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COVID-19 Job Retention Scheme (detailed guidance for employers)

Coronavirus (COVID-19) Job Retention Scheme – detailed guidance now available

Many employers are now considering their need to furlough employees perhaps from the next pay period starting 1 April. Thankfully updated and more detailed guidance on the Job Retention Scheme has now been released.

My summary of the scheme is below and I will personally help each affected client navigate their own particular circumstances. The full guidance is found here:

Job Retention Scheme Summary

  • Grant is available to all employers that had employees on the payroll on 28 February 2020.
  • All employees can be included (full-time, part-time, agency, zero-hours) if they’re being furloughed because of the COVID-19 crisis.
  • Employees cannot work whilst furloughed. Employees put on reduced hours do not qualify.
  • You must have your employees agreement to designate them as furloughed. Of course put this in writing once discussed.
  • The scheme is running from 1 March 2020 for at least 3 months. The minimum period for which you can furlough an employee is 3 weeks.
  • Employers can choose to pay a furlough salary of 80-100% but the government is funding only up to 80% (capped at £2,500). Most employers are best advised to pay the 80%.
  • If 80% of an employee’s salary equates to less than National Minimum Wage (NMW) then that’s fine under the circumstances because the employee is not actually working the hours.
  • A furloughed employee may volunteer to perform work which does not generate income for the business (e.g. bookkeeping, admin type tasks) and can undertake training courses whilst furloughed.
  • Once agreed the payroll runs as normal, with usual tax, NI and pension deductions.
  • An employee who already has two or more jobs can be furloughed by one employer and continue to work for another.
  • If your employee is already sick or self-isolating and in receipt of Statutory Sick Pay (SSP) this must run its course before they can be furloughed.

How do employers calculate the 80%?

Fixed salary employees – simply pay 80% of the fixed salary that was paid for 28 February.

Employees whose pay varies –
For those that have been employed for a full year, take the higher of:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

Fees, commission and bonuses should not be included in the calculation.

For those that have been employed for less than a year – use the average monthly earnings since they started work.

HMRC will also be funding the any Employer National Insurance Contributions and automatic enrolment contributions up to the minimum 3% contribution rate.

Effectively a furloughed employee paid at 80% will cost the employer nothing.

What to do now?

For many employers the best decision will be to furlough all but a skeleton staff. Discuss this with your employees now, decide when to start their period of furlough. Agree with them for how long (a minimum of 3 weeks) but you may like to do one month and reviewed monthly (up to a maximum 3 months unless extended by the government) and at what rate they’ll be paid 80-100%. Finally, and importantly, write to them to confirm. Our letter template can be downloaded Job Retention Scheme – Letter to employees.

As for claiming the grant – please don’t contact HMRC. They’re of course extremely busy and are in the process of contacting employers.

You may well experience a delay between paying your employee and receiving this grant. The claim system is expected to be working by the end of April. Plan you cash flow accordingly and consider using the Business Loan Interruption Scheme (interest free loans – just contact your bank).

What about small company directors?

Professional accountancy bodies continue to seek clarification. But for now the latest was outlined in my last blog: Coronavirus (COVID-19): Help for the Self-Employed

During the crisis I’ll be blogging about government help for small businesses as soon as the guidance is available. My previous COVID-19 post remain relevant and are:

What financial support is available for UK businesses? – NOW UPDATED
Can the Self-Employed go to work?
Help for the Self-Employed and other FAQ’s
Coronavirus (COVID-19): Help for the Self-Employed – PER THE 26 MARCH ANNOUNCEMENT

Enjoy saving tax? 

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Coronavirus (COVID-19): Help for the Self-Employed

Coronavirus (COVID-19) Help for the Self-Employed

This evening the Chancellor Rishi Sunak announced the highly anticipated Self-Employed Income Support Scheme (SEISS) .

The government guidance gives a fairly concise summary of how the scheme will work and is found here:

However, I’ll summarise a little further here:

  • SEISS takes the form of a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
  • Applies to Self-Employed Sole-Traders and partners of Partnerships as long as your tax returns are up to date, you’re currently trading and you intend to keep trading beyond this crisis.
  • Your trading profits must be under £50,000 to qualify for help.
  • To work out your average trading profits HMRC will use the values declared in your Tax Returns 2016/17, 2017/18 and 2018/19.
  • You do not need to contact HMRC to apply. HMRC will contact those eligible for SEISS and ask you to apply online.
  • Remember this grant is taxable income. It will also need to be declared as income if your claim Tax Credits or Universal Credit.

What questions now remain?

Where does this leave directors of small limited companies?

The last line of the SEISS guidance reads: “If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.”

The position of directors remains a little unclear but it does seem that if they cease working, or have to stop because of COVID-19, and they furlough themselves that they’ll be able to claim funding for 80% of their salary just like any other employee. Whilst there is no written guidance yet, the Chancellor’s comments have strongly indicated that dividends will not be taken into account in working out the 80% funding.

In practice it might be difficult for a director to cease work – most companies need someone running the show – even if workload has been scaled right back. I’m currently hoping for more clarity before advising on this issue but it seems to me that one option for many companies may be to furlough all but one director.

Can the Self-Employed continue to work whilst claiming SEISS?

Yes. There is no restriction made due to claiming this grant. That of course is subject following the social distancing guidelines applicable to all as I’ve explained here Can the Self-Employed go to work?

In contrast employees being funded by the Job Retention Scheme are not allowed to work for their employer or take on any other employment during the term that they’re designated furloughed.

For a reminder on how to furlough a worker see here.

During the crisis I’ll be blogging about government help for small businesses as soon as the guidance is available. My previous COVID-19 post remain relevant and are:

What financial support is available for UK businesses?
Can the Self-Employed go to work?
Help for the Self-Employed and other FAQ’s

Enjoy saving tax? 

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


Coronavirus (COVID-19): Help for the Self-Employed and other FAQ's

Coronavirus (COVID-19) FAQ’s: What help is there for the Self-Employed / Small Company Directors? How to forlough employees etc.

Since my two posts Monday 23 March there have been no updates from the government. We are expecting more announcements but for now I hope that this post helps answer some of the most pressing frequently asked questions.

What financial help in there for the Self-Employed?

Regarding sole-traders / partners of a partnership – currently, very little. Extending the 80% funding of earnings to the self-employed has been discussed in Parliament but for now there are no official announcements.

You will likely qualify for the £73 per week Employment Support Allowance via the Universal Credit system.

My opinion: Don’t panic announcements of help for the Self-Employed are expected very shortly. If you’re allowed to work then considering doing so (see below).

Can the self-employed continue to work?

Yes in most cases. There has been a lot of misreporting on this issue along the lines of “non-essential work should stop”. This is not what the Prime Minister announced or what subsequent Government guidance states.

In truth its non-essential travel to work that should stop. The guidance states: “If you cannot work from home then you can still travel to work, provided you are well and neither you nor any of your household are self-isolating.”

True, non-essential shops and public spaces have been closed so in all cases please read carefully the guidance below before deciding if you can still go to work or not.

Government guidance on staying at home:

How to furlough workers and can directors be furloughed?

Any employee that has been out of work since 1 March (i.e. asked to stay home due to the COVID-19 crisis) can be designated as furloughed.

How to do it?

  1. Explain to your employee, first verbally and then in writing, that due to COVID-19 the workload is greatly reduced and you’d like to designate them as furloughed. You must have the employees consent. If they consent then they must stay at home and not take on any new employment.
  2. Agree with your employee the salary they’ll be paid whilst furloughed. Most employers are paying 80% of usual salary (if it varies then based on February’s pay) as this is the amount the government will fund (subject to the £2,500 per month cap). You can however choose to pay 100% but the difference will not be reimbursed by the government.
  3. Employers will makes claims for reimbursement via a HMRC system that is expected to be up-and-running before the end of April.

Can directors be furloughed like other employees?

The guidance is not yet clear. Whilst you are employees of your own company it is expected that this issue will be clarified when the Chancellor announces more help for the Self-Employed.

What about zero hours contract employees?

It seems that these can be furloughed and paid 80% based on their February pay but this guidance is not yet clear.

My opinion: If your business is coming to a standstill then furlough your workers now (even backdate to when they stopped coming to work). Directors don’t panic – I expect help for your earnings will be clarified along with help for the Self-Employed. If you’re struggling to pay the wages of furloughed workers contact your bank for a Business Interruption Loan (these are being processed quickly by most banks) which you can repay once the HMRC funding is processed.

I hope these FAQ’s help for now. I realise that many questions are left unanswered but I’ll aim to provide advice as soon as these issues are clarified.

Please ensure you’re up to date with my previous COVID-19 posts:

What financial support is available for UK businesses?
Can the Self-Employed go to work?

Enjoy saving tax? 

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


Coronavirus (COVID-19): Can the Self-Employed go to work?

Coronavirus (COVID-19) latest: Since the Prime Minister’s announcement this evening of a “UK lockdown” can the self-employed go to work?

The answer is, yes, you probably can. For full guidance and a list of industries which have been shut down (and cannot go to work) see the government guidance here:

Updates to follow as they happen.

Enjoy saving tax?

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Coronavirus (COVID-19): What financial support is available for UK businesses?

Coronavirus (COVID-19): What financial support is available for small UK businesses?

Following is what we know so far. Clients will be updated as soon as possible on specific rules regarding eligibility and how to make claims once that info is available.

Coronavirus Job Retention Scheme

All UK employers will be given support in paying 80% of employees salaries up to £2,500 per month (for at least 3 months from 1 March 2020) for those employees that would otherwise have been laid off during, and only due to, the Coronavirus crisis.

How to claim – HMRC are working urgently to set-up a system but for now we know that you need to designate employees are “furloughed workers”, notify your employees and submit those details to HMRC (method of submission yet to be announced).

VAT payments

VAT payments falling due between 20 March – 30 June 2020 simply do not need to be made on time. This applies to all businesses but it’s deferment only. Any deferred payments will need to be caught-up by 31 March 2021 if not earlier. In the meantime VAT Returns must still be submitted on time. VAT Refunds will be processed as normal.

UPDATED INFO: HMRC ask that businesses please cancel their direct debits with their bank with the intention of setting these back-up again when you cash-flow allows you to make payments.

Self-Assessment payments for the Self-Employed

The usual payment on account due by 31 July 2020 does not need to be paid until 31 January 2021. This deferment will not attract penalties or interest. No application to defer is needed.

UPDATED INFO: Deferral of the July payment on account now applies to all taxpayers under Self-Assessment. There is no need to contact HMRC to arrange this.

HMRC will fund Statutory Sick Pay (SSP) for employees absent due to Coronavirus

Until now employers themselves have funded the £95.85 per week SSP paid to employees during sickness absence. However, starting 13 March 2020 HMRC will fund employers up to two weeks SSP per eligible employee (including directors of small limited companies) who is absent because of COVID-19 (infected, self-isolating etc). During the crisis SSP is payable from day 1 of absence rather than the usual day 4. Eligible employees are those earning at least £120 per week. The HMRC mechanism for repayment is being designed and yet to be announced.

Self-employed not eligible for SSP

The Self-Employed will qualify for Employment Support Allowance of around £73 per week from day 1 of COVID-19 related sickness (extended from the usual day 8). If already claiming Universal Credit then claims are to be made via that system.

Business Rates

Automatic business rates holiday for retail, hospitality and leisure industry for 2020/21. Local Authority will write to confirm – no action needed.

Automatic cash grants for retail, hospitality and leisure industry trading from business properties of up to £25,000 or £10,000 for properties with a rateable value under £15,000 (including those paying no business rates because of Small Business Rate Relief). Local Authorities are writing to affected businesses. No action or application is needed.

UPDATED INFO: The list of businesses to qualify for the grants is expanding. Of note, Estate Agents and Childcare Nurseries recently added.

Business Interruption Loan Scheme

The Government will be guaranteeing loans with interest free periods. Applications for loans can be made via your existing bank from 23 March 2020.


Unfortunately, most businesses are not specifically not insured for closure due to pandemics or government-ordered shut-downs. But, check your policy – if you are then insurers are reportedly dealing fairly with such claims.

In conclusion

Sorry if the info presented doesn’t answer your specific question but updates will follows as and when the rules are clarified and especially as we receive instructions on making claims for the help on offer.

Enjoy saving tax?

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.

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Optimum Directors’ Salary and Dividends for 2020/21

What is the optimum directors’ salary and dividend mix for 2020/21?

Small companies will usually pay their directors with a mix of salary and dividends. The level of the directors’ salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for the forthcoming tax year is:

Upper limits (if intention is to fully utilise the basic rate tax band)



Directors’ salary – per annum



Dividends – per annum



It should be noted that dividends exceeding both the personal allowance and the dividend allowance of £2,000 will be taxed via the directors’ personal income tax return at 7.5%. Meaning that if dividends are paid all the way up to the basic rate band of £50,000 (same as last year) there will be a personal tax bill of £2,663 (last year £2,663)

Companies with more than just a single director on the payroll may benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £4,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £12,500 and dividends up to a maximum of £37,500 (the overall tax saving between the director and the company being around £260).

This second option will not be the best fit for everyone. More than ever, personal circumstances must be carefully considered to give the best results.

Each client of ours will be receiving a personalised recommendation shortly.

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National Minimum Wage rise from April 2020

National Minimum Wages rates

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) will rise from 1 April 2020.

The NLW increase of 51p represents a 6% rise, equivalent to an annual increase of around £930 for a full-time worker.

In summary and effective 1 April 2020 the follow minimum wage rates will apply

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice *
April 2019 £8.21 £7.70 £6.15 £4.35 £3.90
April 2020 (new rates) £8.72 £8.20 £6.45 £4.55 £4.15

* The apprentice rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

Plan ahead

Ensure your payroll procedures are up to date and consider notifying staff ahead of time in writing (even via a note on their payslip). This transparency is likely to be well received and could help build positive employee relations. It also offers an opportunity to explain that any overtime worked during a pay reference period prior to the introduction of the new rates, that is payable after these have been introduced, will still be paid at the previous rate.  For further details and more rates visit

Pension contribution rates

If you employ staff and run a pension scheme the minimum contributions rates remain the same with no more planned increases:

  • Employer minimum pension contribution 3%, staff contribution 5%.

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.