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Winter Economy Plan – What it means for the self-employed

The Winter Economy Plan includes the new Job Support Scheme and an extension to the SEISS grant. Both summarised below.

Job Support Scheme (JSS) to start 1 November 2020 to 30 Apr 2021

JSS will replace the CJRS which ends 31 October 2020

With the intention to protect only “viable” jobs the employer will continue to pay employees for actual hours worked whilst the cost of hours not worked will be split between the employer and the government. This means the employer will need to pay it’s employees a considerable amount more than the hours worked. Compared to CJRS / Furlough scheme government support is being cut from 80% to 22% of wages. Essentially, the scheme is aimed at employers that can’t afford to lose valuable, perhaps highly trained staff.

Eligibility

  1. Employees must have been employed and paid at least once before 23 September 2020
  2. Employees must be working at least 33% of their usual hours (this might be increased after 3 months)
  3. For every “usual” hour not worked the government and the employer will pay a third each.
  4. More detail including a chart showing the 1/3 calculations here: https://www.personneltoday.com/hr/job-support-scheme-fraction-revision-time/

And here: https://www.gov.uk/government/publications/job-support-scheme

Self-Employment Income Support Scheme (SEISS) grant extension

The extension of the SEISS grants is great news for the Self-Employing, including Partnerships affected by COVID19.

Two more grants are to be paid to those eligible with the intention of helping towards lost profits from Nov – Jan (covering 20% of average profits) and Feb – Apr (value of grant not yet confirmed).

Eligibility

  1. You must currently be eligible for SEISS grant 1 and 2 (i.e. have been adversely affected by Coronavirus for grant 1 anytime until 13 July 2020, for grant 2 between 14 July –  19 October 2020)
  2. You must be currently trading and intending to continue to trade
  3. You must be adversely affected between the grant extension period (from 1 Nov until the date of the claim). See here to help decide if you’ve been adversely affected by Coronavirus: https://www.gov.uk/guidance/decide-if-your-business-has-been-adversely-affected-for-the-self-employment-income-support-scheme

Worth remembering: The deadline to claim grant 2 is 19 October 2020. All such grants are taxable and will need to be declared on your Income Tax Returns.

How to claim: As with grants 1 and 2 it seems likely HMRC will contact each self-employed taxpayer.

Bounce Back Loan extension

The government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half.

Other previous COVID-19 posts remain relevant and are:

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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COVID-19 £1,000 Job Retention Bonus

Coronavirus (COVID-19) Job Retention Bonus – will you qualify?

During the Chancellor’s 8 July “Plan for Jobs” speech to Parliament Mr Sunak confirmed that the Job Retention Scheme will end 31 October. However in an attempt to avoid mass lay-offs he also announced a bonus of £1,000 for employers that retain previously furloughed staff through to at least 31 January 2021.

Details of the Job Retention Bonus are here but I’ll outline the takeaways below: https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus

Job Retention Bonus Guidance – In Summary

1. The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021.

2. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021.

3. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021.

4. Employers can claim the Job Retention Bonus for all employees who meet the above criteria, including office holders, company directors and agency workers

5. Claims can be made from February 2021 and the income received under this scheme will be taxable income for the business.

Common Employers Questions:

  1. Do previously furloughed directors qualify for the bonus? A: Yes.
  2. My employee’s furlough finished sometime before 31 October but they’ll continue to be employeed well after January 2021 – will I still qualify for the bonus for that employee? A: Yes.
  3. Is there any action to take now? A: Simply continue to maintain up to date payroll records and RTI submissions with HMRC. Then, as long as your retained (but previously furloughed) employees earn over £520 per month between November 2020 – January 2021 there should be no problem in qualifying for this bonus.

My previous COVID-19 posts can be found here:

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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When can you claim the second SEISS grant?

The COVID19 Self-Employed Income Support Scheme (SEISS) grant has been extended.

This article applies only to self-employed sole-traders or partners of a partnership.

If you were eligible for the first grant and can confirm to HMRC that your business has been adversely affected on or after 14 July 2020, you’ll be able to make a claim for a second and final grant from 17 August 2020.

Source info: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

If you’ve already made a first or second SEISS claim then this previous post of mine is well worth a read: You’ve claimed the SEISS grant – What next?

Other previous COVID-19 posts remain relevant and are:

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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COVID-19 Job Retention Scheme – new rules from 1 July

Coronavirus (COVID-19) Job Retention Scheme – new rules from 1 July

On Friday evening the Chancellor announced three changes to the Job Retention Scheme as well as an extension to the Self-Employed Income Support Scheme (the self-employed can skip ahead to that section).

The changes are outlined here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Detailed guidance on the new rules is expected to be published 12 June.

Job Retention Scheme – new rules starting 1 July

1. From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.

2. From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September (govt will fund 70%) and October (govt will fund 60%).

3. The scheme will close to new entrants from 30 June.

Employers: What to do now?

The final date by which an employer can furlough an employee for the first time will be 10 June (in order to complete the minimum 3 week furlough by 30 June).

As some employers have been rotating their furloughed workers then they should consider now if any workers that haven’t yet been furloughed can be furloughed before 10 June in order to leave the door open to the flexible furloughing (part-time) rules starting 1 July.

Extension to the Self-Employed Income Support Scheme (SEISS)

The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade is adversely affected by COVID-19 (coronavirus). Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020 (PER GOV.UK 12 JUNE UPDATE). People do not need to have claimed the first grant to claim the second.

Self-Employed: What to do now?

Claims for the first SEISS grant, which opened on 13 May, must be made no later than 13 July. Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total).

My previous COVID-19 posts can be found here:

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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You’ve claimed the SEISS grant – What next?

You’ve claimed the COVID19 Self-Employed Income Support Scheme (SEISS) grant – What next?

Please note this article does not apply to employees or directors of their own limited company, only self-employed Sole-Traders / Partners.

By now most of our self-employed clients have successfully claimed the SEISS grant.  However, if you’re having any trouble making a claim or any doubts about a claim already made please don’t hesitate to get in touch. If you’re still to claim then you might find this 2 minute video helpful.

For those that have already claimed here are some important reminders

  • To claim you’ll have logged in using your Government Gateway User I.D. and password – be sure to keep a permanent note of these login details. They’ll be useful for the lifetime of your self-employment
  • Record keeping and reporting
    You should keep any evidence that your business has been adversely affected by coronavirus such as:
  • business accounts showing a reduction in turnover
  • confirmation of any coronavirus-related business loans you have received
  • dates your business had to close due to lockdown restrictions
  • dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities due to school closures
  • You will need to report the grant:

    The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes.

Source info: https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme#after-youve-claimed

My previous COVID-19 posts remain relevant and are:

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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COVID-19 Self-Employed Income Support Scheme (SEISS): Get ready to claim

Coronavirus (COVID-19) Self-Employed Income Support Scheme (SEISS): Get ready to claim

Since yesterday HMRC have been emailing and texting self-employed taxpayers asking them to get ready to claim the SEISS grant. I will summarise the latest guidance and what you should do now. However the full guidance is not too long and is found here: https://www.gov.uk/https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Please note this article does not apply to employee’s or directors of their own limited company, only self-employed Sole-Traders / Partners.

What is SEISS and what are the conditions to claim?

  • SEISS is a one-off taxable grant of 80% of 3 months average trading profits up to max £7,500
  • You must have been trading since 2018/19 and intend to continue to trade
  • You can continue to work and even start a new self-employment or employed position
  • It will be declarable as taxable income on your 2020/21 Tax Return and for Tax Credit / Universal Credit purposes.
  • You must have been adversely affected by COVID19 due to either:
    1. you’re unable to work because you: are shielding, are self-isolating, are on sick leave because of coronavirus, have caring responsibilities because of coronavirus
    2. you’ve had to scale down or temporarily stop trading because: your supply chain has been interrupted, you have fewer or no customers or clients, your staff are unable to come in to work

When can you make the claim?

  • The go live date is being staggered for individuals you can find yours by using the HMRC tool mentioned below. The first applicants will be invited to claim from 13 May onwards

What can you do now?

  • Your accountant will not be able to claim on your behalf
  • Right now you’re able to use an online HMRC tool to check if you’re eligible
  • The most important thing you can do now is to make sure you’ve a working Personal Tax Account (PTA) (aka Government Gateway). You’ll be using your PTA to login and claim. However, most individuals with accountants either haven’t signed-up to a PTA or rarely use it. Many of my client’s have old login credentials that they might have forgotten. It some cases I have notes of these from when you first signed-up to my service. Therefore, if you’re struggling to sign-in please get in-touch before setting up a new PTA. Login to test your PTA or sign-up to a new one here: https://www.gov.uk/personal-tax-account

My previous COVID-19 posts remain relevant and are:

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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COVID-19 Job Retention Scheme: Advice for Company Directors

Coronavirus (COVID-19) Job Retention Scheme – Advice for Company Directors

The critera to qualify for the COVID-19 Job Retention Scheme (essentially funding 80% of salaries), is without doubt, stricter and less generous in the case of small company directors. Below I’ll discuss what can be claimed by this group of employees. The full guidance is the same as that for the non-director employees and is found here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Job Retention Scheme: How it applies to company directors

  • Directors can be furloughed if they’re an employee on PAYE and on the payroll on 28 February 2020
  • The same restrictions to furloughing apply both to directors and employees. See here for the full list but of particular difficulty for directors is the requirement to perform no work whilst furloughed.
  • In practice, a company may be so badly affected by the crisis that it goes into a ‘COVID-19 hibernation’ meaning that the director would have no day to day employment type duties (especially, income generating activity) but is still on hand to undertake their statutory duties as company director.
  • Other companies might only be partially affected. In such cases, it might be practical to furlough all but one of the directors. This may especially apply to small husband and wife ran companies.

How much is the grant worth to directors?

  • Employers can choose to pay a furlough salary of 80-100% but the government is funding only up to 80% (capped at £2,500). In the case of directors it’s likely that the company will want to continue to pay 100% of the current salary in the knowledge that 80% will be funded by HMRC later.
  • Directors salaries are usually set quite low with the remainder of their remuneration being paid via dividends. Unfortunately HMRC will not be funding anything towards dividends.
  • Presuming therefore that you earn a typical directors salary (often below all tax and NI deductions) of £719 per month. HMRC will fund approx £575 per month.
  • The grant will be received by the company as taxable income and cannot be expected to hit the company before late-June 2020 or later.

Practical tips

  • There’s no need to worry or rush to take action. If work has ground to a halt you will qualify for this scheme. Just apply the rules are best as you can formalise the arrangement later using our template letter to furlough.
  • As for claiming the grant – please don’t contact HMRC. They’re of course extremely busy and are in the process of contacting employers.

My previous COVID-19 posts remain relevant and are:

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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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: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

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?

UPDATE 1 Apr 2020: See my post: COVID-19 Job Retention Scheme – Advice for Company Directors

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? 

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.