As we started to close on the winter period, we felt a strong feeling of trepidation about the COVID-19 crisis and the reversion back to restrictions. This in contrast to the loosening of the restrictions in July and the more positive feeling that all elements of life, but especially business, were going through a form of rejuvenation.
This week marks another dramatic week – another countrywide lockdown starting on Thursday, and newly announced business support measures.
We deliberately slowed our updates given that Cornwall was appearing to avoid the local tiered restrictions that were being place on other areas of the country, and such the business support measures associated with these were largely irrelevant to the County. However, the countrywide lockdown clearly is different.
The business support measures in place are now as confusing as they ever were, mainly given the number of different but similar measures available. We will attempt to provide some clarity in this update.
As we have said before in previous updates, in times like these, we cannot emphasise enough the importance of communication. We have a specific focus on maintaining effective communication with our clients, and all in Cornwall, getting information to you that will help you and your business in these uncertain times.
Government announcements are inevitably going to increase in regularity again. It is fair to say that it will be a challenging winter however, we are genuinely committed to attempting to disseminate information and advice as soon as more information is released from Government to provide as much support as we can to our clients, and others in Cornwall.
Coronavirus Job Retention Scheme (CJRS)
The Government had announced in September their commitment to the cessation of the CJRS on 31 October 2020, and the creation of a new, less beneficial support scheme in the form of the Job Support Scheme.
After some confusion (particularly around the Job Support Scheme – see below), the Government has announced that the CJRS will be extended to at least 2 December 2020 (presumably dependent upon whether the countrywide lockdown is lifted then).
We do not have detailed guidance on this CJRS extension, however, we understand from Government announcements that:
- The scheme will provide a grant towards the cost of wages of 80%, capped at £2,500 per employee, per month – This being the same as the earlier iterations of the CJRS, and therefore the more beneficial than the CJRS in recent months (when the CJRS was tapering away);
- Employers will have to cover the costs of employer national insurance and pension contributions;
- Employers employees do not have to have previously used the CJRS to benefit from the CJRS extension;
- To be eligible, employees need to have been on an employer’s PAYE payroll with an ‘Real Time Information’ (RTI) submission notifying payment to that employee to HMRC before midnight on 30 October 2020;
- So-called ‘flexible furloughing’ (i.e. part-time furloughing – so that employees can work some of their usual hours) will continue to be available to employers, as well as completely furloughing employees (i.e. full-time furloughing). We understand that the calculations for calculating entitlement under ‘flexible furlough’ will be the same as for the previous iterations of the CJRS;
- The extended CJRS will apply from 1 November 2020 i.e. there is no gap in support under the CJRS.
We will provide further detail when detailed guidance is published.
Many businesses will have planned staffing before these announcements – it’s obvious to say that such plans should be quickly revised for the impact of the CJRS extension, and communication delivered to employees ASAP. Employee consent and redrafting of agreements with affected employees may be required – these practicalities are important and employment law/HR advice should be sought.
Holiday entitlement – furloughed employees continue to accrue leave whilst on furlough, however, crucially employees can take holiday while on furlough (they must be paid 100% but CJRS can be claimed at 80% under the extended CJRS) and employers can require employees to take holiday while on furlough as long as they give adequate notice. This should be seriously considered in order to avoid resourcing problems in the future in the event furloughed employees return and wish to use their accrued unused holiday. Again, employment law/HR advice should be sought.
Job Support Scheme (JSS)
The Government had previously announced the JSS back in September that was effectively the Government’s method of easing away from the more generous Coronavirus Job Retention Scheme (that was previously ending on 31 October 2020) that was announced shortly after the beginning of the first countrywide lockdown.
At the weekend, given the announcement of the new lockdown, it was initially announced that the JSS has evolved into two different schemes:
- JSS Open – providing support to businesses that are open but whose employees are working shorter hours due to reduced demand; and
- JSS Closed – providing support to businesses that are legally required to close as a direct result of restrictions announced by one of the four UK governments.
Almost as soon as the guidance had been released on the evolved JSS, it was announced that the JSS would be postponed until the end of the extended JRS (see above).
It is for reasons such as this that, as a business (as has been the strategy around tax updates), we wait in order to provide a considered commentary on such measures, to ensure that we can provide as much clarity as possible.
Self-Employment Income Support Scheme (SEISS)
As part of this suite of extensions, the SEISS is also being extended called the Self-Employment Income Support Scheme Grant Extension.
An extension to the SEISS had already been announced in September – this in the form of two grants, one for each of the 3 month periods ending 31 January 2021, and 30 April 2021.
As with the previous SEISS grants, these grants will be paid in lump sum instalments.
Under the previous announcement, the 1st grant (for the 3 month period to 31 January 2021) was to be “covering 20 per cent of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.”
The extension announced this week represents an increase from this 20% to:
- 80% of average monthly trading profits for November 2020; and
- 40% of average monthly trading profits for December 2020 and January 2021.
This effectively increased the level of this 3rd SEIS grant to 55% of average monthly trading profits.
The guidance (that can be found here) summaries the grants as follows:
“The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 55% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £5,160 in total.
The grant will be increased from the previously announced level of 40% of trading profits to 80% for November 2020. This therefore increases the total level of the grant from 40% to 55% of trading profits for 1 November 2020 to 31 January 2020.”
“The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.”
Eligibility for the grant is linked to eligibility for the previous SEIS grants:
“To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:
- have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- declare that they intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus”
The previous claims window for the 3rd grant will be brought forward from 14 December 2020 to 30 November 2020. HMRC will release more information regarding the claims process in due course. We will provide an update when this is released.
We will, of course, also provide further updates when information regarding the 4th grant is released.
The Government’s news story can be found here.
The Local Restrictions Support Grant (LRSG) had been previously announced to help business that were required to close under local Tier 3 lockdowns.
These grants were based on the previous Retail, Hospitality and Leisure Grant Fund (RHLGF) and Small Business Grant Fund that applied to the first lockdown.
These grants are now available to businesses required to close as part of the countrywide lockdown restrictions.
Detailed guidance is yet to be published, however, Government announcements (found here) state that:
“Businesses required to close in England due to local or national restrictions will be eligible for the following:
- For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
- For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
- For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.”
We understand that, as with the Retail, Hospitality and Leisure Grant Fund (RHLGF) and Small Business Grant Fund, the local councils will be responsible for the administration of these grants.
Job Retention Bonus
The Job Retention Bonus was announced as part of the Chancellor’s Summer Economic Update.
Broadly, the bonus is £1,000 that will be paid to employers for bringing previously furloughed employees back to work (that have been subject to a previous eligible claim under the CJRS), and retaining those employees until January 2021. This £1,000 bonus will be for each such employee.
Detailed guidance has now been released – which can be found here.
Claims can be made from 15 February 2021.
Mortgage payment holidays
The mortgage payment holiday scheme that had been due to come to an end on 31 October 2020 has been extended for another six months.
The Financial Conduct Authority (FCA) is yet to update its guidance, however, has released a statement that can be found here.
Crucially, we understand that borrowers who have not yet obtained a payment holiday can request one under the extended scheme, as well as borrowers that have already started a payment holiday being able to extend theirs.
We understand that each lender will be providing information to their customers as to how to apply etc.
Business interruption insurance – Test case
On 15 September 2020, the High Court rules that some insured businesses will be covered for losses realised as a result of the impact of the COVID-19 pandemic.
Eligibility to claim obviously will be largely determined by the wording of the insurance policy
Businesses should seek appropriate advice and engage with their insurance provider if they believe they are eligible to claim under their insurance cover for such losses realised.
Businesses that believe they have a claim should continue to maintain detailed evidence to substantiate their business interruption losses since March and now into the future, given the new countrywide lockdown restrictions.
If we can help and advise you in any way, please get in touch with your usual RRL contact, we continue to largely work remotely. We will respond to emails as usual. We are conducting meetings virtually (using Microsoft Teams).
We will provide further updates, as and when further announcements are made and detail/guidance released.