There was a lot of attention given to the self-employed support scheme in the media on Friday, which was to be expected after the guidance was issued the evening before, but the main new development has been the issue of further guidance on the Job Retention Scheme.

Job Retention Scheme (Furlough)

HMRC have issued more details of the rules governing who qualifies for the Job Retention Scheme grants and the amounts payable.  Advice for employers can be found here:

A summary of the main new provisions is as follows:

  • It is now clear that the £2,500 figure is the maximum amount of gross pay that will be covered by the grants, if 80% of qualifying salary exceeds that amount. If an employee has more than one job through separate payrolls, each employer will be able to obtain a grant towards their costs, with no restriction on the number of jobs. In theory an individual who is furloughed from more than one job could receive multiple amounts of £2,500 through the grants, although I suspect that this will be a fairly rare occurrence!
  • The monthly pay figure to which the 80% limit is applied will be different depending on whether the employee is on a fixed or zero (i.e. variable) hours  contract. If the hours are fixed (full or part time), the salary which they were on at 28 February 2020 will be used, so there is no scope for post-JRS announcement salary  “increases”. If the hours are variable, it is more complicated and the figure to be used will be the higher of the amount paid in the same month (for which the claim is being made) in 2019 and the average of the monthly earnings for the 2019/20 tax year. This applies where the person has been employed for at least one year, but if not, you use the average monthly earnings since they started work. Clearly, where the employee was furloughed part way through a month, this “monthly” figure will need to be apportioned to the furlough period, and if the employee started during February 2020, and there is therefore no whole month on which to base the average, a pro-rata figure of earnings to date will need to be used.
  • When the claims are made (see below for more details of this), the employer will also be able to claim the related employers’ national insurance, and the minimum (3%) auto-enrolment pension contributions.
  • It is permissible for the employee to be paid more than the amount qualifying for the grant, but this top-up, plus the associated NI and pension, will be an un-refunded cost to the employer. There is therefore no problem in paying furloughed employees their usual salary, but you can only claim the qualifying amount.
  • As stressed in previous bulletins, a furloughed employee must not carry out any duties of their work. HMRC have however now clarified that employees can undertake training whilst on furlough, and they have confirmed that this will by necessity include online training (and I don’t think that this includes joining in with Joe Wicks).
  • Employees will qualify if they were made redundant or laid off after 28 February, and are then rehired. I’m not sure what the position is if this happened on Saturday 29th February (possibly another fairly rare occurrence!). Also if employees were put on unpaid leave on or before 28th February, they will not qualify.
  • The minimum period for which an employee can be furloughed is three weeks, so it is possible to ask a furloughed employee to return to work after they have been off for three weeks. It would appear that they can then be furloughed again if necessary, as long as each furlough period is at least three weeks long.
  • To make the claims, information will need to be provided through the HMRC portal. Worryingly, the date when this will be available has moved out from a couple of weeks’ time to being expected “by the end of April”. Details of the information that HMRC will require is on the website link above, and claims will be limited to one every three weeks. It will probably be convenient to link this process to the preparation of the payroll, if done monthly, or possibly to every third weekly payroll. One of the pieces of information required is the bank account number/sort code into which the grants will be paid following the submission of the claims. The JRS has been initially limited to the three months from March to May inclusive, so if the portal is not available for use before the end of April, there will not be many opportunities to use it anyway in this first period because the first claim will be for the whole period from the start of furloughing (1 March 2020 at the earliest) up to the end of April, and the next claim will not be able to be made until 3 weeks later, well into May. Let’s hope that the crisis will have dissipated sufficiently by then to allow the scheme to be discontinued after the end of May.

Regarding the scheme generally, you must ensure that you have followed the correct legal requirements under employment law, which should include consultation and a written agreement – specialist HR advice should be taken in this area.

And finally (for now) the announcements included a warning that HMRC will have the right to audit all claims, and it is therefore essential that no claims are made which do not meet the rules set out above.  There has been a lot of talk about the possibility of director/shareholders qualifying for the JRS, and this is increasing with the realisation that the self-employed support scheme announced yesterday does not include them (see below). As we have said before, the salary (payroll) element of their pay could theoretically qualify for the grant, but there may be difficulties in justifying this where the business is continuing (see previous bulletins).

Self-employed Support Scheme

As mentioned above, there has been plenty of reaction to the scheme, mostly in relation to those who do not fall within it – new businesses and those whose reported profits are reduced because of investment in the business were high up the list. The problems of shareholder/directors seem to have had a surprisingly low profile, although there has been plenty of talk away from the headlines. This is a large sector of the business population which does not qualify for any support under this scheme and little, if any, under the Job Retention Scheme (see above). I am not sure why more prominence is not being given to this issue, because  if the rules are not changed, we will see many thousands of business owners having to join the long queue for benefits. I suspect that it may be because of a perception amongst the public and press that anyone who owns their own limited company must be comfortable enough to not need any further help. As most of the readers of this bulletin will be aware, this is far from the case, but is simply a result of the choice of using a limited company structure to operate a business rather than remaining as a sole trader or partnership. There are many commercial reasons why the decision to go “incorporated” is made, but as I have said many times before, I fear that the Government is currently being heavily influenced by the tax and national insurance advantages which the incorporated business owner has enjoyed in the past. Let us hope that the Government can be persuaded to stop ignoring this sector.

Deferment of Vat

There has been some doubt about how businesses that pay their Vat by direct debit should arrange to defer their payments, if they wish to.

HMRC have released a note today confirming that:

  • Vat returns should be prepared and submitted as usual.
  • Businesses that wish to defer their payment should cancel the direct debits through their banks in good time before the due date. Otherwise HMRC will collect the amount due according to the return.
  • Businesses which are due repayments will receive them as normal in accordance with their returns.

Deferment of Self-assessment Tax due on 31 July 2020 

The guidance on the  “support for businesses” website (  has been amended to extend the interest-free deferral of the self-assessment income tax payment due on 31 July 2020  to all forms of income. This means that all self-assessment taxpayers can defer the second instalment of their 2019/20 tax until 31 January 2021. When this scheme was originally announced it was limited to the tax on self-employed income, and it was not clear how HMRC would be able to distinguish between that tax and the tax on other forms of income such as dividends, rental income and interest. This extension will benefit landlords and will provide some relief to director/shareholders who pay most of their tax through the self-assessment system on their dividends. This relief will be fairly limited consolation for them though, as the many director/shareholders who are struggling to meet their day to day financial requirements because of lack of support under the JRS or the Self-employed Support Scheme would  have been unlikely to be able to pay this tax anyway. Having said that, it would appear churlish not to welcome this additional help.

As explained when this deferment was announced in its original form, it must be noted that this is only a deferral and that the tax will have to be paid next January, at the same time as the 2019/20 balancing payment and 2020/21 first instalment are due.

Coronavirus Business Interruption Loan Scheme (CBILS)

Many people have been put off borrowing under this scheme because their bank was asking for personal guarantees from director/shareholders for loans to their companies. The good news announced by the British Business Bank today is that the “Big 4” high street banks have agreed that they will not require PGs for loans up to £250,000. The updated information is at:

Although lending under the scheme has to be repaid at some point, the terms are much more generous than normal commercial lending and could provide a lifeline to those who are unable to make use of other schemes.

(28 March 2020)

Author; Peter Hedgethorne, Director