Today’s bulletin picks up on some updates which are peripheral to the main schemes, but which will provide useful clarity for many affected businesses. 

Job Retention Scheme 

It has been reported that the Government now accepts that director/shareholders can be furloughed so long as the only “work” they undertake is that required to carry out their statutory duties as directors. This can only really apply when the business has temporarily ceased, and is still limited to the salary paid through the payroll, which in most cases is a small proportion of a director/shareholder’s pay. If the individual concerned carries out any work that relates to the business itself, such as sales, marketing, etc, it will prevent that person from being treated as furloughed, and the scheme will not therefore be available.   This is not what the sector is holding out for, either in terms of qualification or the amount of pay that can be covered, but at least it provides some clarity around the principles that apply to the scheme. 

Annual leave for furloughed employees

Straying into some HR advice here, there has been quite a lot of guidance from various sources on the relaxation of the statutory annual leave rules to help with issues created by the crisis, especially in relation to the furloughing rules.

We have found  the guidance from ACAS to be clear and helpful, and you can find it here:

https://www.acas.org.uk/coronavirus/using-holiday

In particular the guidance confirms that holiday is accrued during a furlough period, and that it is possible to convert a previously booked holiday to a furlough period.

The reason for the new rules is that problems could be created for businesses if staff are required to use their annual leave entitlement within the holiday year, which is the normal rule. This could cause difficulties where employees have already had a significant period of absence, so it is now going to be possible to defer up to four weeks of annual leave,  to be taken over the two holiday years following the one in which the holiday was accrued.

For instance, if a business has a holiday year end of 31 March, and an employee has not taken their entitlement for the year ending 31 March 2021 by that date, it will be possible to spread that holiday period over the two years ending 31 March 2023, to be taken in addition to their actual entitlement for those years.

Time to Pay

The telephone number of the HMRC Coronavirus Helpline has been changed to:

0800 024 1222

This is the number to call if you wish to request deferment of a tax liability because of cash flow difficulties. Let’s hope that it will be less busy than the old one.

Working from home (WFH)

HMRC have updated their guidance on the tax rules governing the costs of working from home. These are not aimed at those freelancers who normally work at home, but at staff who have been required to work at home because their work place is closed, or they are required to self-isolate. The changes are not particularly significant, and most of the guidance reiterates the rules for what continues not to attract tax relief. However,  there are some relaxations, the main ones being:

  • If an employee has broadband installed to enable them to work from home, the costs can be paid by the employer as long as private use is limited. This will clearly be a fairly rare event.
  • If the employer provides office equipment, such as a laptop, to an employee this will not be taxable on the employee, again provided private use is limited by the employee.

The guidance explains that the employer needs to spell out in writing what it considers to be private usage – full details are at:

https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19

It is worth noting that the automatic allowance for general household usage (such as heat, light, broadband), has been increased from £4 per week to £6 per week as from 6 April 2020, so that can be paid to WFH employees tax-free.

Coast to Capital grants (as of 02/04/20 these have been paused)

https://www.coast2capital.org.uk/media-centre/blog-articles/backing-business-grants-update-we-are-pausing-applications.html

Coast to Capital is the Local Enterprise Partnership for our area, which is centred in Gatwick and is charged with encouraging business development in the area, which includes West Sussex, Brighton and Hove and East Surrey. They have £2m available to give to local businesses who have between 5 and 50 staff and a turnover of less than £10m. They are offering this fund to businesses in the form of grants of between £5,000 and £25,000, to help you to adapt, evolve and innovate to the various economic impacts brought about by the pandemic.  They have called them “Backing Business Grants” and full details are provided here:

https://www.coast2capital.org.uk/backing-business-grants

The fund is limited at the moment to £2 million, and the money will be allocated on a first come, first served basis, so we would advise anyone who considers that they may be able to qualify under this initiative to give it their early consideration.

(30 March 2020)

Author: Peter Hedgethorne, Director