We start with limited companies and their Directors as very little has been reported about them and what support is available..
Limited companies and directors
This especially applies to one-man or two-man limited company businesses.
There is very little financial support currently available for these types of businesses. Unless a limited company director has self-employed income, they cannot take advantage of the Coronavirus Self Employed Scheme; where 80% of average monthly earnings are going to be paid to the self employed early June 2020.
Many of these businesses also do not have business premises registered with the local Council for Business Rates and Small Business/Rural Business rates relief so are not eligible for the £10k/£25k council grants.
What can limited companies and directors do…
If your business isn’t trading (isn’t generating sales) you can furlough yourself from the payroll; this means you can then claim back 80% of your monthly pay from HMRC (capped at £2.5k per month). You are still allowed to do administration for your business; e.g book keeping, deal with emails and possibly even marketing but you can’t be generating revenue during the time. You have to furlough yourself for a minimum of three weeks at a time. During this time there is nothing to stop you carrying out your activities as a freelancer e.g as a self-employed person, and continuing to earn money (where possible and within the lockdown rules) outside of the limited company, yet be furloughed from your own company.
Universal Credit – if you have savings of less than £16k, it might be worth looking online to see if you are eligible for UC; if you are, it might amount to more than you think.
As it stands there is no additional specific support for directors of companies and we can’t see the Government changing this at the moment.
Update on the Coronavirus Jobs Retention Scheme (CJRS) – Furlough scheme
We are told HMRC’s new online portal for reclaiming back 80% of furloughed staff pay, opens on 20 April with the first reimbursements paid to employers on 30 April.
Thereafter reimbursements will be paid out in around 4-6 days from submitting details over the portal.
We will let you know when we have precise details about what information you will need to supply to make a claim.
A few other details that have emerged about the furlough scheme:
- Furloughed employees can go and work elsewhere and earn money from doing so, whilst on furlough.
- Employees can be furloughed multiple times e.g laid off and then brought back to work before being laid off again, subject to each furlough period being minimum three weeks.
- Employers must notify employees of their furlough status in writing
- Employees whose pay varies; furlough claim is based on the higher of; the same months earnings from the previous year or average monthly earnings from the 2019/20 tax year
- You can only submit one claim at least every three weeks. Claims can be backdated to 1 March if applicable.
Self-employed financial support scheme
At the time of writing, the Government have still not issued detailed guidance about exactly how this scheme will be applied to the vast numbers of the self-employed.
What we know so far is that HMRC will look at three years tax returns ending on 5 April 2019; they will calculate an average monthly income figure for that period and three months of this figure will be paid early June. It will have to be claimed via a new online HMRC system and HMRC will identify self-employed people they think will be eligible and will write to them before this time.
So far, we understand that in order to make a successful claim, individuals must still be self-employed at the time they submit the claim (were it not for the effects on their business of the virus) and must have suffered a loss as a result of coronavirus e.g a drop in sales/income or having had to shut the business indefinitely. We are not sure how HMRC are going to ‘police’ the system as clearly there will still be some self-employed individuals who are able to carry on in business and perhaps won’t see a reduction to income and this scheme is not designed to financially support those individuals.
There are all sorts of different circumstances to cater for; those that haven’t been in self-employment for the full three year period, those who were self-employed during the three years but ceased since 5 April 2019. We don’t yet know exactly how HMRC are going to deal with some of these scenarios.
Crucially, the self-employed can carry on working and earning money despite claiming the financial support referred to above.
In the meantime, we urge people, with savings of less that £16k to look at Universal Credit online to see if they are eligible for any form of UC payment.
Local Authority Grants
These are now being paid out in Shropshire and Powys (along with other local authority areas in the UK); if you have a business premises registered with your local authority (regardless of whether you have actually paid any rates or not; including those premises eligible for small business rate relief and rural rate relief) then you may be eligible and please ask us for further information.