The government has put together an extensive package of financial support to help businesses during the coronavirus crisis. This includes the Coronavirus Job Retention Scheme (CJRS) which benefits furloughed employees as well as their employers and the Self-employment Income Support Scheme (SEISS) and deferral of income tax payments for the self-employed.
An overview of the government’s financial support, including how it affects limited companies, umbrella companies and directors can be found here. While the government has provided lots of information alongside these packages, there are still some grey areas and questions going unanswered. We’ve done our best to answer some of the most common ones below.
Q: I’m a director of a limited company – what support is available to me?
The SEISS won’t apply to you, but you can still be furloughed under the CJRS, providing you’re on your company’s PAYE scheme. In this case, you should be eligible to receive 80% of your salary, up to a maximum of £2,500 per month. This grant will be backdated to 1st March and cover you until the end of June 2020 (at least).
Q: As a director, if I furlough myself, can I carry on working?
You can’t carry on working for your firm to generate income, however, you can perform your statutory duties as a director, for example, official legal filings, such as your annual accounts, preparing tax returns and updating records. You can also technically go and work for another company while on furlough if you’re really struggling. This may or may not be possible in your line of work, but it’s worth pointing this out, since employees who have been furloughed are allowed, according to the government, to go and work elsewhere.
Q: What’s covered in a grant under the Job Retention Scheme?
Furloughed workers will have 80% of their monthly wages covered, up to £2,500 per month. In addition, the government will pay the associated Employer National Insurance and pension contributions on subsidised furlough pay (up to the level of minimum automatic enrolment).
Q: Is income from dividends included in any of the financial support packages?
No. If you pay yourself dividends in order to maintain a tax-efficient director’s salary, only your PAYE salary is covered in terms of the relevant financial support packages. You might want to look at increasing your monthly salary going forwards, but note that your accountant will not be able to backdate payroll records.
Q: I’m self-employed – what do I need to know about tax returns?
To claim support under the SEISS, you must have filed a tax return for the year 2018/2019. This means you must have been self-employed prior to 6 April 2019. If you became self-employed after that date, you won’t be eligible to claim this support. The support you receive as part of this package is based on 80% of average profits from the tax years 2016/2017, 2017/2018, and 2018/2019.
Q: I wasn’t self-employed for the full tax year of 2018/2019 – can I still claim SEISS?
Yes. Even if you were only self-employed for four months of the tax year 2018/2019, you can claim. Whatever you earned during those four months will be classed as your income for that tax year. So if you earned £6,000, that is the total income figure the government will use to work out your grant. But note – you must have also traded in the tax year 2019/2020 and intend to trade in the tax year 2020/2021 to make a claim.
Q: I’m self-employed and still working during coronavirus, although my earnings have been impacted. Can I still claim SEISS?
Yes. The government doesn’t require you to prove how your earnings have been impacted and you are allowed to carry on working, unlike furloughed employees, who aren’t. The government wants to help you keep your business afloat during this crisis. But you should ask yourself: do you really need to claim this grant? If you’re still earning around the same amount as before the crisis (and indeed, some self-employed businesses will thrive during this time), you shouldn’t be claiming. The grant is for self-employed people who have lost trading profits due to coronavirus.
Q: I’m self-employed, but not eligible for SEISS, what other help is available?
If the SEISS isn’t open to you, for example, if less than 50% of your income is from self-employment, you earn more than £50,000 per year, or you’re a very new business, you can still apply for a Business Interruption Loan. This scheme offers access to a range of finance options of up to £5 million for up to 6 years.
Q: Who can apply for the Coronavirus Business Interruption Loan Scheme (CBILS)?
Any small or medium-sized UK business with a turnover of up to £45 million can apply for this scheme. Finance options include access to loans, invoice finance, overdrafts and asset finance, up to a value of £5 million for up to 6 years. The CBILS is designed to help businesses stay afloat during the coronavirus crisis. Businesses may also benefit from a Business Interruption Payment, designed to cover the first 12 months of interest and any lending fees.
Q: What expenses can be claimed while working from home?
The government hasn’t made any changes, as yet, to allowable expenses. If you’re self-employed, and you’re working from home, you can potentially claim for the use of office space and if you need to purchase new equipment to enable you to work from home. If you’re a company director on furlough, it’s unlikely that many additional expenses would be applicable. Because although you’re allowed to work on administration tasks, you’re not allowed to carry out income-generating work.
Q: How can I keep my employees safe and well?
As an employer, you have a responsibility to look after your employees. That doesn’t just include their physical health; it includes their mental health and wellbeing too. The coronavirus situation has led to much anxiety for many people, not least because of money worries. But there are things you can do to help.
To start with, if your employees can work from home, they should. Check in with staff members regularly (virtually of course) and encourage them to have a good work/life balance, as you also should. Set up robust systems that make working from home easy and manageable, as this is one less thing to worry about. Consider offering flexi-time, so that your staff can cope with other issues like homeschooling or having to look after a family member with coronavirus symptoms. Here’s some further information to share with your employees.
Do you have any pressing questions about the government’s financial support packages and how your business might be impacted? Reach out to us via email and we’ll do our best to help.