Monday 23rd update
HMRC Job Retention Scheme – Furloughed (grant leave of absence to) Employees
Today, not unsurprisingly, this has been our most commonly asked question, we can give you some facts, but not all. HMRC are working on providing more details in due course.
Here’s what we know;
> It’s a grant (so not repayable – unless you do something that doesn’t qualify)
> It is claimed by the Employer, through a new portal (that, at the time of writing is not open)
> It’s purpose is to pay an employee rather than make them redundant
> There is no consultation process with the employee, simply a ‘one liner’ stating that their status has changed.
> The amount of the grant is 80% of the worker’s wage cost
> see notes below
> The employee needed to have been on the payroll at the end of February 2020.
> Unlike the okey-cokey (sorry about that) you can’t be part in/part out
> therefore, if you are furloughed you do no work. Failure to comply could lead to repayment of the grant
Here’s what we are assuming;
The definition of wage cost
> we believe that workers wage cost includes all the costs of employment
> so not just the gross pay
> but also Employers National Insurance (13.8%).
> and possibly pension (3%).
> thereby the cost to the employer is zero, subject to the Employer ’topping up’.
> the bit the employee gets will be in the region of 65-70%.
> you could be entitled to the 80% of your monthly salary
> but only if it complies, so;
> in lieu of redundancy
> you no longer work in the business until the furloughed period has ended
> The payment will probably be calculated on an average of, say, the last 6 months
> We cannot see that it will produce cash for the payrolls you are running over the next few days (for March)
Dealing with some of your HR concerns
Many of you want to understand what options/obligations you have with regards to your team, and where to go to get that advice. The following link is the ACAS guide to a number of questions that you may be concerning you just now ACAS updated Coronavirus guidance
Coronavirus Business Interruption Loan scheme
What we know
> The cash should be available this week (see below)
> It is available if your application for finance through your normal source (High Street Bank?) is turned down.
> If your bank offers you finance (up to the amount required) this scheme will not apply
> The first 12 months are interest free (paid by the Government)
> Loan repayments will need to be made in the normal way (e.g. £100k over 5 years = £1.67k pm)
> The bank guarantee 80% of the loan
> At the discretion of the lender, the first £250k may be unsecured
> The borrower always remains liable for 100% of the debt
What we assume
> The funding cannot be used to replace existing finance
> Where the lender does look for security this may come in the form of either assets owned by the business or director/owner personal guarantees. I hope this is not the case
Self Employed (and directors of ‘one man’ limited companies?)
We anticipate an announcement later today. We are hoping it includes measures for the self employed and those that are sole employees of limited companies
As always – please contact us with any queries you may have.
- Landline – 01326 660022
- Mobile/What’s App/Text – 07779799995 – Mike Hutchinson
- Zoom – ID 205-677-7765 – Mike Hutchinson