Coronavirus latest government support

Further to my blog on Monday a number of things have been clarified and there has been the announcement of a new scheme similar to the CJRS to help the self-employed.

Firstly it has been clarified that those operating their own company and being paid by a combination of salary and dividend will be covered by the CJRS for the element being paid as salary, subject of course to complying with the rules.

Secondly the deferment of VAT has been clarified as applying to the VAT due on 7thApril, 7thMay or 7thJune. This is of course a deferment so will need to be paid later so it is a case of managing your cash flow and deciding if this will help.

Thirdly from discussions I have had it appears that the Coronavirus Business Interruption Loan Scheme is proving hard to secure without putting up your home so these should be used only after serious thought.

Fourthly it has been clarified that the deferment of the self-assessment payment on account due in July only applies to those who are self-employed. Now amended to all Self-Assessment payments due in July now covered not just the self-employed.

Fifthly the Business Rate relief claims are being processed by the local authorities. More problematic has been registering for Universal Credit and other benefits, particularly as new users are unfamiliar with the system, but it is hoped these difficulties will ease.

The Self-Employed Income Support Scheme is similar to the help for the employed in that it will pay 80% of the average monthly profits over the last three years. This will be paid as a one off grant hopefully in June to cover the three months from 1stMarch to 31stMay. This is limited to those with an average profit of less than £50,000 per annum and to a monthly limit of £2,500. At least half of your income needs to come from self-employment. This scheme seems more generous than the CJRS as you will be able to continue to trade but there is a requirement that your trade has been adversely affected by Covid19 which is currently subjective until we have some rules.

The rules for the CJRS have been published, link below, and clarify some issues as follows:

  • Those already made redundant can be rehired to then qualify for the scheme. This is helpful but not without effort for the employer who will be dealing with other issues.
  • A full record of when an employee is furloughed and that no work is done will need to be kept.
  • Reduced hours will not be covered.
  • The amount covered is 80% of salary at 28/2/20.
  • For variable pay, where employed for more than 12 months, the higher of, the same month last year, or the average monthly earnings for 2019/20 (not sure if that includes March!)
  • You need to submit a claim for the gross wage and Employer NI and AE pension costs every three weeks.
  • Clearly this needs to be paid to claim so it is uncertain how this will work for those with poor cash flow or an uncertainty about qualification.
  • An employer may have to un-furlough themselves and perhaps payroll staff which may be unattractive.
  • None of the new rules change employment law or other laws regarding equality etc.

The various measures whilst very generous do, as a result of their urgent implementation, leave some significant gaps in support and their interpretation is still subjective. The main issues are:

  • If an owner manager continues to run the business despite generating no income can they be furloughed?
  • Cash flow issues may prevent application of the CJRS scheme for many.
  • If you have several jobs and are self-employed you may be able to benefit several times from different schemes.
  • There is no direct relief for landlords, particularly corporate landlords.
  • There is no relief for those whose main income is from dividends.

The most significant issue is the long term impact on the economy. Some forecasts are suggesting a decline in GDP of 15%, which whilst clearly speculative is concerning. A fall like this will be far more damaging to the nation’s health than the virus itself so I would hope that government agencies adjust their advice to help get people back to work as soon as possible. My own personal view is that we should all continue to work if we can do so whilst staying 2 metres away from each other and avoid touching communal surfaces, easier said than done. We are continuing with remote working for some employees but there are clear health and safety issues with requiring staff to work from home that you should clarify.

As the environment is constantly changing you should seek advice before any course of action.

Claim for wage costs through the coronavirus job retention scheme

Claim a grant through the coronavirus Covid-19 self-employment income support scheme

Updated 30th March 2020