Furlough Scheme changes September 2020

As our readers will no doubt be aware, the Coronavirus Job Retention Scheme (CJRS) is closing on 31 October 2020. The scheme moved to a more flexible working arrangement from 1 July 2020 to allow employees to resume part-time working and to begin to ease employers away from their reliance on the scheme.

These changes continued with effect from 1 September when government support for the scheme was reduced from 80% to 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work. Employees will also have to continue to cover employers’ NIC and pension costs for the hours the employee does not work. From October 2020, the government support for the scheme will be reduced further to 60%, with state support for furloughed workers reduced to a maximum of £1,875 with the same rules for NIC and pension costs.

Since the furlough scheme was introduced, many employers have been topping up the government support payments. Employers can of course continue to top up employee wages above the relevant percentage caps for the hours not worked at their own expense. This is obviously becoming more expensive as government support for the scheme tapers off. Employers have to pay their employees for the hours worked as normal.

Once the furlough scheme ends, a new Job Retention Bonus will start. The bonus payment has been designed to help encourage employers to bring back furloughed workers. The new bonus scheme will provide a £1,000 bonus payment to employers that bring back an employee that was furloughed, and continuously employ them for at least 3 months after the end of the CJRS..

Relief for self-employed trading losses

There are a number of tax reliefs available for self-employed taxpayers that make a loss carrying on their trade, profession or vocation (collectively referred to as a ‘trade’) and for their share of trading loss for any partnerships they are involved with.

For the 2020-21 tax year, trade losses can be relieved in a number of ways. This includes the following:

  • By using the loss to reduce income for the year ended 5 April 2020 and / or 5 April 2019. If there are still trade losses remaining (after your income has been reduced to nil) then you may be able to set-off some or all of the remaining loss against chargeable gains.
  • A claim can also be made for losses made in the first 4 years of trade known as early trade losses relief. Taxpayers need to look at the earliest year first (i.e. 2016-17) and use any remaining loss in 2017-18 and then in 2018-19. The time limit for making claims for 2019 to 2020 losses is 31 January 2022.
  • Taxpayers can carry forward any loss against future profits of the same trade or income from the company (where you transfer your trade to a company in exchange for shares in that company), or post cessation receipts
  • Terminal loss relief is available for businesses that suffer a loss in the last 12 months of trade of a business. Terminal loss relief allows for the carry back of any trading losses that occur in the final 12 months of trading to be set off against profits made during the final tax year or any or all of the previous three tax years.
  • Self-employed taxpayers who were previously employed can offset trading losses against employment earnings or other earned income in the current or preceding tax year. 

There is also an overall cap on certain Income Tax reliefs. The cap is set at 25% of income or £50,000, whichever is the greater.

Green Homes Grants

A reminder that home owners and landlords can now access funding to help pay for the cost of energy saving improvements.

In a recent press release the Department for Business, Energy & Industrial Strategy said:

Homeowners and landlords can, since Friday 28 August, see for themselves how the government’s new Green Homes Grant scheme can help make their homes warmer and more energy efficient.

Business and Energy Secretary Alok Sharma today unveiled a new opportunity for consumers to get tips for making their homes more energy efficient, and details of how the Green Homes Grant scheme can make installations cheaper. These will be available on a revamped Simple Energy Advice website.

The site offers a quick energy survey for consumers to see how energy efficient their homes already are, and where improvements can be made. Taking as little as 5 minutes, once completed homeowners and landlords can receive a personalised energy plan.

The Green Home Grants scheme, due to open by the end of September, will allow consumers to obtain funding for up to two-thirds of the cost of the energy saving measures identified – up to £5000 – in the form of new vouchers. Lower income households could be entitled to have as much as £10,000 of the costs covered.

The scheme will cover green home improvements including insulation of walls, floors and roofs, the installation of double or triple glazing when replacing single glazing, and low-carbon heating. These measures could help families save up to £600 a year on their energy bills.

The Simple Energy Advice website then offers people access to fully accredited tradespeople in their area able to carry out the work needed, so they can get quotes ready for when the vouchers become available.

Cars – it’s all online

If you have access to the internet there are a bewildering number of online resources that you can access to help you manage recurring tasks. This week we have listed a number of these with links to the relevant website pages.

  1. Book a theory test – https://www.gov.uk/book-theory-test
  2. Get vehicle information from DVLA – https://www.gov.uk/get-vehicle-information-from-dvla
  3. Tell DVLA if you have sold, transferred or bought a vehicle – https://www.gov.uk/sold-bought-vehicle
  4. View or share your driving license information, useful when you hire a car – https://www.gov.uk/view-driving-licence
  5. Check MOT status of a vehicle – https://www.gov.uk/check-mot-status
  6. Book your driving test – https://www.gov.uk/book-driving-test
  7. Check if a vehicle is taxed – https://www.gov.uk/check-vehicle-tax
  8. Tax your vehicle – https://www.gov.uk/vehicle-tax
  9. Check the MOT history of a vehicle – https://www.gov.uk/check-mot-history

Another tip for motorists unrelated to the above services is that many insurance companies have been offering discounts to drivers – who because of COVID-19 restrictions have limited mileage on the clock – obviously, the less you drive the lower the risk of claims. Worth a call to your broker or insurance company.

New grants for businesses affected by local lockdowns

New grant support was announced 9 September that offers businesses in areas subject to a local lockdown a measure of financial support. In a news story posted to the GOV.UK website HM Treasury said:

Businesses in England required to close due to local lockdowns or targeted restrictions will now be able to receive grants worth up to £1,500 every three weeks, Chief Secretary to the Treasury Steve Barclay told MPs today. To be eligible for the grant, a business must have been required to close due to local COVID-19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.

Payments are triggered by a national decision to close businesses in a high incidence area. Each payment will be made for a 3 week lockdown period. Each new 3 week lockdown period triggers an additional payment.

Other details published in the same announcement include:

  • Any businesses still closed at a national level (e.g. nightclubs), will not be eligible
  • If a business occupies a premises with a rateable value less than £51,000 or occupies a property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1000
  • If a business occupies a premises with a rateable value of exactly £51,000 or above or occupies a property or part of a property subject to an annual rent or mortgage payment of exactly £51,000 or above, it will receive £1500
  • Local authorities will also receive an additional 5% top up amount of business support funding to enable them to help other businesses affected by closures which may not be on the business rates list. Payments made to businesses from this discretionary fund can be any amount up to £1500, and may be less than £1000 in some cases.
  • Local authorities will be responsible for distributing the grants to businesses in circumstances where they are closed due to local interventions
  • Further eligibility criteria may be determined by Local authorities
  • As with other Covid business grants, local grants to closed businesses will be treated as taxable income

It is implied in this announcement that businesses in affected areas will need to contact their Local Authority to secure funding under this new support initiative.

Regional considerations

The UK Government has guaranteed that the devolved administrations will receive at least £12.7 billion on top of their March Budget settlements to help them with their response to COVID-19 this year, with £6.5 billion for the Scottish Government, £4.0 billion for the Welsh Government and £2.2 billion for the Northern Ireland Executive. The Barnett formula will apply in the usual way to any additional funding provided to departments in relation to this intervention.

Kickstart program opens in Wales

Under the new £2 billion Kickstart scheme, employers will be able to offer young people on Universal Credit and at risk of long-term unemployment, state-subsidised work placements for six months. The Kickstart scheme is available to qualifying 16 – 24 year olds in England, Scotland and Wales.

Commenting on the launch of the scheme in Wales, the Secretary of State for Wales, Simon Hart, said:

We have taken unprecedented action to secure Wales’s economic recovery from the pandemic. More than 500,000 Welsh jobs have been protected through the Job Retention and Self Employed schemes while over 40,000 businesses in Wales have received more than £1.4 billion in loans.

Protecting, supporting and creating jobs is at the heart of our plan for recovery. Aimed at young people, the Kickstart scheme will make sure no-one is left behind as we get the Welsh economy moving again.’

The government will fully fund each “Kickstart” job by paying 100% of the age-relevant National Minimum Wage plus associated employer National Insurance contributions and employer minimum auto-enrolment pension contributions for 25 hours a week.

Businesses of all sizes looking to create quality jobs for young people can apply and there is no cap on the number of places. There will be a simplified application process for employers offering fewer than 30 placements.

The government will also help by paying employers £1,500 to set up support and training for people on a Kickstart placement. The scheme will initially be open until December 2021 but may be extended.

Time to Pay

Back in March 2020, as the coronavirus pandemic was just starting the government announced new emergency measures to help those businesses and self-employed people affected by COVID-19 through the Time To Pay service. A dedicated COVID-19 helpline opened on 11 March 2020 and remains available via webchat and phone. HMRC has made up to 2,000 experienced call handlers available to support businesses concerned about meeting their tax liabilities due to coronavirus.

HMRC says that all businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. Agreements reached with HMRC allow businesses and individuals to pay off their debt by instalments over a period of time.

HMRC will usually only offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full now but will be able to pay in the future. If HMRC do not think that more time will help a taxpayer then they can require immediate payment and start enforcement action if payment is not forthcoming.

Taxpayers cannot appeal against HMRC’s decision not to grant addition Time To Pay but can make a complaint if they are unhappy about how the way they were treated by HMRC.

Refunds – guidance or law?

The Competition and Markets Authority (CMA) recently published further detail on its views on the law in relation to cancellations and refunds during the pandemic. It remains their view that a consumer will generally be entitled to a refund when they have paid money in advance for services or goods that cannot be provided because of the coronavirus pandemic.

Given the evolving situation, the CMA has provided more detail on issues such as the difference between lockdown laws and government guidance, and their impact on cancellations and refunds.

For example, if contracts are partially affected by lockdown laws then, depending on the circumstances and the scale of the impact, consumers may be entitled to a refund or a price reduction.

Additionally, the government has issued guidance in place of, or in addition to, lockdown laws. As these are guidance and not law, whether a consumer is entitled to a refund will vary according to the specific circumstances.

For example, if a package holiday is cancelled in light of Foreign and Commonwealth Office advice against travel to the relevant country, there are specific protections which mean that consumers should be entitled to a full refund.

In other situations, it will not always be the case that a full refund is due because government guidance does not create legal restrictions and will not necessarily mean that a contract cannot be performed.

The CMA has also written to certain package travel companies involved in group trips to explain its view on when customers should be offered a refund.

This follows complaints about some package travel organisers advising customers that they are not entitled to a refund as their contract was between the company and a group, such as a school, rather than made directly with the customer. It is the CMA’s view that the Package Travel Regulations apply to these group travel packages, and that individual customers should be entitled to a refund if they have paid money in advance for a group trip that is cancelled because of the pandemic.

The CMA’s statement on consumer protection law, setting out its views, is designed to help consumers understand their rights and to help businesses treat their customers fairly. Ultimately only a court can decide how the law applies in each circumstance.

Witnessing wills remotely

A statutory instrument will be issued September 2020 that will legitimise the witnessing of wills by video conferencing methods. This extension to the witness process will apply from 31 January 2020 for two years.

The new law will amend the Wills Act 1837 to stipulate that where wills must be signed in the ‘presence’ of at least two witnesses, their presence can be either physical or virtual.

An increasing number of people have sought to make wills during the COVID-19 pandemic, but for people shielding or self-isolating it is extremely challenging to follow the normal legalities of making a will – namely it being witnessed by two people.

To reflect this, the will-maker could use the following example phrase:

‘I first name, surname, wish to make a will of my own free will and sign it here before these witnesses, who are witnessing me doing this remotely’.

Witnessing pre-recorded videos will not be permissible – the witnesses must see the will being signed in real-time. The person making the will must be acting with capacity and in the absence of undue influence. If possible, the whole video-signing and witnessing process should be recorded and the recording retained. This may assist a court in the event of a will being challenged – both in terms of whether the will was made in a legally valid way, but also to try and detect any indications of undue influence, fraud or lack of capacity.

Which video conferencing software?

The process of choosing a video conference solution for your practice can be a little hit and miss due to the variety of solutions on offer. Practitioners have adopted the use of web conferencing to:

  • Deal with staff matters
  • Organise client meetings
  • Organise partners’ meetings

In fact, much of the activity previously undertaken face to face is now accommodated by an old-fashioned telephone call – sometimes with a video link – or video conferencing software.

The problem is, there is a bewildering array of software to choose from.

Practitioners still looking for a solution could take a look at a recent report issued by Software Reviews that ranks alternatives based on specific criteria. Google “SoftwareReviews web conferencing”.

Or you could ask clients or IT contacts what they recommend.

Truthfully, the differences that seem to separate the leading brands are not that great and as long as the software you choose does the job, why change.

What is clear is that video conferencing is here to stay. It is doubtful that the present restrictions on face to face contact will be eased significantly any time soon.