We have set out below more details on Furloughed Employees and Chancellor’s latest update on Business Interruption Loans.
FURLOUGHED EMPLOYEES
The COVID-19 job retention scheme enables employers to keep their employees on the payroll via a grant that will cover for 80% of salary up to £2,500 gross per month together with employer NIC and pension costs. Claims will be through a new portal which should be available at the end of April. o Only employees on the payroll on or before 28th February 2020 may be furloughed. o It is your duty as an employer to inform those employees you want to furlough of the change in their contract, proof of this communication is required to be able to claim. o Furloughed employees cannot work or carry any tasks for their employer while on furlough. o Employees are still liable to pay Tax, NI and Pension under furlough scheme (unless they opted out of pension) o Employees will still have the same employment rights whilst on furlough. o For employees on zero hours contracts or working varied hours each month, you should use the pay from last year (March 2019) or averaged monthly pay of last tax year 2019/2020 whichever greater to determine the furloughed earnings. ACT London payroll support and process If we have been processing your payroll for the 2019/20 tax year, then we will have all the data and be able to assist you in claiming the grant when the portal is available. If we do not act for your payroll, we would be happy to advise as required.
BUSINESS INTERRUPTION LOANS
There have been adjustments: o The current Loan Scheme has been extended so more small businesses can benefit. o No personal guarantees are required for loans of less than £250,000; o Personal guarantees for loans in excess of £250k limited to 20% of loan after recoveries from business assets; o Government will cover the first 12 months of interest and fees; o No requirement to apply for a commercial loan before being able to apply for the interruption loan; o Larger firms with profits between £45M and £500M can now apply for loans up to £25M; o Banks to move swiftly to support economy and business; o Note that the Chancellor has not set a cap on the interest charged on such loans.
CONTACTS If you would like to discuss anything further or any issue affecting your business then please do not hesitate to contact Anne Healy-McAdam Head of Tax (ahm@act.london) or Payroll (Payroll@act.london) or your usual ACT contact.