There hasn’t been much news today from the government with regards to it’s support for businesses but we have learnt some things from our clients:
- The Grant Application Process has started for some, Ashford Council and TMBC have allowed people to apply for grants – no news from Medway or Maidstone for most.
- The Banks are still asking for personal guarantees and are still not making finance easy – Anyone applying is being reminded that you are still 100% responsible for the debt and are being asked to complete personal wealth information.
- Some business are falling through the gaps and can’t pay their staff and can’t get funding. Business is not getting easier that is a fact.
Tonight’s update is all about:
- Employee Retention Scheme and Payroll
Employee Retention Scheme
As the end of the month is now upon us, it is a busy time for payroll. With this in mind, we have had a lot of questions surrounding the ins and outs of the job retention scheme and furloughing workers, so here are a few of the most commonly asked questions of the day.
Can an employee still do some work if they are furloughed?
HMRC and government guidance states that an employee is not to carry out work of any kind while furloughed. They may carry out training, for which they should be paid, but they should not carry out any operational duties.
Can Directors be furloughed?
Yes, Directors can be furloughed. They too must not be carrying out any revenue-generating activities, but they can carry out admin tasks in order to ensure their business is ready to go once the lockdown is complete. This will, however, be limited to 80% of their monthly salary, and not inclusive of any amounts taken as dividends.
What happens with employees who receive regular commission?
Commission is not to be included in calculations for furloughed workers. If employees receive a salary + commission package, the 80% furloughed amount will be based on their salary only. Any top up on top of this is at the business’ discretion, and will not be repaid under the Job Retention Scheme.
I have a new starter that started in March, can they be furloughed?
In reality, yes they can. With this being said, the Job Retention Scheme does only cover employees who were on the payroll at 28 February 2020, so any wages paid to this employee while furloughed will have to be entirely financed by the company, the government will not repay this.
What if I can’t afford to pay their wages?
If there is no physical cash available to pay the wages, then they cannot be paid. If all avenues have been explored, such as VAT deferrals, Time to Pay arrangements on PAYE/Corporation Tax/CIS, payment holidays on regular commitments and the business has been unable to get a loan, then the final option is to communicate to the employees that they will be getting paid, but not until the government repays the money under the furlough scheme, and wait for the grants to start being repaid in this way.
Is the portal open yet?
No there is no active portal as yet. It has been said that this will be up and running by the end of April. Please keep an eye on our Facebook group and website updates as we will be posting here as soon as the portal is active.
How do I upload my claim to the Portal?
If we run your payroll we do this for you free of charge – if you run your own payroll we will help you with guidance. The portal is likely to be fairly simple and will require some key information – PAYE Ref, Details of Each Furloughed Worker, Bank Details etc.
What about if 80% of my employee’s wages will put them on less than minimum wage?
The NMW and NLW do not apply to furloughed workers. These can only apply to hours worked, and as a furloughed employee there are no hours worked, thus NLW and NMW do not apply.
There is an old saying in business Turnover is Vanity, Profit is Sanity and Cash is King. At the moment Cash Is Everything. You need to keep hold of it and make sure you are covered for all the outgoings that may face you in the coming weeks and months. This is on a business and personal level.
If you are not forecasting your cashflow then email and request a copy of our cash forecast.
Now is the time to make sure you only pay the essential utilities and cut back on anything deemed non-essential. Call major suppliers and ask for better payment terms. Do all you can to prevent yourself from running out of cash.
As always we are keeping an eye out for further developments on all things business-related in respect to Covid-19, but it has been a fairly quiet day today on that front, with more updated and details expected on the already-announced schemes in the near future.
Banks are now under pressure in the media for not freely offering the government guarantee for the Business Interruption Loans, so we would expect some changes on this in the coming days.