The Chancellor has announced that the Government will expand the new Job Support Scheme (JSS) to assist jobs and businesses required to close their doors as a result of tougher Coronavirus restrictions.

The announcement was made ahead of new plans to introduce a tier-based system for lockdowns across the country, which could force some businesses to close their doors once again.

The expanded Job Support Scheme

Under the expanded JSS, firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work.

These grants will cover around two-thirds of each employees’ salary (67 per cent), up to a maximum of £2,100 a month.

Employers will not be required to contribute towards wages and will only be asked to pay National Insurance contributions (NICs) and auto-enrolment pension contributions.

The Government has estimated that around half of potential claims are not likely to incur employer NICs or pension contributions at all.

Businesses can only claim a grant where they are subject to a restriction that prevents them from opening and employees must not work for a minimum of seven consecutive days to be eligible.

The new scheme will open on 1 November alongside the other JSS measures announced last month in the Winter Economy Plan. It will be available for up to six months for businesses affected, with a review point in January.

All grant payments will be made in arrears through a dedicated HM Revenue & Customs service, which will be available from early December.

Lockdown grants

As well as expanding the JSS, the Government will also increase the value of cash grants offered to businesses in England forced into lockdown to support them with fixed costs.

Linked to the rateable value of business premises, the increased grants will see payments of up to £3,000 per month, payable every two weeks, instead of up to £1,500 every three weeks.

Under this reformed grant scheme:

• Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month;
• medium-sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and
• larger businesses can claim £3,000.

The Government is also extending this scheme to include businesses that are forced to close on a national basis, such as nightclubs.

Here to help 

Much of these new measures will rely on the Government’s new tiered system for restrictions and may vary over time from one region to the next.

With this being the case, it is important to consider how this affects your business and seek advice at the earliest opportunity. To find out how we can assist you, please contact us.

At LRH we have been working hard to continue delivering payroll services to companies big and small during the coronavirus pandemic.

With the increase in cases and the government asking those who can work from home to do so, we have been reviewing how we operate to see if we can make the delivery of our services more efficient and safer for our team, our clients and their employees.

We have realised that we are sending a substantial amount of documents in the post from our payroll department that require handling by our team, Royal Mail, you and ultimately your employees.

This creates the potential risk of infection being spread to you and your employees which we all want to avoid.

To mitigate this risk we are now asking that companies who use our payroll services switch to using online payslips rather than paper copies wherever this is possible.

We have the facility to send your employees payslips directly as long as they have an email address to receive these, ideally a personal email address.  We can also send copy payslips and other payroll reports to you without the delay of these going in the post.

Your employees may be accustomed to receiving a physical payslip, but there are many advantages to getting the payslips online including the lack of contact.  Having access to historical payslips can assist employees when they are obtaining a mortgage.

From October 2020 we plan to contact all companies that use our payroll services and receive paper documents to ask them to switch to online payslips and documents.

We appreciate that this may not be possible for all companies, but we would be grateful if you could consider switching to help make our service more efficient and to reduce the risk of transmission.

Thank you for your assistance.

HM Revenue & Customs (HMRC) has published further details of the Job Support Scheme (JSS), announced by the Chancellor during his Winter Economy Statement in Parliament on 24 September.

The JSS is intended to support businesses facing reduced demand over the winter as a result of the Coronavirus crisis, helping to keep employees in ‘viable’ jobs on short-time working.

The scheme will launch on 1 November 2020 – the day after the Coronavirus Job Retention Scheme (CJRS) closes – and will run for six months until the end of April 2021.

It will be open to all SMEs, but will only be available to large businesses that can show that they have been adversely affected by the Coronavirus crisis through reduced revenues. Large businesses will be expected not to make capital distributions, including dividends or share buybacks, while using the JSS.

Employees claimed for through the JSS must have been on an employer’s PAYE payroll on 23 September 2020, meaning their employer must have included them on an RTI submission on or before that date.

They cannot be on notice of redundancy or be made redundant while in receipt of the JSS.

Employees must work at least 33 per cent of their usual hours and be paid in full for those hours by their employer.

The employer must also then pay one-third of the hours not worked – an amount which will be matched by the Government up to a cap of £697.92 a month.

Employees will then forego pay for one-third of the usual hours that they are not working. This means they will be paid at least 77 per cent of their usual wages, even if they are only working 33 per cent of their usual hours.

Employers meanwhile, would pay a total of 55 per cent of an employee’s usual wages in return for 33 per cent of their usual hours.

Therefore, it could cost an employer less to dismiss two staff and keep one working full-time, rather than having three staff on short-time working through the JSS. The scheme has similar implications, even where employees are working a much larger proportion of their usual hours.

HMRC has published a table, setting out how the scheme will work at different levels of short-time working:

Employers will need to agree short-time working arrangements with staff affected and make any necessary changes to contracts of employment, with documents made available to HMRC on request.

HMRC says that it intends to notify employees directly with full details of the claims made in respect of them.

Link: Job Support Scheme Factsheet

Since 1 January 2019, the Annual Investment Allowance (AIA) for capital allowances has been £1 million – helping businesses to invest tax efficiently.

However, from 1 January 2021, the AIA will fall back to just £200,000, reducing the amount of tax that can potentially be saved.

By using the AIA, businesses can claim against most qualifying plant and machinery expenditure allowing them to deduct the full value of the investment from their profits, thus reducing their tax bill.

That means if a business has any plans that involve significant capital expenditure, they should consider accelerating these claims in 2020 to take advantage of the higher allowance available this year.

Where a business has a 31 December year-end then they can take full advantage of the £1 million allowance this year, as only qualifying capital expenditure after the year-end will be subject to the AIA of £200,000.

However, for businesses whose year-end falls after 31 December 2020, the position is more complex as the AIA limit is determined by the amount of time within the accounting period that falls in the year 2020.

For example, if a business has a year-end on 31 March 2021, they will only be apportioned nine months of the old allowance and three months of the new allowance, which would result in them being able to claim up to £800,000 in AIA (£750,000 from 2020 and £50,000 from 2021).

Businesses can also take advantage of tax planning opportunities by entering into an unconditional contract on or before 31 December to purchase the qualifying expenditure, and benefit from the relief on offer this year.

Link: Claim capital allowances

During the last few months, to assist workers with working from home, many businesses have supplied a work mobile phone, but how should they account for this benefit?

Typically, the provision of equipment, such as a mobile, could be considered a benefit in kind for tax purposes, however, an employee can benefit from an employer-provided mobile phone without suffering a tax charge where certain conditions are met.

Under the rules, to avoid a tax charge via benefit in kind, the ownership must not be transferred to the employee, as the exemption applies only if the employer makes a mobile phone it owns available for use by the employee.

This exemption only covers the supply of a single mobile phone to each employee, the line rental and the cost of any private calls made on the phone, which are paid for by the employer.

Where the mobile phone (or sim card) is registered in a company name, all the costs can be claimed, with the proviso that ‘personal use’ must be ‘reasonable and not excessive’. Meanwhile, the phone itself counts as a company asset.

In some cases, a home-working employee may have been allowed to or decided to use their own personal device to make business calls.

Where a phone contract is personal, i.e. not registered to the company, then there are two main ways to treat the expense:

• Where a company pays for the bills and the phone, it is counted as a ‘benefit in kind’ and the costs have to be reported via the P11D form and there will be National Insurance contributions (NICs) to pay.
• Where an employee pays for the phone and bills, deductions have to made on PAYE and Class 1 NICs on the value of the monthly contract, plus any personal calls that may add costs over the normal monthly tariff.

In both of these scenarios, VAT can only be claimed on the business costs.

Businesses should also consider the potential security risks of a person using their own devices, such as the accessibility of sensitive data by other persons, and should have an agreed policy on phone use, which could be part of a home working agreement.

Link: Expenses and benefits: mobile phones