On this first day of the new tax year, please see below details of changes to the CJRS and CBILS, and also what you can do if you fall between all the safety nets. But firstly a reminder not to contact us except as detailed before and repeated at the end of this circular.
JOB RETENTION SCHEME EXTENDED TO IR35 WORKERS IN PUBLIC SECTOR
The Cabinet Office has confirmed that the coronavirus job retention scheme will also apply to off-payroll contractors working for public sector organisations. This means that the scheme can now be offered to those individuals:
- working through a personal service company,
- for a public sector client,
- where the worker is unable to carry on working due to the COVID-19 pandemic.
Furlough can now be offered to all such public sector workers, described as contingent workers in the announcement, including those being paid under PAYE, through an umbrella or their own personal service company.
CHANGES TO THE CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
The Chancellor has announced the extension of the current Coronavirus Business Interruption Loan Scheme (CBILS) to all viable small businesses affected by COVID-19, in a move aimed at combatting fears that small and medium-sized businesses may become insolvent accessing emergency funds.
In a statement, the government said the move is intended to “maximise the support available” and means that all small businesses will now be eligible “should they need finance to keep operating during this difficult time” – not just those unable to secure regular commercial financing.
New rules will prevent lenders from requesting personal guarantees for loans under £250,000, and the government has also stated that it will make operational changes to speed up lending approvals and continue to cover the first twelve months of interest and fees.
PROPOSED HELP TO INDIVIDUALS IN FINANCIAL DIFFICULTIES
The Financial Conduct Authority has announced it is consulting on new measures to help consumers avoid financial distress whilst they are unable to work or otherwise impacted by coronavirus.
Whilst it is called a consultation, the tone of the announcement and the four-day deadline to turn around any response makes the FCA’s intent clear. Borrowers and those who find themselves needing to borrow must be helped through the toughest period of the crisis where they may no longer be working but government support measures have yet to kick in.
The FCA has proposed:
- A three-month payment freeze on loans and credit cards
- No interest on the first £500 of an arranged overdraft on a main personal current account for three months
- Individuals should not be adversely affected by the recent changes to overdraft charges
- Anyone using these temporary measures should not have their credit rating affected
As the detail of furlough schemes and self-employed support is worked out, the measures to be consulted on will allow individuals a bit of extra breathing space both in terms of cash flow and worrying about any negative impact on their credit and financial standing in the future. The message is that regulators do not want to see people becoming unnecessarily indebted while waiting for support.
Whilst individuals will have to contact their lender, there is “no expectation” they will be asked for evidence of their coronavirus-related difficulties, which will hopefully mean a smooth process of getting support.
STATE BENEFITS
If you are one of those people who fall through the various schemes announced to assist people and firms through coronavirus then you may need to rely on state benefits. Some of these are Contributions Based and others are Means Tested.
Contributions based benefits are those where eligibility is based on the individual’s national insurance contributions record.
New style Jobseeker’s Allowance (JSA)
JSA is available to those who are seeking work. Only Class 1 national insurance contributions count for JSA so it is available to those who have been recently employed, but not to most people who have recently been self-employed. The period used to check entitlement is usually the last two complete tax years before the benefit year in which the claim starts.
New style Employment and Support Allowance (ESA)
ESA is available to those who are unable to work due to illness or disability. Class 1 and 2 national insurance contributions count for ESA so it is available to the recently employed and self-employed. The period used to check entitlement is usually the last two complete tax years before the benefit year in which the claim starts. Class 2 national insurance contributions must be paid by the 31 January following the end of the relevant tax year for that year to qualify for ESA purposes.
At Spring Budget 2020 the government announced that new style ESA will be payable from day one of sickness, rather than day eight, if you have COVID-19 or are advised to self-isolate.
Means tested benefits are those where eligibility is based on the individual’s financial circumstances rather than their national insurance contributions record.
Universal credit (UC)
Universal credit is replacing the following benefits:
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Working Tax Credit
- Child Tax Credit
- Housing Benefit
- Income Support
The government has announced the following COVID-19 related changes to universal credit:
- The requirements of the minimum income floor for the self-employed are temporarily relaxed for anyone applying for universal credit due to the impact of the coronavirus. This change took effect on 13 March 2020 and will last for the duration of the outbreak.
- For those already receiving universal credit the minimum income floor relaxation will take effect on 6 April 2020.
- If you need to claim universal credit, but have COVID-19 or are self-isolating, you will now be able to make a claim and to access advance payments without needing to attend a Jobcentre Plus.
The controversial five week wait, which is a feature of new claims for universal credit, remains.
CONTACT DETAILS
Due to the current restrictions on movements please note the following revised contact details:
Dave Watkinson
Telephone: 01925 428896
Email: dave@warringtonaccountants.co.uk
Margaret Black
Telephone: 01925 428895
Email: margaret@warringtonaccountants.co.uk
Tom Coyne
Telephone: 01925 428894
Email: tom@warringtonaccountants.co.uk
Stuart Barr
Telephone: 01925 428893
Email: stuart@warringtonaccountants.co.uk
Sara Garrity
Telephone: 01925 428892
Email: sara@warringtonaccountants.co.uk
If you have difficulties contacting by telephone then please email the individual who will ring you back as soon as possible.
Do not use the normal office number as there is no-one to answer, and please do not use the direct telephone number or email address of any other staff member.