Coronavirus update from Croucher Needham 7th April


Good Afternoon

We hope this finds you and your families keeping well.

The last week has seen many of us at Croucher Needham working with our clients to support them during these continuing challenging times that are affecting both us as individuals and our businesses.  Many of these discussions have been around claiming the support that has been made available and the processes around these.

Unfortunately, we still cannot answer all the questions that you have, please believe us when we say that we have just as many questions as you do.  However, we are able to talk you through the support available and guide you in determining what actions you need to take.  If you have any questions or need to talk through your options please do contact us in the usual way.

While no new support measures have been announced, some clarity has been provided by the government in some areas and we have taken the opportunity to highlight these below, alongside some of our own guidance that has been teased out of the detail.

Coronavirus Job Retention Scheme

The key for claiming the grant to support the retention of jobs is to make sure you furlough employees in the right way, with the appropriate employment law support, and for a minimum of 3 weeks.  It is imperative that you keep documented evidence of this process to include the relevant dates and communication with employees and that the documented evidence is retained for five years.
Some key points to note are:
  • You can claim 80% of an employee’s salary or wage, capped at £2,500;
  • You can also claim the related employer’s national insurance and statutory pension contributions;
  • You must deduct PAYE, national insurance, student loans and pension contributions as normal;
  • You can choose to make up any part or all of the balance of wages or salaries for any individual but you do not have to and this will not impact your claim;
  • You can claim for any regular payments you are obliged to pay your employees. This includes wages and any overtime, fees or compulsory commissions earnt but not paid before furloughing. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded;
  • Claims will be prorated from the point that the furlough period begins, which is the point the employee stops working, not when the decision is made;
  • You cannot claim for employees who have reduced hours or reduced pay.

Recap on calculating claims

If you are eligible you will be able to claim:
  • For salaried workers, 80% of the employee’s salary at 28 February 2020;
  • For those with variable pay, the higher of:
    • the same month’s earnings from the previous year; or
    • the average monthly earnings from the 2019/20 tax year (or from the point the employee joined if they have only worked a part year).

Benefits in Kind and Salary Sacrifice

When calculating claims, consideration is required of the impact on Benefits in Kind and any salary sacrifice scheme in existence, namely:
  • Non-monetary benefits provided to employees should be excluded from the calculation of the claim whether or not they are taxable Benefits in Kind;
  • Similarly any benefits provided through a Salary Sacrifice scheme should be excluded from the calculation of the claim;
  • If there is a “life event” clause in the Salary Sacrifice scheme that allows employees to withdraw from their prior agreements the current COVID-19 pandemic would likely constitute such an event. However, contracts and agreements should be reviewed to ensure a change/withdrawal from the agreement is possible in the current environment;
  • In either case the Job Retention Scheme does not affect your contractual obligations to provide any non-cash benefits to employees.

Impact on holidays

Some businesses are already determining that the furloughing of employees will give them a backlog of work later in the year and as such may not be in a position to approve employees’ holidays.  Rather than employees losing these days and you as employers facing potential financial penalties for not providing the obligatory minimum holidays, employers will now be allowed to defer up to four weeks’ unused leave to the following two leave years.

Self-employment Income Support Scheme

The grant will not be available until June 2020 but you will be able to claim if:
  • You are a self-employed individual or a member of a partnership;
  • You have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19 that was due by 31 January 2020 (if you haven’t filed this yet you must do so by 23 April 2020 to qualify for support but your claim will have lower priority);
  • You have traded in the tax year 2019-20;
  • You are trading when you apply, or would be except for COVID-19;
  • You intend to continue to trade in the tax year 2020-21;
  • You have lost trading profits due to COVID-19;
  • You have taxable profits under £50,000 per year, determined as follows:
    • Either your trading profits in 2018-19 were less than £50,000 and these profits constitute more than half of your total taxable income; Or
    • your average trading profits in 2016-17, 2017-18, and 2018-19 were less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you are eligible you will entitled to 80% of your average monthly earnings capped at £2,500 per month.
Average monthly earnings are calculated as follows:
  • If you have traded since prior to 6 April 2016 the three tax years ending 5 April 2019 will be used to calculate the average monthly trading profits;
  • If you started trading between 6 April 2016 and 5 April 2019 only those years for which you filed a Self-Assessment tax return will be used to calculate the average.

Other considerations

Please also be aware of the following:
  • You cannot apply for this scheme yet.  HMRC will contact you if you are eligible for the scheme and invite you to apply online;
  • Any grants awarded will be paid direct into your bank account with a target date in June 2020;
  • Any grants awarded will be taxable and should be included as income in your 2020/21 self-assessment tax return – if possible, you should set-aside the tax due when the grant payments are received;
  • When claiming these grants, you can continue to work, subject to the latest government and Public Health England social-distancing guidelines;
  • Those that do not qualify can defer July 2020 self-assessment tax payments, explore the Coronavirus Business Interruption Loans and make a claim for Universal Credit.
Business Rates
We are now seeing local authorities re-issue rates bills for those that are eligible for relief.  As a precaution, if you think you will be eligible you can cancel your direct debit and if you don’t hear from your council later this month do contact them.
The rates relief has been expanded since it was first announced with full details available here:, what is classified as retail has been expanded.

Even if you don’t qualify for the new relief available you may be able to claim some relief.  If your business premises is closed with everyone furloughed or working from home you could make a claim for empty property relief.  This is not guaranteed but we have been made aware that some councils are providing it.

To make a claim you would need to write to your local authority and request that it applies while providing details of the property and the date it became vacant following advice taken from the government guidance during this pandemic.


We are now seeing local authorities starting to send out letters inviting applications for grants, to those that they believe are eligible.  These letters are providing the application forms for these grants.

The grants are available on a per property basis, as such if you have multiple business properties you will qualify for multiple grants.

If you believe you are entitled to grant and don’t receive correspondence later this month it is recommended that you contact your local council who you usually pay rates to.

A reminder of who is eligible for a grant:

  • A £10,000 grant is available for businesses with a premises that qualifies for small business rates relief or rural rate relief;
  • A £25,000 grant is available for businesses that are in the Retail, Hospitality and Leisure industries that don’t qualify for the small business grant.  To be eligible you would be eligible for rates relief under the expanded relief set out above.

There are exclusions, full details of the grant are available here:

Please note, the grants are State Aid under EU law. A consequence of this is that there is a limit to the support an organisation can receive, notably:

  • €800,000 to the total amount of State Aid; and
  • €200,000 limit to the “De Minimis State Aid” received over the past 3 fiscal years.
If you have received any other grants or support under State Aid rules (including SME Research & Development support in the Corporation Tax regime) you will need to consider whether you are eligible for the current grant.

Coronavirus Business Interruption Loans (CBILS)

Since the launch of this loan scheme there has been some uncertainty as to what support banks will offer, particularly given that they had been advised to lend on normal commercial terms first.

Under CBILS the government will guarantee 80% of the debt and cover any initial lending fees and the first 12 months interest – only capital payments are then payable by the business in the first twelve months.

Improvements to the scheme have subsequently been announced to ensure more businesses can access the support required.  These include:

  • Banks should now lend to smaller business under the scheme even if there is enough security and eligibility to lend under normal terms, thus the businesses benefitting from lower initial payments and no fees;
  • Businesses being above the threshold to self-certify that have been impacted by COVID-19;
  • For lending under £250,000 banks are not able to ask for personal guarantees;
  • For lending over £250,000 banks can ask for personal guarantees but recoverability under those guarantees are capped at 20% of any funds outstanding (the element not guaranteed by the government);
  • An indication that some lenders won’t charge arrangement fees or early repayment charges;
  • The availability of automated processes and online portals for lending under £30,000.

A new Coronavirus Large Business Interruption Loan Scheme is also to become available for those with turnover between £45m and 500m.

Other Supports Measures Guidance

Finally, please allow us to remind you of the other measures available and the actions you need to take:
  • If you’re VAT registered and want to take advantage of the deferral of VAT due in the period 23 March 2020 to 30 June 2020 then cancel your direct debit before payment is taken by HMRC (the first affected payment would be for any VAT falling due on 10 April 2020);
  • If you fall under self-assessment for personal tax you can defer your 31 July 2020 payment on account until 31 January 2021, no action is required;
  • If you need extra time to pay other HMRC liabilities then contact their dedicated Coronavirus Time to Pay helpline on 0800 0159 559 – we are already aware of HMRC deferring payments for at least three months with no fixed plan agreed as yet thereafter;
  • If you’re struggling to complete your statutory accounts then Companies House are now offering filing deadline extensions of three months for those that are affected by COVID-19.  Our accounts team will already be discussing this with you if they believe it is something you need.