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June 2020

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To June’s Tax Tips & MYOB News.

In this newsletter we are concentrating on changes to the Government’s Coronavirus Job Retention Scheme. This past month we have reclaimed another £72k for clients for their furloughed workers, bringing the total claimed under this scheme to £180k. We have also helped clients claim for the grants and loans available to them and for the Self Employment Income Support Scheme. We do not charge extra for this support. We regularly update our Coronavirus Support web page with the latest government advice for Businesses.

For advice on the help available for your business just ring us on 01422 847500 anytime or just

June 2020
· Furlough Scheme Changes
· Coronavirus (COVID-19) update: self-assessment payment deferrals
· Coronavirus SSP Rebate Scheme launches
· Taking Leave whilst on Furlough
· June questions and answers
· June key tax dates
Furlough Scheme Changes 
In response to the coronavirus pandemic, the Government brought in the furlough scheme – officially called the Coronavirus Job Retention Scheme – to help employers pay your workers during lockdown. The idea was to encourage employers to keep jobs on standby, ready for a quick restart when lockdown ends, and also to discourage employers from making mass redundancies. Employees cannot work for the employer whilst on furlough.

The scheme was originally planned to cover salaries in March, April and May, but was previously extended to also cover June. It has now been announced that it’ll run until the end of October.

Timing Of Furlough Claims
It is now possible to submit furlough claims for a period ending up to 14 days in the future from the current date. This will help employers’ cashflow. The earliest date we can claim your June furloughs will be 16th June.  So if you would like to take advantage of this please with confirmation of who is furloughed and for how many days as soon as possible.

Note that Jennifer () is preparing and submitting your furlough claims.  Lorraine () will reflect the furloughs in the payslips issued (although the figures may differ depending on top-up etc) and she is working to the normal payroll timescales.

Closure to new Applicants from 30 June
The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Part-time Furloughs
From 1 July 2020 furloughed employees will be able to return to work for their employer part-time (this has now been moved forward from the originally-stated date of 1 August 2020).

Under this part-time arrangement there’s no limit on the number of hours employees can work. If an employee usually works a 40-hour week, for example, and the employer wants to, they can ask you to work 39 hours and then furlough you for the remaining hour. The amount of time employees work each week can also vary over the month with employers changing it week by week. Workers should be paid their normal wage for those hours actually worked. 

Please explain clearly the split between furloughed and worked days (or hours) for each affected employee with your furlough and payroll information each month.

Repayment of Furloughed Wages 
Currently, the Government pays the employer 80% of employees’ wages up to a cap of £2,500/month.

From 1st August, employers must also pay all National Insurance and pension contributions.  From September Employers will also have to contribute 10% of normal pay, rising to 20% in October.

furlough breakdown.png

Can Directors go on Furlough?
Coronavirus SSP Rebate Scheme launches top
As part of their efforts to keep their businesses afloat, company directors may consider placing themselves on furlough. This raises a number of issues:
– The Coronavirus Job Retention Scheme only supports permanent employees. An executive director is usually the most senior contracted permanent employee of a business, so would qualify. Non-executive directors are not permanent employees, so would not qualify.
– Although generally furloughed employees must not perform any work for the employing business, the government has clarified that a director can furlough and continue with their ‘statutory duties’.
–   Depending on the size and needs of the company, it may be possible to furlough one or more directors.
– Directors paid a nominal salary but receiving the bulk of their reward through dividends would only receive 80% of the nominal salary (if they qualify). Payment-by-dividends is not supported by the Scheme. 

From 26 May 2020 onwards, employers can make claims through the Coronavirus Statutory Sick Pay (SSP) Rebate Scheme.

This is a new online service and forms part of the package of support measures for businesses affected by the COVID-19 outbreak. The service enables small and medium-sized employers with fewer than 250 employees, to recover SSP payments they have made to their employees.

We can make these claims for you if you tell us which of your staff are eligible.
Read More
Taking Leave whilst on Furlough
In our May newsletter we discussed annual leave during furlough whilst claiming under the Coronavirus Job Retention Scheme (CJRS).  Annual leave accrues during the furlough period, holiday can be taken whilst on furlough and these days can still be claimed for under the furlough grant.  Since then the Government’s guidance has clarified that you can compel your staff to take their leave whilst on furlough if that is written into their staff employment contracts. Here is an update on the guidance.

Can employees have holiday paid whilst on furlough leave?
Yes, employees should have holiday paid at their normal full salary rate. Employers can claim back the cost of an annual leave furlough day subject to the cap of 80% of salary or £2,500 per month.  The employer must make up the difference between that and the employee’s normal pay on their payslip.

Carrying over Annual Leave
Employees who have not taken all of their statutory annual leave entitlement (up to 20 days) in a leave year will be able to carry it over into the next two leave years. This applies where, on account of coronavirus, it is not reasonably practicable for employees to take some or all of the holiday to which the employee is entitled.  As an employer you may want to avoid the overall accrued holiday balance of those on furlough to increase.  Otherwise staff returning from furlough will have large accrued leave to take. There is also an equity problem; those staff that have been working through will likely need a holiday, but may not have sufficient leave to be able to do so. 

Compelling Employees to take Annual Leave
The solution is to compel your employees to consider a part of their furlough as leave.  We suggest that at least the leave that has accumulated during the furlough period itself, should be taken within the furlough period.
See the Government Advice.

You do have to make sure that by compelling your staff to take leave you are not breaking the terms of their staff contracts.  I
f your staff contracts already say that leave must be taken at the discretion of the employer then we are confident that you already have the right to compel employees to take some leave under furlough.  Alternatively if this is not already covered we advise that you issue a letter to staff amending their terms of employment.  We have a template letter which you can use.   It tells your staff that your intention is to reduce the holiday balance during Furlough.  

us if you wish to compel your furloughed staff to take leave and you would like a copy of the furlough leave letter to send them.

Bank Holidays
Another detail is that bank holidays can also accrue (including Easter and May!) during furlough periods.  These are usually taken in addition to the formal annual leave.  If employees usually take Bank Holidays as leave and they fall within a furlough period, the employer must top up the employee’s pay to their usual holiday pay rate for those days or give them a day’s holiday in lieu. 

Example: Let’s say that your employees have their leave year and Furlough period starting on 1st April 2020.  Their leave allowance is 4 weeks and 8 bank holidays (5.6 weeks or 28 working days) off in total annually each.  You expect them to return to work on 1st August and by then you would like a third of this 28 day total to be used up (say 9 days) to represent the leave that they would have taken during the four months if they had been working.  You therefore send each staff member a letter explaining that they will take a five day annual/ bank holiday leave period in June and a four day leave period in July.  When they return to work on 1 August they would have 19 days leave remaining.  It is immaterial whether the remaining 19 days are accumulated as bank holidays or annual leave entitlement not taken.

Payslips and the Furlough Claim 
As explained, the annual leave and bank holiday entitlement have to be paid to staff at the full rate. This needs to be made clear on the payslips. This is fairly straightforward if you are already ‘topping up’ your employees’ furlough pay. However if you are just paying your staff 80% of their normal pay, it needs to be clear that the leave payment is ‘topped up’.
June questions and answers top
June key tax dates top
Q. I am the director of a limited company and due to the impact of the coronavirus, I will need to waive my entitlement to company dividends for the time-being. Are any formal waiver procedures necessary? Answer

Q. I have recently registered for VAT. Although my turnover is only just above the VAT registration threshold, I anticipate that it will now increase year-on-year. How does the flat rate scheme for VAT work and will it help me with business administration? Answer

Q. I have a part time job and I earn about £9,000 a year. As my earnings are less than the tax-free personal allowance, can I transfer the unused amount to my husband? Answer
10 – last date for new applicants to CJRS to furlough employees

– earliest date to submit June Furlough Claim

– PAYE/NIC, student loan and CIS deductions due for month to 5/6/2020

30 – Last date of claim for a newly furloughed employee.

Need Help? top
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