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Changes to CJRS – the furlough scheme

How will the changes announced in June 20 impact your business?

Changes to the Coronavirus Job Retention Scheme (CJRS) announced in June will see furloughed staff being able to return to work part-time, an end to adding new staff to the scheme from 10/6/20 and the amount of Government support reducing gradually from August 20.

What changes for the CJRS and when?

The  CJRS will close to new employees who have not previously been furloughed, from 10th June, and the scheme closes completely at the end of October 20th.

  • A system of flexible furlough/ part-time working will come into effect from 1 July, allowing employers to bring back furloughed employees for any amount of time on any shift pattern, while still able to claim a grant in respect of the time not worked when they would normally have worked.
  • As and employer you will have to pay employees at their usual rate of pay for any hours they work, and pay the Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions that this pay attracts.
  • You will need to reach new flexible furlough agreements with any furloughed employees brought back on a part-time basis. Ask an HR adviser or edit the letter you used for furlough leave.
  • From 1 August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. The grant will continue to cover 80% of furloughed employee’s usual wages, up to the cap of £2,500 a month.

When does the CJRS Grant start to reduce?

From September, the value of the grant will fall to 70% of a furloughed employee’s usual wages, capped at £2,187.50 a month. Employers will pay the remaining 10% plus NICs and pension contributions to reach a combined total payment to the employee of 80% of their usual wages, up to a cap of £2,500 a month.

From October the CJRS grant from the Government reduces to 60%, capped at £1,875 a month, with employers paying 20% of a furloughed employee’s usual wages plus NICs and pension contributions to reach the total of 80%, capped at £2,500 a month.

No new entrants to the CJRS from 10 June

The government has announced the closure of the scheme to new entrants from 30 June. After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before 30 June.

This means the last day an employer can furlough an employee for the first time will be Wednesday 10 June.

Also, after 30 June, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any period under the scheme in its current format.

Getting Back to Business after Lockdown

Details of the CJRS after June                            

Details from HMRC are expected to be announced on 12th June 2020.

What records do you need to keep?

HMRC have announced clearer, updated record-keeping requirements of the scheme.

The written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025. Also the agreement must

  • State the main terms and conditions
  • Be incorporated either expressly or implicitly in the contract of employment – most employers have a separate agreement signed by the employee.
  • Be either made or confirmed in writing – get your staff to sign it.

Changes to Job Retention Scheme

Be aware – Expect an HMRC audit of furlough Grant Claims

It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially large penalties and possibly prosecution for those found to have acted improperly.

HMRC have opened a whistleblower online portal for individuals to report employers who have acted improperly, especially those who have claimed grants for staff who continued to work for the business.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/report-fraud-to-hmrc

If you need help to work out what you can claim please call us on 01603 516 304 🙂

Know your Cash Flow

Every business owner needs cash and most are acutely aware of it, especially in the early years.

You may have to juggle wages, VAT bills, personal or company tax bills and chase late payers to get the cash you’re owed. You may be paying from personal savings to start up the business of your dreams and all cash does is flow outwards. Whatever your situation, Cash is still King.

Not only have you become a bank account watcher, someone who builds and stares at an excel spreadsheet, that soon takes on a life of its own but you may annoy your precious customers by actually daring to ask them to pay on time, and that leads to anxiety about repeat business or a damaged business relationship. You know you’re experiencing cash flow stress and it is not a good feeling.

Could you pay less VAT?

As a small business owner cash flow anxiety certainly makes you aware that you are human. All the emotions are yours and yours alone, and the person who has to take the action, is you as well. As an Accountant to small business humans it’s the emotional side of the cash flow anxiety that I see doing more damage than just taking the shine off your lovely business.

The thing about cash that you sometimes miss, is that it’s as essential to know the Flow as it is the amounts to go in or out. It’s the timing that matters – that is the Flow. Software and Apps that help manage the cash and its flow can be life savers to you and your business and as much as you love Excel, and I do too, you can reduce more stress by using the right tools for the right job. Here are 6 Tips to help you go with the Flow of your business.

Tip 1 – Use cloud accounting software Xero or Quick Books Online are best. They are the market leaders and match up to each other in functionality – if one launches something the other develops it too – this is all in your best interest as the owner of a small business that needs cash to develop itself.

Move from Sage to Xero

Tip 2 – Get good Cash Flow software that adds on seamlessly to you accounting software. That means everything in the accounts is automatically put into the cash flow. No more worries about spreadsheet formulas, or forgetting something. It also means you can review reliable data and add in forecasts going forward. So if your bad payer says they will pay you in 90 days instead of 30 you can accurately plan for that, and follow up to make sure it comes in.

Tip 3 – Share your accounts and cash flow software with your adviser or Accountant. The best thing you can add to Xero or QuickBooks is an Accountant. They can check over what you’ve got – you always have to input the sales forecast – and they know when you should, or may have to, pay HMRC tax, salaries, loans, get a VAT repayment etc. Remember the key payment dates for PAYE, corporation tax and VAT. Your adviser can forecast your VAT payments based on your sales forecast and you get to see your business in cash terms instead of profit or loss terms.

Tip 4 – Cash Flow software like Float will give youscenario planning as well. You can look at “what if” scenarios, like what if I took on a new staff member, what if I bought new technology or what if I paid myself more money.

 

Shaper Accountants Norwich

Tip 5 – Reliable software will let you see the Flow. This means you can see the cash crunches coming. You can ask the bank for an overdraft facility, you can show any financers that you have tight internal controls over cash management, and your stress levels will reduce because the sense of reliable control will also increase.

Tip 6 – Open a separate bank account to transfer cash reserves. This helps you save the cash for tax bills, save to repay investors or for new items you want to buy.

Taking control of the Cash Flow will help you take control of your wellbeing.

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Blog written by Carolinecaroline connor FCMA

 

 

 

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