CORONAVIRUS UPDATE – 26 March 2020
We now have a little more information regarding ‘Furloughed Workers’ following yesterday’s update.
It now seems to be widely accepted that HMRC, via their online portal, will ask that you make the 80%
payments, report it at each pay period and then reclaim it through the system they are creating.
In this circumstance RTI will still need to be submitted and all appropriate PAYE and NIC deductions
will likely need to be made at the time. Base salary is expected to be included only.
It is expected that HMRC will then reimburse you after the RTI submission as they will then hold the
information required to do so. This will likely begin in April as they state that the first grants will be
paid within weeks.
As a precaution, you should still withhold making these 80% payments until told to do so by HMRC as
they may be under no obligation to reimburse you retrospectively. This is even though they will
If you are worried about cash flow in the meantime, HMRC recommend that you take advantage of
the Coronavirus Business Interruption Loan.
Remember, it is the employer who decides whom they wish to furlough, but this must be done in
consultation with the employee who may then refuse to be designated. If they do however accept,
please get in touch with us at SHR Group so that we can make the necessary contractual arrangements,
as required under employment legislation.
The scheme is intended to avoid redundancies but if these become necessary, you must follow due
procedures so don’t forget to consult with us first.
The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and is
initially open for 3 months but will be extended if required. Once you are informed that the new online
portal is live, submit information to HMRC regarding the employees that have been furloughed and
their earnings (HMRC will set out further details on the information required).
Which Employees are Eligible?
All UK employees who are paid through the payroll irrespective of business size. This includes agency
workers, apprentices, charities, public sector and private sector.
CORONAVIRUS UPDATE – 25 March 2020
Further to our release of information regarding ‘Furloughed Workers’ in yesterday’s update
(appended again below), I now have additional information for you to consider.
Although we do not yet know the mechanics of the 80% support payment scheme it does seem likely
that for logistical purposes, the government may choose to ask that you make the 80% payments,
report it at each pay period and then reclaim it through whatever system they are creating.
This is where present thinking is headed but please do not take this as concrete advise either from
SHR Group or anyone else, it is just something that HR and employment lawyers have been discussing
and believe may actually be the case. If that is so then we all need to be prepared, but if not then we
will be informed next month exactly how the scheme will be administered.
It’s clearly a case of ‘watch this space’, but please be aware of the following matters that you should
National Insurance and Income Tax
If businesses are asked to make direct payments of 80% to their employees, we may need to make
provision for deductions of PAYE, N.I. and pensions. So ahead of the announcement next month we
need to be sure our systems or payroll providers are geared up to do this efficiently and accurately.
National Minimum or Living Wage
If we pay our employees 80% of salary, we may need to consider whether or not they will then drop
below the required minimal pay levels.
It may be wise to prepare to make up the shortfall in those circumstances as it is likely to be for just a
small number of people however, government are considering this issue at present and it is fairly
certain that they will issue guidelines.
The Commission has found the decision to loan half a million pounds to the company of a former trustee was misconduct and/or mismanagement, in an inquiry into the Jewish Seminary for Girls (JSG). Two former trustees have been disqualified.
Update on GOV.UK.
Filing charity annual returns during the coronavirus pandemic
Any charity that needs an extension to their annual return deadline can contact the Charity Commission to ask for one.
This year’s UK Budget was the first for many years to say nothing specific to charities – or least not in relation to charities as a whole. So there are no changes to gift aid, charity tax reliefs, to the inheritance tax rules for gifts to charities or anything similar.
There is no mention at all of “charities” in terms of anything changed in either the Budget Red Book or in the Treasury’s Overview of Tax Legislation and Rates except in the context of (a) some changes which affect all businesses including charities, (b) a specific grant of £10M (which the Chancellor mentioned in his speech) to the Armed Forces Covenant Trust to support veterans’ mental health needs and (c) confirmation that a change announced previously is now taking effect to exempt medical rescue charities from vehicle excise duty.
But this does not mean charities are unaffected by the Budget! On the contrary, many of the wider changes announced, especially the big increases in numerous areas of public spending, have the potential to benefit the sector substantially and hence to enable charities to do more with their beneficiaries.
A £3,000 grant to most small organisations which occupy business premises
As part of the measures to help businesses cope with the effects of Coronavirus – e.g. reduced sales and/or staff off sick (see more below) the Chancellor announced a £3,000 grant to all organisations subject to business rates in England where the rates bill is currently zero as a result of small business rate relief (SBRR).
This means that many charities which occupy small offices, charity shops etc could suddenly find themselves in receipt of a £3,000 government grant! For many charities that do not normally get public sector funding, this could mean actual grant funding from the public purse for the first time. It will also apply to charity trading subsidiaries that occupy premises.
However, it seems it will only help those charities (and businesses) which:
occupy premises that are subject to business rates and
where the charity itself is the occupier, liable to pay the rates where applicable, and
the size of the premises is such that they currently meet the rules for SBRR – in general this means the charity occupies a single property with a rateable value of £12,000 or less (in England). (If your organisation is subject to business rates, look at your last bill to see the rateable value of your premises – or you can look up the rateable value of any business property on the VOA site at www.gov.uk/correct- your-business-rates.)
A similar relief applies in Scotland up to a rateable value of £15,000 – it’s known as the Small Business Bonus Scheme (SBBS). As business rates are a devolved issue, it will be up to the Scottish government whether to offer the same grant as in England, although it seems likely that something similar will apply as the funding decisions made by the Chancellor will also apply on a pro-rata basis in Scotland.
The government is also announcing 100% rate relief for many businesses in the retail and hospitality sectors even if their rateable value is above the limit for SBRR. This may help charities with larger shops and charities running restaurants, cafes and residential conference centres (either directly or through a subsidiary). However, if your premises are above the SBRR level you won’t get the £3,000 grant as well. But since there is mandatory 80% business rate relief for charities, this will only save you the remaining 20%.
It seems the £3,000 grants will be administered by local authorities through the business rates system – effectively it will be like paying negative rates! Obviously it will take a while for local authorities to get their systems set up for this so it’s not yet clear when it will be paid, and it is only a one-off grant for 2020/21.
So – whilst a number of charities will get a £3,000 boost from this, it’s worth noting that it won’t help:
charities which don’t occupy business premises at all – for example charities run entirely from trustees’
charities which occupy premises that are wholly exempt from business rates – this includes places of worship and church halls, it also includes buildings used for training or welfare of disabled people (though if only part of your charity’s work fits into one of these categories, there could be a case for giving up the exemption and paying business rates as normal – though bear in mind the £3,000 grant is only promised for one year)
charities which do not occupy premises in their own right but which simply sub-let from another organisation where any rates are included as part of the rent (this includes most cases of serviced offices, desk rental arrangements, occasional room rentals, etc). However, if your landlord will get the benefit of extra rate relief or the £3,000 grant you could try suggesting to them that they should pass a share of this on in the form of a reduced rent!
The Fraud Advisory Panel and the Charity Commission have collaborated in creating a set of support materials for tackling charity fraud.
You can find more information here.
It is closely edited to express ideas in a small number of simple words. It also uses specific imagery to compliment the text.
The Fundraising Regulator has expressed concern over how charities report fundraising.
The Charities Act 2016 requires charities to include a statement on fundraising in their annual report and lists what types of information the statement should include
The report focused on charities that spent £100,000 or more on fundraising but it is always worth ensuring that smaller charities are compliant with the same expectations, as scrutiny frequently widens its concern.
You can find guidance here.
The NCVO have recently released a report reviewing the sector’s operating environment which looks at the trends set to impact voluntary organisations in the future. The report is broken down into four areas: political, economic, social and technological. It includes some key insights into the future of the sector and offers some challenging questions for charity Trustees and Management to consider as part of their short- and long-term strategy planning. Trustees and Management should be encouraged to read this report and consider how the topics discussed may present challenges and opportunities for their charity. The Road Ahead
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