This week's COVID-19 Special Newsletter was slightly delayed because we wanted to gather as much information as possible about guidance for specific groups of beneficiaries.
Please see the guidance section below for information on safeguarding for children, animal welfare, and mental well being, as well as news about funding for charities working on food distribution.
Much of this week has been spent alongside other sector support bodies, making the same old arguments about the value of charities to government. What is increasingly clear now is that government does not understand how charities work, how diverse and different we are as a group of organisations, and what our individual and collective role is, and could be at a time of national crisis.
As part of our collective effort all the sector support organisations have been contacting media outlets to make journalists aware of the issue and you would have hopefully seen increased mention of charities on prime time television news. SCC has been contacting journalists and media outlets on behalf of members whose stories, in the first instance we believe will support our collective campaign for a 'stabilisation fund'.
We have also made representations to the DCMS Select Committee which convened an urgent meeting to explore the Impact of COVID-19 on the Charity Sector.
You can read the Small Charities Commission submission of evidence and those made by other agencies here
For Small Charities Coalition members in immediate crisis because of funding, and who have less than 30 days we have also set up a special task force group to help, with expert advice on finances, HR, management and fundraising.
To access the service please email COVIDclosureresponseteam@smallcharities.org.uk
DESPITE CORONAVIRUS, TODAY IS 31 MARCH -
SO IT'S YEAR END FOR A WIDE RANGE OF CHARITIES
Forgive us sending a Kubernesis Bulletin which you might consider is a
statement of the obvious! But we just wanted to draw attention to the
fact the TODAY is 31 March 2020, so it's the financial year end for many
It's also worth nothing that this coming Sunday is 5 April, the end of
the tax year. So for anyone trying to get gift aid donations within the
current year, there are only 3 working days left (Wed-Fri).
With many charities rising to new challengs in the light of the
Coronavirus crisis, it would be easy to overlook obvious things like year
end, especially if everyone is working away from the charity's normal
However, our advice would be: don't overlook your year-end processes,
notwithstanding the crisis.
You might think "We have more important things to deal with at this time -
can't we just postpone our year end?"
Well, it is POSSIBLE for a charity to change its financial year (let us
know if you want more details). But we believe that for most charities,
the last thing you want at this time is the confusion of working to
non-standard financial year. If you were to change to (say) 30 April
this year and then wanted to go back to a 31 March year end in 2021 you
would be dealing with a 13 month year and then an 11 month year which
would make comparatives difficult (and to change the year end twice in a
row can require special consent from charity regulators).
So, we suggest sticking with today as the year end if 31 March is the
normal date. Try to make sure you have some means of putting a figure on
everything as at the end of today. If you can't accurately count your
petty cash or your stock at least work on the best possible estimate.
But, as usual, wait for year end bills to come in before trying to close
off figures on your accounting system. Given that many suppliers are
themselves disrupted you might want to allow a bit more time than normal
for those final bills, and if the charity's offices are closed do make
sure someone pops in occasionally to check for post - you don't want to
overlook bills that still come by post.
As usual, please get in touch - firstname.lastname@example.org - if you have
queries where you think we may be able to help.
Kubernesis Bulletin (c) 2020 The Kubernesis Partnership
These Bulletins are prepared primarily for clients who belong to the
Kubernesis Charity Advice Service. However, it may be forwarded to
others (whether in your organisation or elsewhere) so so long as the
source is acknowledged.
These notes are intended to provide general guidance only. Legal issues
are reported only in summary form and are not a full statement of the
If you have any queries on the points mentioned, including issues for
your own organisation, please contact Dr Gareth Morgan (Senior Partner)
at email@example.com. There is no charge for responding to reasonable
queries as you belong to the Kubernesis Charity Advice Service.
The Kubernesis Partnership LLP - Charity Consultants
10 Kings Court, Dunbar EH42 1ZG
Tel: 01368 864582
A limited liability partnership - registered in Scotland no SO306613
E-mail: firstname.lastname@example.org (For changes of contact details only)
E-mail: email@example.com (Advice queries - This address is ONLY for
clients who subscribe to the Kubernesis Charity Advice Service)
E-mail: firstname.lastname@example.org (General queries)
At last we have the detailed information relating to the Coronavirus Job Retention Scheme.
The scheme is aimed at employers who would otherwise have to lay off employees because
· They had to close their business on Government instructions
· Business has slowed down and there are staff members who are not required to keep the business functioning.
The Government will create a portal where you will upload information about employees you have furloughed. You can then recover 80% of their salary costs up to £2,500 per employee. You can also recover the employers’ NIC contribution and the minimum 3% employer pension contributions. This is more generous than we had anticipated.
All employers who had created and used a PAYE scheme before 28 February 2020 and there are no restrictions on the type of business than can apply, so charities, partnerships, agencies who employ workers and of course sole traders who employ staff.
Who doesn’t qualify?
If you have an annual scheme set up before 28 February but not yet used, then you won’t qualify.
Which employees qualify?
You can furlough any employee who isn’t immediately required for the operation of your business during the Coronavirus outbreak. They can be:
· Full time
· Part time
· On agency contracts
· On flexible or zero hours contracts
You can also re-employ any employee you made redundant in anticipation of coronavirus downturn. This will not only assist the employee but also the system as they will not have to apply for Universal Credit which is currently overloading the DWP.
What is a furloughed Employee?
If you furlough an employee, they cannot do any work for you at all. If they are an agency worker, they cannot do any work at all.
If you decide to reduce staff hours, then they are NOT furloughed, and you must pay their salary as normal. You may only use this scheme to recover the costs for employees who are NOT doing any work for you.
If you have staff who were on unpaid leave before 28 February 2020 you may not furlough them.
Staff on Statutory Sick Pay may be placed on furlough once their self-isolation or sickness period has expired, and staff who are required to shield due to pre-existing conditions can also be placed on furlough.
What do I need to tell the furloughed staff?
You are changing their terms and conditions and so you should negotiate and discuss furloughing with your employees and ensure if not all employees are being furloughed that it is done with regard to equality and discrimination law. You should also give them a letter confirming they are furloughed and keep copies of all correspondence.
Staff on Maternity Paternity and Adoption Leave
There are no significant changes to the statutory maternity pay provisions but of you offer enhanced maternity pay, over and above SMP you may claim this element via the portal.
The paternity and adoption leave schemes mirror the maternity scheme.
How do I claim?
You can recover the lower of £2,500 or 80% of basic gross pay plus the minimum employer pension contribution and national insurance. You cannot include bonuses or commissions or other fees. The basic gross salary should be that as at 28 February 2020.
What if an employee is paid a variable wage?
If someone has been employed for at least 12 months you should use the higher of:
· The same month’s earnings for the previous year
· The average monthly salary for 2019/2020
If you do not have a 12-month employment period then use the average for the period of the employment.
If they started in February use a pro-rata amount.
What is 80% takes an employee to below National Minimum Wage?
NMW/NLW does not apply as the employee is not actually working. However, if you require employees to do training while on furlough, they must be paid at the appropriate rate for the hours worked.
Can I deduct an admin fee for processing what is essentially a state benefit?
No, you must pay your employee the full amount due to them, you may only deduct the usual statutory deductions. You cannot charge a fee.
How do I treat the grant in my accounts?
The grant is a taxable replacement for income you will lose due to Coronavirus. It should be included as income in your business accounts.
If we operate your payroll then we will have most of the information required to make the claim all you will need to give us is the names of the employees, you wish to furlough.
Once each claim has been made via the portal the repayment will be made to your UK bank account, so we will also require the sort code and account number and name.
Best wishes and stay safe
K M Business Solutions Limited
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 Association of Charity Independent Examiners
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