Can someone please explain the 80 per cent salary cover

[noFlowers]

Sorry if I'm being stupid but what does this mean!

Does it mean businesses who may lay off staff get 80% of staff salaries to pay them so they can still work.

Or does it mean you lost your job due to all this and you're at home and you get 80% of your salary.

@QuizzlyBear HMRC sent an email last night with details of all the help available.
If your dh is a Ltd co then would he qualify as an employee? Directors are employees for PAYE purposes but details aren't clear yet from what I can see.
Self assessment tax due at end july has been pushed back to end jan 21.
Cant see anything else on the email that might help I'm afraid.

Afaik company directors are covered by the 80%, but only on the salary element rather than the dividends.

Thanks @Bookvan - we haven't seen an email yet, I will scrawl through the junk folder! Yes, he's down as a Director and receives a small salary so if you're right then maybe he could claim on that and get a few hundred a month. 🤞🏻

I don't think there's any help for me as a sole trader unless I sign up to UC, though? I've never claimed any benefits before so it's a whole new confusing world. I just wish there was some definitive advice 😢

I truly am thrilled for those employees who are receiving 80% though - without that our whole country would be f*cked, probably for a generation.

Plus I bloody overpaid my self assessment taxes back at the beginning of the year and they've taken the overpayment to cover my July taxes already. Gutted!

Anyone know if they can then make you make the hours back up later? As that’s what DH’s job are proposing, 80% of pay and you make the hours back over the next 2 years.

I'd be surprised if that's legal, if they're not topping it up at all. It usually isn't with statutory stuff like SMP.

So £73.10 instead of £96. Great. And if you apply for esa does that get deducted from your universal credit?

You can't claim income-related ESA and UC. But very few people can claim IR-ESA now anyway, and have to claim UC instead.

If you are on contribution-based ESA, you can claim UC. The ESA will be deducted from your UC entitlement. You can get CB-ESA even if you have savings over £16k or if your partner is working and getting a good income, but either of those will disqualify you from claiming UC.

You can only get CB-ESA if you have paid NI for at least 26 weeks in one of the last 2 complete tax years, AND paid or been credited with NI class 1 or 2 to at least the level of 50 x the lower earnings limit for NI (ie 50 x 118) for both those years.

If you don't meet the NI qualification for tax year 2017/18 but do for 2018/19, wait till after 6 April and your "relevant years" for qualifying for CB-ESA will then be 18/19 & 19/20. And vice versa, so if you earned less than the threshold this year, claim now!

I have been registered with HMRC to pay tax since the early 1990s and they have not emailed me eiher but perhaps they don't have my email address and as I am a sole trader I get nothing (other than if I want to get into debt I can choose to pay VAT and tax late in one huge payment - June 2020 for VAT and Jan 2021 for tax - so that is only a cash flow help - you don't get a penny)

The sole person company situations will need a lot of thoughts when the rules are put into more detail. Presumably a company which has one employee - the director sharelder who eg drives his own school bus on trips as needed might suddenly have no money. If he has mostly paid himself dividends then the state says as ever yah boo sucks to you you should have taken all that income as PAYE taxed income taxed at your highest rates but you chose not to so now you suffer. If he paid himself a salary of £650 a month say and now does not have any work I think the new income support his company (not him, his company ) can apply for would be 80% of that sum. I don't think he would be allowed to say okay I normally draw £60k a year most as dividends let us up the PAYE element of that to £60k and no dividends and claim on basis of £5k a month wage which comes down to £2500 for the new scheme or even £30k a year (maximum under scheme) - so the most per employee is 80% of £2500 a month = £2000. Nor could he say okay let us add the wife, my mother and the dog to the payroll now who also will have no work to ge multiple £2000s. Instead I expect HMRC will look at the latest PAYE records they have of that person and not allow huge pay rises, nor will they allow sole traders to incorporate today and put their worker on an employment contract on £3k a month.

For the self employed - ESA is only if we are actually sick?

For the moment, yes. However, I am hearing rumours that senior bods at DWP and HMRC have been asked to look at how the s/e can be supported financially through this.

I suspect that the big problem will be verification of income. HMRC knows exactly what every employee's income is, because of RTI. They only know what s/e people tell them their earnings are (not being pejorative, but that is how HMRC will see it). And that information is submitted long after the money is earned, so could be very out of date.

They may consider flat-rate support, but then the issue is at what level. There are people earning a few pounds a week and people earning £1,000+ a day on IT contracts.

Whatever the government do, there's no way they can come up with something that's fair for everyone who's self-employed, and they may decide that the game's not worth the candle. And they've already made a bid concession to the low-earning self-employed by not imposing the minimum income floor in UC.

The email has gone to company directors bit it just links to this www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

My partner works in a hotel and was laid off yesterday with all the other staff. No one knows if they'll get this 80% as they haven't been told if it's temporary or not

I believe it is for anyone on PAYE so should cover those on bank/0 hours contracts also, that was specifically discussed yesterday on the news during the questions from reporters.

They are setting up a new online portal for employers to use for this. It is all on the HMRC website and no doubt this will be updated regularly. Without sounding shitty it is best to look on there as there is a lot of misinformation on here.

I am an accountant and har clients calling within an hour of the announcement. We havent been given any more info than is publically available but will be working through all the info we have in the next few days to help people. Next week I am happy to start a thread with as much info I have and to answer questions if people think that will be useful.

What about those on unpaid leave? We have to take 6 weeks between now and June. Staggered so there is coverage at work.

The first point is the employer or ex employer decides. If I had just been laid off or had been put on unpaid leave I would get as many other employees together and send a joint email to the employer saying in the light of yesterday's announcement and to preserve the work force would they take you back on/ not have you laid off on low or no pay as they can recover 80% of that from the state. If the employer says yes - great. If they say no I believe the announcement means it does not help you.

Changeof name - thanks for that. I have looked at the HMRC site. I have not so far found who can claim - eg lots of companies nothing to do with the virus at any time are laying off workers (and indeed themselfe in a sense when a one person company with director on PAYE). I does not seem to say the furloughed employee has to have no work due to the virus which is interesting.

"Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
Eligibility

All UK businesses are eligible.
How to access the scheme

You will need to:

designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan."

www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

A lot of company directors pay themselves low salary but then get dividends.

That's going to hit a lot of people.

It's also going to hit those high earners - especially those in areas where housing costs are high, if there company starts to fold..

Tough times

But it only goes up to £2500 anyway. So the dividend part isn’t that relevant.

I'd imagine a significant number of us sole director Ltd companies don't pay ourselves more than £2,500 salary + dividends a month.

They may consider flat-rate support, but then the issue is at what level. There are people earning a few pounds a week and people earning £1,000+ a day on IT contract

This

Self employment income varies widely.

Many people may have recently started a business and had low income for the first year as the business started.

Contractors.
Supply teachers - (but they are probably in demand now)

I feel for the Government trying to sort this out - especially in a country where housing costs vary so much around the country.

Splitting income and dividend was always about lower tax anyway. So it makes sense to use income.

'd imagine a significant number of us sole director Ltd companies don't pay ourselves more than £2,500 salary + dividends a month

Dividends aren't going to happen.
If Directors declare a salary of about £900 a month (linked to the NI contribution / tax allowance) level, then that's presumably what they will get?

80% of £900 a month (approximately)

Doesn't really make any difference to me tax-wise, it gets paid through corporation tax, though I think it might at higher levels of income, but it allows me flexibility with varying income each month.

what about if you pay into a company +pension should we be freezing that at the moment to maximise immediate available income?

Tabby I see yes annoying I guess there’s the low percentage who’ve managed things that way.

Bookvan same here re short hours. We have some work which we were originally going to share around but we're instead going to give who we can full hours and furlough others. We need some people working still - both to help the clients who need it and to keep some income coming in to the business to cover the fixed costs as the grants etc aren't available at the moment.

For us, furloughing is probably going to be:
-the managers (as we can do their role to minimise business costs)
-those with kids who can't work
-a couple of people where they/their families have a health condition so might need to self isolate for a while anyway
-those who have to travel the furthest.

Not perfect by any stretch, but I don't know what else we can do.

Dividends are now taxed at 7.5%, so I pay 20% corporation tax on the income though my company then another 7.5% when taken as a dividend, so they are taxed at two points.

Surely it HAS to also be applicable to the millions of people who will now have to take unpaid leave to home educate their children?

I doubt it. I think it only applies to those situations where a business is closing or laying off staff as otherwise it will go under. It's designed to protect jobs that are at risk. Most people who are taking unpaid leave to look after children won't be in that category.

Re self employed. When I was self employed it was drilled into me over and over again that I had to build up and then set aside a minimum 3 months pay to look after myself if I was unable to work for any reason. So unless someone is in a really new business then they should have that put by. If you are running a business that isn't that profitable then it's more of a hobby than a business. I have a couple of friends whose husbands fall into this category.

I am so relieved that my DC should hopefully be able to pay their rent as they are covered by the 80% scheme so long as their employers claim it (which looks likely)