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How to implement the ‘80% of salary’ ‘Job Retention Scheme’

How to implement the '80% of salary' Job Retention Scheme

In these challenging times and with many businesses looking for answers to questions about the Government backed support, the following information, which relates to payroll & staff costs, may be useful to you:

Support for Businesses through the Coronavirus Job Retention Scheme

  • The scheme will enable businesses to recover 80% of wage costs for employees on ‘furlough leave’ – which is an entirely new concept and is a new class of indefinite leave where the government will reimburse the employer for wage costs.
  • This has been introduced as an alternative for employers who might have otherwise implemented redundancies, lay-offs, unpaid leave or other measures for their employees.
  • All UK businesses are eligible to claim under the scheme. It seems that employees will be covered, but not other workers (such as casual staff or contractors) or the self-employed, although we expect support for these classes of worker to be announced shortly.
  • The government has announced that the scheme is available for at least three months from 1 March 2020 and will be extended if necessary.

 What costs can employers recover?

  • The coronavirus job retention scheme allows for 80% of wage costs to be recovered up to £2,500 per month per employee. There is no limit on the number of employees or the duration. Wage costs are expected to include wages, pension contributions and employer national insurance (NI) contributions, although this has not yet been confirmed.

What do employers need to do?

  • Employers and employees will need to agree the members of staff being designated as ‘furloughed workers’. This should be straightforward because this route will no doubt be more attractive to employees than redundancy, lay off, unpaid leave or a reduction in pay.
  • We recommend employers send a letter/email to each employee concerned and get them to agree to the change in status formally in writing.
  • Employers will then need to submit details to Her Majesty’s Revenue and Customs (HMRC) through a new online portal, which is being set up urgently.
  • The portal is expected to be in place by the end of April, so the 1st claim will cover the months of March & April 2020.
  • The timescale for payments to businesses is not yet known.

Does the employer have to top up the employee’s pay to 100%?

  • No, they do not. Some employers may wish to make up the shortfall, while others may not be able to. This just needs to be made clear to all employees concerned.

What about employees that have already been dismissed or taken unpaid leave?

  • The scheme is backdated to 1 March 2020 and employers are urged by the government to take back anyone they had already dismissed and convert them to this leave instead. Likewise, with anyone who is on unpaid leave.

What situations will this not help with?

  • Furlough leave is recommended for anyone that would have otherwise been laid off or made redundant due to the impact of coronavirus on the employer’s business.
  • It does not help with any situations where employees had agreed to reduce their hours, or to a pay cut but where they are still required to work. There is currently no option to do a mixture of reduced hours and furlough leave.

Support for Businesses who are paying sick pay to employees

All small and medium-sized businesses and employers will be able to reclaim Statutory Sick pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria is as follows:

  • The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • Employers should maintain records of staff absences and payments of SSP (if we look after your payroll this matter is already being dealt with for you), but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
  • Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Further information is being provided by the Government regularly and you should keep up to date with these fast moving developments.

If you have any questions please do not hesitate to contact Murray Patt, or a member of my team – we are all working remotely, fully operational and we are available to speak with you.

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Supporting our clients

We're recruiting in Hale for a new accountant

Murray Patt, our founder, is focused on supporting clients in this challenging period:

“Over the last few weeks we have all been shocked with how coronavirus has had an impact on our respective businesses.

“Whilst we are all in unchartered territory I have some basic rules for you to consider, in trying to get through this period. It may be that not all of these are relevant to you, but there will be some aspects which will help you to think clearly going forward.”

My top-ten-tips are as follows:

  1. “Cash is king”. Businesses do not fail through making losses – they fail when they run out of cash.
  2. Forecast your cashflow. Predict your future cashflow as best you can, & schedule this out using excel/similar tools. I recommend doing this for a 12 week period & monitoring it daily vs actual.
  3. Cash injection. Be prepared to inject monies into your business & talk with your bankers at an early stage for support.  Through fundingcircle.com our clients can secure a discount on standard loan rates, with a rapid decision-making process.
  4. Government loan/grant schemes. Whilst these schemes are very welcome, it will take time for them to get up & running – therefore do not rely on them. Further, if they are administered by the banks/local authorities, who are already struggling for staff, then expect them to be slow & cumbersome.
  5. Loan repayment holidays. Talk with your funder(s) & see if you can arrange a payment holiday on your existing loans.
  6. Employment contracts. Review your staff contracts, & see what scope there is to make changes & save cost. However, please consider the knock-on effect on them.
  7. Paying suppliers. Talk with them &, if you can, agree revised terms in the short-term.
  8. Be selective with cancelling discretionary expenditure. We will eventually come out of the other side of this, & therefore do not terminate arrangements now, which you may regret in a few months time.
  9. Plan in advance. If some form of restructuring to your business is required, then the sooner you take some professional advice the better.
  10. Talk, talk, talk. Don’t be afraid to talk with us, & other business owners. The more we share our experiences the better for everyone.

Murray Patt says:

I suspect that things will get worse before they start to improve again, but they will improve – the uncertainty is the timescale for this. The team at AK&Co are there to support you & we will always make time to speak with you. Every day is a steep learning curve, & we will get through this eventually.

Coronavirus – an update for clients

With the concerns surrounding the COVID-19 outbreak we wish to reassure our clients and contacts that Alexander Knight & Co remains fully operational and open for business.

  • We are following all appropriate UK Government guidance to ensure the wellbeing of our employees, their families and our clients.
  • We have robust contingency plans in place to ensure that client work can continue with minimal disruption. Our plans will ensure the continuity, integrity and level of service that we provide to help you meet your business objectives and priorities during this time.
  • As part of our business continuity plan all our team have laptops and are able to operate remotely if required. They can be contacted via email or phone in the normal way.
  • We operate in a paperless environment and so all client records and transactional documents are held electronically and can be accessed remotely and securely.
  • We are are still operating face to face meetings and site visits but if you would like to use other methods of communication during this time then we have video and/or telephone conferencing services available.

Alexander Knight & Co are here to support you and your business operations during this time.

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How to stand out from the crowd

Accountants Hale

If you run a business then you’ll know how hard it is to capture the attention of your target audience. Getting people to become aware of your product or service is only the start of the battle. Once you’ve got their attention and they are aware that you exist – how do you actually get them to buy?

It’s often said that we are bombarded by at least 5,000 brand messages every single day.

Consciously or unconsciously you are experiencing the results of somebody’s PR and marketing efforts. In this competitive environment you need to work out what ‘message’ you want to send to the market by defining your own brand identity first and then working out which channels to use to market your services effectively.

Brand footprint

Defining a brand in a crowded sector can be daunting task. The very best brands in any marketplace don’t just look good aesthetically – they back it up with great products and brilliant service.

Remember, a brand isn’t just a logo. It’s a promise, it’s your reputation and it’s your personality as a business. It’s these things combined and rolled out across your website, social media, PR and other marketing collateral that defines who you are to you target market.

Defining who you are as a brand is crucial. Most businesses evolve naturally and business personas develop over time It’s important that you define, not just what your brand identity is now  – but where you are going in the future. This is particularly important if you’ve recent acquired a company or merged with another company. Having a cohesive brand identity is essential.

What is your brand promise? 

Are you faster? Are you cheaper? Are you better? Are you more friendly? Are you luxury? Whatever it is that makes you different needs to be clearly understood internally by you and your entire team before you begin the process of externally marketing it.

We defined our own identity at Alexander Knight & Co as the ‘accountants for entrepreneurs’. It has been highly successful in encouraging business owners to contact us, largely because we talk the same ‘language’ and as business owners ourselves we understand the challenges. Our brand is therefore very important to us – and it plays a huge role in not only attracting new clients but also new staff, suppliers and new business opportunities.

In fact, our own brand development has encouraged many new clients to come on board who are in the business of brand-building, marketing and digital services – so we must be doing something right. Our PR company has been very helpful in this process.

Finally, by reading this article, you are experiencing our own PR and marketing efforts to make you aware of our own accountancy practice for business owners like you  – so if you’re in the market for a new accountant – please do drop me a line!

Murray Patt is the founder of accountants Alexander Knight & Co. You can email him: murray@alexanderknightaccountants.co.uk or call (0161) 980 8788.

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Coronavirus tax credits for your business?

Coronavirus tax credits for business

Coronavirus tax credits should be introduced for businesses that suffer from the impact of coronavirus – as well as more measures to assist SMEs.

The Italian government has introduced tax credits for businesses effected by coronavirus and tax experts say the UK should follow suit to lessen the impact for SMEs.

The Government has now announced an action plan which includes help for businesses. In our view, this should include tax credits for firms who have been hit especially hard like in Italy where firms who see a 25% drop in revenue as a result of the virus can secure further tax breaks.

Impact on business

We are in uncharted waters with regards to the impact of the virus on UK businesses. We know that the FTSE100 has been volatile but we also need to look at the impact on SMEs who are the backbone of the economy.

Tax credits should be introduced for firms who get hit hard and they should be announced in the Budget next week. With companies doing their very best to take precautions to protect their staff we must give SMEs all the support and confidence they need.

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Do you want a ‘Budget for the North’ ?

Budget for the North?

It’s good to see some action from the Northern Powerhouse 11 (NP11) which is in the news this week demanding a ‘Budget for the North’.

We know many of our clients will be enthused to hear this influential group of local enterprise partnerships (LEPs) supporting the Northern export market.

All the entrepreneurs, manufacturers and other innovative businesses across the region who we deal with are working hard to ramp up their export activity in 2020.

Let’s hope that the looming Brexit-related trade deals are not going to destroy the hard work already put in and there are very positive negotiations ahead.

Better transport is another key theme the NP11 is pushing. We are in total agreement. We need resources and mobility if we’re going to get anywhere close to southern productivity rates.

However, we were bitterly disappointed to see that the HS2 proposals for north of Birmingham are not forecast to be delivered to passengers in Manchester and Leeds until between 2037 and 2040!

Much of the east to west rail infrastructure was based on HS2 happening. Does that mean our essential transport links aren’t to be improved in the North until that time as well?

What is important right now, is that the Spring Budget on March 11th 2020 is clear and forthcoming with much needed fresh capital for the North. Our team is poised to inform our clients on any good (or bad!) news announced which may affect their business or their personal finances as company directors.

We’d be very interested to hear YOUR views on this. What would YOU like to see in the Budget?

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Electric Car Tax Service launched by Alexander Knight & Co Accountants

electric car tax guide accountants uk

We are really proud to launch a new service for our clients as we continue to innovate in the accountancy marketplace.

Rising demand for electric cars amongst our business owner client base – coupled with new tax breaks means we have launched the UK’s first dedicated electric car tax accountancy service.

Our new electric car service is perfectly timed as increasing numbers of our clients enjoy the generous tax breaks offered to company owners who use electric vehicles on the road.

From 6 April 2020 company car owners will pay zero benefit-in-kind on certain fully-electric vehicles, compared to as much as 37 percent on vehicles with high CO2 emissions.

Electric Car Tax Savings

As a result of this premium electric vehicles could save business owners £1000s – compared to traditional vehicles – as the new regime kicks in.

The launch of new luxury models such as the Mercedes-Benz EQC, Audi E-Tron, together with Porsche and Range Rover hybrid vehicles follow the success of the Tesla Model 3 which is already considered to be a cult company car for British sales executives

Company cars have been deeply unfashionable for more than a decade now. In that time, most business owners have understood that they were better off buying a car personally and then claiming the associated expenses.

Electric cars are a game changer for the humble company car. The new tax breaks laid out by the Government have reversed this trend and we predict there will be an upward swing in demand for electric vehicles, not least from business owners but also socially responsible fleet managers in the business world.

murray patt electric car tax accountant

Murray Patt of Alexander Knight & Co charges up his own electric car.

Huge tax savings

One client of ours saw more than £10,000 knocked off his tax bill because he plumped for the Range Rover hybrid model over the diesel version.

With these tax breaks about to kick in, more e-charging points being installed across the country, improvements to the range of electric engines and a steady fall in the price we are predicting a renaissance of the company car.

Consideration needs to be given to purchasing a hybrid model. Although they still offer a great tax break under this new rule, it’s not zero percent as with fully-electric vehicles. Another issue to think about is that hybrids now feature in the Government’s hit list for cars that will be banned from 2035 – we’d really advise going for that pure electric model.

Get your FREE electric car tax guide:

 

Watch our video about electric car tax breaks for company directors:

If you are a business owner and you want to get a tax-free electric car – speak to us first and we will help you. Call us on 0161 980 8788 or email cars@alexanderknightaccountants.co.uk  

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Alexander Knight & Co joins global accounting network

We are delighted to announce that we have joined a leading international network of accounting firms to take advantage of growing demand for UK-based tax expertise.

Our practice, based in Hale, Greater Manchester, is now a member of MGI Worldwide which includes more than 9,000 professionals in almost 100 countries around the world.

 MGI Worldwide was established in 1947 and is the oldest international accountancy network in the world.  Annual revenues of all its members top £770m.

We have made this decision following increased demand during the past few years for our specialist UK tax and audit services for the UK subsidiaries of overseas companies. It also comes in readiness for a post-Brexit business landscape in anticipation of new trade deals where international expertise will be required.

MGI Worldwide member firms are well respected in their local markets, share similar values and work with the same types of clients, from small and medium-sized businesses, family business, entrepreneurial and fast growth enterprises to subsidiaries of major multinationals.

Murray Patt, founder of Alexander Knight & Co, explain what it means for our clients:

Joining MGI Worldwide means we are part of a network of advisers who have expertise in all corners of the globe. As well as being able to access guidance from other member firms in their own jurisdictions, it means that we can secure referrals from international companies who are looking for specialist advice about setting up in the UK or who need specialist advice on the UK tax position. It’s a fantastic expansion of our expertise for our clients.

Paul Winder, MGI regional co-ordinator for the UK & Ireland, said:

We are delighted to welcome Alexander Knight & Co into our international network. We have a high demand for UK expertise, particularly on tax issues and Alexander Knight & Co fits our key criteria of being highly skilled in this area.

“They also understand their clients businesses, aspirations and what it means to be entrepreneurial. We now have strong representation across every single continent in the world and a strong presence in every key economic centre throughout the world and Manchester and the North West is no exception to that.

LEARN MORE ABOUT OUR INTERNATIONAL EXPERTISE BY CLICKING HERE.