Short-time work, tax deferral & co: what employers and entrepreneurs in the uk need to know at corona times


If you run a business in the UK or even employ people there, you might ask yourself: what do I have to do now against the background of the corona crisis?? Get answers to the most pressing questions here:

The united states, i.E. The US and UK are actually proud of their highly liberal labor markets. This means that companies can quickly dismiss employees in difficult times, but then hire them again just as quickly. Flexibility is the keyword and has long been the pride of these nations. But we are living in special times right now. And under the influence of corona, changes are also taking place in the UK. This article provides information on the newly introduced short-time working, furlough, in the UK, the problems it brings and how to use it as an employer.

Short-time work in the UK

It's one of the most remarkable announcements in the history of peacetime labor law, says the institute for employee rights in england. Because with the on 01. March, the UK leans heavily on the system of short-time work, which has been known in germany for a long time and was already used in germany during the financial crisis in 2009. And companies in england are jumping at the offer because it allows them to keep employees during the crisis without having to pay them.

After the release of the portal on the websites of the english government, there were already over 67000 applications in the first half hour. Meanwhile, the UK government pays one in five salaries, a full 20 percent. But how did this decision come about and how can entrepreneurs access this generous aid?

Info: what is actually short-time work?

Short-time work in germany is a system whereby companies in a momentary financial emergency can only partially employ staff, or not at all, without having to lay them off. Employees then receive a partial payment of their salary from unemployment insurance, which can be topped up by the employer, but usually does not equal the full salary. Typically, it is 60 – 80 percent of the net salary.

Once the employer has overcome the difficult period, employees can resume their work with full salary. Advantages are evident here for both sides. Workers lose some of their pay for a period of time, but are not made redundant and do not have to go looking for work. The employer can save his company by saving salaries in difficult times, but does not have to lay off employees, most of whom have long experience and are difficult to replace.

Short-time work has existed in germany for over 100 years, and the construction industry in particular has often resorted to it, for example, in order to be able to survive periods without work due to weather conditions. However, short-time work became really famous during the financial crisis in 2009, when more than one million employees had to go on short-time work, which cost the state about five billion euros, but more than 300.000 jobs saved.

What makes UK different?

Probably the biggest difference between the newly introduced "job retention scheme" in england and traditional short-time work in germany is that employees' working hours cannot be reduced. If one resorts to the help of the state, the employee concerned is not allowed to work at all, but in return 80 percent of his salary is paid by the state and that up to 2500 £.

The rationale for this far simpler method is that the short-term design of a more pronounced short-time working scheme was not possible in the face of the corona crisis. Employees either stay at work full time and get paid as normal, or they don't work at all and get 80 percent of their salary from the government. Actually, this sounds like a good solution.

And it is definitely a possibility that many english companies use. One fifth of english firms want to apply furlough money to all their employees and more than one third want to send 75% to anglo-saxon short-time working. What at first reads well on paper, of course, also brings many problems with it.

The weaknesses of the english short-time work

First of all, there is the financial burden that has to be borne by the english state. It is thought that the 11 million short-time workers suspected to be on the payroll in the first three months will cost up to £40 million. A huge sum. But employers are also reaching their limits.

This is mainly due to the inflexibility of the job retention scheme. This is best explained with an example: will and peter are both employees in a medium-sized company. You are the only two employees who are well versed in a particular task. Your employer decides to send will to furlough for financial reasons. Three days later, someone in peter's circle of friends falls ill with the coronavirus and he has to spend two weeks in quarantine.

Due to the rigidity of the short-time work system, the employer cannot ask will to come back to work even if he would like to. It should be noted, however, that the UK government has of course recognized this weakness and is therefore planning to allow part-time employees to return to work in the extension of the job retention scheme from august onwards.

In this case, the comparison to the german short-time allowance would then be even more apt. Find out now what requirements you have to meet as an employer in the UK and where to apply for short-time allowance.

How can I, as an employer in the UK, apply for short-time allowance for my employees??

The requirements for claiming short-time allowance in the UK are surprisingly simple. The employer only needs to have a UK bank account and be registered with PAYE online. Employers are usually registered there anyway to submit reports of their employees' salaries to HM revenue and customs (HMRC).

Furlough money applies not only to full-time employees, but also to part-time and even freelance workers. The only condition: employees who receive money from the job retention scheme must not continue to work under any circumstances. Most notably, even employees who were laid off at the end of february can be rehired to make short-time benefits available to them.

The start date of the job retention scheme was 01. March and is initially planned for four months, but an extension has already been mentioned and should run until the end of october. If you are a client of our firm and have any further questions, or would like to be guided through the application process, please do not hesitate to contact us. We are happy to help you with all the necessary steps.

Can I get financial help from the UK government for my company in the UK??

The simple answer is yes, but of course the whole thing turns out to be much more complicated overall. On the official website of the UK government, owners of companies are offered a lot of information and also financial help. In addition, you can maneuver through a questionnaire by determining, for example, how many employees you employ, or how much turnover you made last year. J

E depending on how you answered the questions, different loans are offered, all specifically set up for the corona crisis. For example, you get up to 50.000 pounds, which only has to be repaid after 12 months if they can prove that the coronavirus has negatively affected their company and they have not already had financial problems in 2019.

However, if you run a business in the UK and are looking for advice, it is recommended that you do not tackle this flood of information on your own, but instead call on our help. As experts, we are very familiar with the tax system in the UK, even in this emergency situation, and are always ready for a free informational discussion. This could be especially helpful if they are interested in the following UK government offer:

Deferral of VAT taxes for companies in the UK

To take another financial burden off the shoulders of companies in the UK, the government is offering that all VAT taxes paid between the 20. March and the 30. June 2020 should be paid until the 31. March 2021 can be postponed. This almost one-year period is a really generous offer that you should definitely take advantage of, if necessary. V

However, AT MOSS or import VAT are not affected, only the normal monthly or quarterly payments. Nevertheless, the UK insists that you send in your tax return on time. Since this can be a great burden for you, especially in these difficult times, do not hesitate to get us on board for this.