Below is a summary of some the measures that have been announced in the last few days –
Coronavirus Job Retention Scheme
The government has announced a new ‘Coronavirus Job Retention Scheme’. The scheme is open to all UK businesses who have employees, to receive support, to enable them to continue paying part of their employees’ salary, for those employees that would otherwise have been laid off during this crisis.
- Employer’s will be asked to access a HMRC portal to register their employee’s as furloughed workers. A furloughed worker is someone who has been granted leave of absence or laid off for a temporary period.
- The scheme means that HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
- Each employee should be notified of this change to their employment conditions. (HMRC will publish further details in due course)
- Changing the status of the employees will remain subject to existing employment law and should therefore be discussed and agreed with each employee.
- Employer’s will need to submit information to HMRC about the employees that have been furloughed and their earnings. The earnings will be based on the February 2020 payroll information and can be backdated to 1 March 2020.
- Employer’s can top up the employee’s salary to 100% but they don’t have to. If the employer can’t, this should be discussed with the employee and agreed.
- The scheme will be open for at least 3 months, but the chancellor said that it would be extended if necessary.
Deferring VAT payments
The Government announced it is deferring VAT payments for 3 months. The deferral will apply from 20th March 2020 until 30th June 2020. All UK businesses are eligible. The deferral is automatic. Businesses will not need to make a VAT payment until after 30th June 2020.
- Businesses will be given until the end of the 2020/21 tax year (5th April 2021) to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
- Until further details of the scheme are published by the government, including a full list of the VAT periods covered, there is no official guidance on how HMRC will manage this.
- Please continue to prepare and submit your VAT returns on time – HMRC’s regime for late submission is still likely to apply
- If you are due a refund, you don’t need to do anything, this should be provided in the normal way
- If you pay by Direct Debit (DD) and you can’t pay the VAT liability, you will need to cancel the DD in place with HMRC
- If you wish to keep paying VAT during the deferral period, it’s likely HMRC will allow you to do so.
Deferral of income tax payments
If you’re self-employed and need to make a payment on account in July 2020 under the Self-Assessment system, HMRC have deferred this payment until 31 January 2021.
- The deferral is automatic for all self-employed people. No penalties or interest for late payments will be charged in the deferral period.
- As usual, I would advise all our clients to submit the Self-Assessment Tax Return by the 31 January 2021 deadline date.
- As we are reaching the end of the tax year (5 April 2020) I would encourage any client who is concerned about paying their tax liability, to provide us with their accounting records as early as possible, so that we can provide you with as much notice of your income tax liability as soon as possible, prior to the 31 January 2021 deadline.
- If your tax liability is outstanding from the 2018/19 tax year, which was due to be paid by 31 January 2020, I would advise you call HMRC’s dedicated “Time to Pay” helpline to agree a payment arrangement. Call 0800 0159 559
- If you’re self-employed you will not usually be covered by SSP. You should be able to claim either Employment Support Allowance (ESA) or Universal Credit.
- Self-employed claimants on Universal Credit who are required to stay at home or are ill as a result of coronavirus will not have a Minimum Income Floor (an assumed level of income) applied for, a period of time, while affected
- If further support for self-employed people is released, we will of course let you know as soon as possible.
Statutory Sick Pay relief for small businesses with employees
The Government announced it will introduce legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme 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 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, 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
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
Cash grants for businesses operating from business premises
Small businesses that pay little or no business rates and are eligible for small business rate relief (SBBR) or rural rate relief (RRR) are able to receive a cash grant of £10,000; the business will be contacted by the local authority – they do not need to apply. The funding will be made available to local authorities in early April.
Retail, hospitality and leisure businesses
- The government are giving retail, hospitality and leisure businesses in England which do pay rates a 100% business rates holiday for the next 12 months. The local authority will contact you in relation to this.
- A £25,000 grant will be made available to retail, hospitality and leisure businesses operating from premises, with a rateable value over £15,000 and below £51,000
- To check your rateable value for your premises to see if you qualify, please follow the link https://www.gov.uk/correct-your-business-rates
Mortgage holiday – help for people who rent and buy-to-let landlords
The government announced a three-month mortgage payment ‘holiday’ to help those in difficulty as a result of COVID-19. Your personal credit rating will not be affected for delaying payments for up to 3 months. The repayments would still need to be made in the future and interest would still be payable.
On 18th March 2020, the government announced emergency legislation to suspend new evictions from social or private rented accommodation while this national emergency is taking place.
No new possession proceedings will commence during the crisis. Landlords will also be protected as the three-month mortgage payment holiday includes Buy to Let mortgages.
Coronavirus Business Interruption Loan Scheme
The government announced a new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, launched on 23rd March 2020 to support primarily small and medium-sized businesses to access bank lending and overdrafts.
The scheme is for businesses with viable borrowing proposals, up to £5 million in value, that the COVID-19 outbreak has ‘interrupted’. Businesses can access the first 12 months of that finance interest-free, as the government will cover the first 12 months of interest payments.
- This is essentially a loan which will need to be repaid.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
- An industry-wide agreement was signed by all UK domestic suppliers of energy to provide support to pre-payment and pay-as you go customers during this current period.
- If you have personal credit card debt, please speak to your provider to discuss a revised payment arrangement.