The name COVID-19 is known to everyone now, as it put many of us working at home or self isolating. The current situation is far from ideal for many business, which started 2020 with many prospects and hope what future may bring, but instead we are worried if our business may survive it. It is reassuring to see that government is making help available for business to go through this unexpected period. Below you will find the key points announced by Chancellor.
Coronavirus Job Retention
The government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during the crisis. The scheme has been put in place after many business had no other choice than let the employees go, however these grants will help many employees to secure their job until we will all be back to work as usual.
The scheme is open to all UK employers and will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It is expected to be in place for at least three months.
To claim under the scheme employers will need to:
designate affected employees as ‘furloughed workers,’ and notify your employees of this change, as 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 cost, up to a cap of £2,500 per month. Employers can choose choose to make up the remaining 20% of their employees’ wages, but they are not obliged to do so.
While the scheme is in place, employees in the position will be deemed to be ‘furlough workers’. The will remain employed but must not do any work for their employers.
HMRC is working urgently to set up a system for reimbursement, as the existing systems are not set up to facilitate payments to employers.
VAT payments
The next quarter of VAT payments will be deferred, this will apply to end of June. Businesses will then have until end of 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
This deferral will apply automatically and there is no application needed. However, if you pay VAT by direct debit, you should cancel the direct debit if you wish to take advantage of the deferral. HMRC will not cancel your direct debit as you may wish to continue making payments. The VAT returns still have to be sent as normal. There is no change for VAT refunds and reclaims which will be paid by HMRc as normal.
Income tax payment
The second payment on account due on 31 July 2020 will now be deferred to 31 January 2021. This will be process automatically and you do not need to apply for it, therefore no penalties of interest will be charged for deferral period.
Universal credit
This is available to self-employed people who can now access full universal credit at a rate equivalent to statutory sick pay.
Statutory Sick Pay
This has been offered to companies with less than 250 employees. The government will refund £94 per week, maximum £188 for two weeks per employee. This can be applied from day 1 of someone being sick or self isolating due to COVID-19.
Business Rates holidays and cash grants
If your business is in the retail, hospitality or leisure sectors then you don’t have to pay rates for 2020-2021 tax year. Additionally in those sectors, you will received a cash grant of up to £25,000 per property if your rateable value is between £15k and £51k. The rates holiday and cash grants will be administered by local authorities and should be delivered automatically.
Coronavirus Business Interruption Loan Scheme
This is available for small and medium-sized business and will be delivered by the British Business Bank through support in wide range of funding facilities including overdrafts, loans, asset finance and invoice finance.
The first 12 months of these loans will be interest and fee free and government will cover these payments together with providing with partial guarantee of 80% on each loan.
To be eligible for the scheme the business must be based in UK and have no higher turnover than £45million per year. Please follow the link for a quick eligibility checklist on the British Business Bank website.
Mortgage holiday
Mortgage borrowers can apply for a three month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don't pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
HMRC Time to Pay
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of COVID-19 to delay payment of outstanding tax liabilities. You can contact HMRC on dedicated line for help and advice on 0800 0159 559.
You can find the lates advice and guidance from HMRC for business on their website.
Please do not forget to contact us if you have any questions, need some clarification or just would to chat about your options.
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