Covid-19: Latest Business Friendly Measures by The Chancellor

March 21, 2020by Admin

Last night, the Chancellor announced a far-reaching package of measures to allow businesses in this country to stand by their employees at a time of Covid-19 national emergency. Such practical business advice to keep people in employment is a really good start. Governemt is still working on much of the detail and we expect more information to follow. As soon as we can, we will provide you with more in-depth comments to help you navigate the support now on offer.

Meanwhile, here’s a quick summary of practical help notified by the Chancellor due to Covid-19.

Coronavirus Job Retention Scheme

Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.

To claim under the scheme employers will need to:

  • designate affected employees as ‘furloughed workers’, and notify 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; and
  • 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.

While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.

VAT payments

The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.

The deferral applies automatically and businesses do not need to apply for it. Government will pay VAT refunds and reclaims as normal.

Income Tax payments

All income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

So,income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no need to apply for this. Government will not chrage any penalties or interest for late payment in the deferral period.

Please read in detail the earlier measures introduced in Budget 2020.

Coronavirus Universal Credit

Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.

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. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.

Business Rates holidays and cash grants

  • No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.
  • In those sectors, if your rateable value is between £15K and £51k, you’ll also receive a cash grant of up to £25,000 per property.
  • Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).
  • Local authorities will administer the rates holiday and cash grants and should deliver automatically, without businesses needing to claim.

Coronavirus Business Interruption Loan Scheme

  • These should be available from Monday 23 March and are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
  • They are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
  • Governemnt will not charge interest  for the first 12 months.

COVID-19 corporate financing facility

The Bank of England has set up a scheme to finance working capital by purchasing commercial paper from larger business ‘making a material contribution to the UK economy’. Businesses do not need to have previously issued commercial paper in order to participate. The scheme will operate for at least 12 months.

Mortgage and rent 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. They will have to pay Interest on the amount they owe.

Tenants can apply for a three-month payment holiday from their landlord. landlords will not be able to start proceedings to evict tenants for at least three months.

Insurance claims

Businesses that have cover for pandemics and government order can make an insurance claim. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres, etc., is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.

Statutory Sick Pay (SSP)

  • If you’re a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
  • The government will refund £94 per week, maximum £188, to your company.
  • It will also refund SSP for staff of businesses with less than 250 employees  for up to two weeks.

 

Please read in detail the earlier measures introduced in Budget 2020.

 

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London: Suite 2462, Unit 3A,34-35 Hatton Garden,London, EC1N 8DX
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