Update: The Chancellor's Message
Last night the Chancellor set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.
Here are some of measures announced to support businesses as taken from HMRC website:
Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
You must designate affected employees as “furloughed workers”.
You must notify your employees of this change – remember changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
HMRC is working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers so please let us know if this affects any of your employees so we can advise HMRC so that when the scheme is in operation, we can put your claim forward.
In the meantime if your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan (see below).
Ability to defer VAT
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
All UK businesses are eligible. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.
VAT refunds and reclaims will be paid by the government as normal.
Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.
Ability to defer Income Tax Payments
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. No penalties or interest for late payment will be charged in the deferral period.
HMRC have also scaled up their “Time to Pay” offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities (see below).
Support for businesses that pay little or no business rates
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.All the major banks will offer the Scheme once it has launched. You should talk to your bank or finance provider ASAP and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The scheme will be available from early next week commencing 23 March.
Support for Self Employed and those ineligible for SSP (this may be subject to change as the government are being pressed for greater support for the self-employed)
The government recognises that self-employed people and employees below the Lower Earnings Limit are not entitled to SSP. The best system of financial support for these people is the welfare system and, in particular, ‘new style’ Employment and Support Allowance and Universal Credit.
‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day
People will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre
For the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating according to government advice for duration of the outbreak, ensuring self‑employed claimants will be compensated for losses in income
Support for businesses paying tax: Time to Pay service
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s “Time to Pay” service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.
Insurance
Unfortunately, most businesses are unlikely to be covered by insurance, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics. Businesses fortunate enough to have cover for both pandemics and government-ordered closure should be covered, so I would encourage you to check the terms and conditions of your specific policy and contact your providers.
Mortgage payment deferral
A three-month mortgage deferral will be available to homeowners affected by coronavirus related issues. To find out more contact your mortgage provider.