COVID-19: The latest Government announcements

On Friday 20 March, the Chancellor added additional measures to his existing package to support businesses, the public sector and people even further during the challenging times caused by COVID-19.

 

To summarise, his full business support package now includes:

– a coronavirus job retention scheme

– deferring VAT and income tax payments

– a Statutory Sick Pay relief package for SMEs

– a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England

– small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief

– grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000

– the Coronavirus Business Interruption Loan Scheme (CBILS) offering loans of up to £5 million for SMEs through the British Business Bank

– a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

– the HMRC ‘Time to Pay’ scheme

 

In this article we will explore the recent announcements added to the existing Government support package:

 

Coronavirus job retention scheme

The Government will cover 80% of the salaries of retained workers up to £2,500 per month. 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 due to the crisis. The scheme will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April for at least 3 months.

There’s no limit on the funding available for the scheme, the government will pay to support as many jobs as needed.

How to access the scheme

You will need to:

– notify affected employees and assign them as ‘furloughed workers,’ and notify your 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. The employees cannot carryout any work for you whilst on furlough.

– submit information to HMRC about the furloughed employees that have been and their earnings through a new online portal (HMRC will set out further details on the information required).

HMRC are in the process of setting up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

 

Deferring VAT and income tax payments

No business will need to pay VAT from now to mid-June. You’ll have until the end of the financial year to repay those bills. If you’re self-employed, income tax payments due in July 2020 under the self-assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

How to access the scheme

No applications are required. Businesses will not need to make a VAT payment during this period. Business who pay VAT will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. Any VAT Government refunds will be paid as normal.

 

Income tax

Income tax self assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021 for all those who are classed as self-employed.

How to access the scheme

As with VAT, this too is an automatic offer with no applications required. It is also important to note that 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, read our blog here to find out more.

 

Coronavirus Business Interruption Loan Scheme (CBILS)

A new temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, will launch today (Monday 23 March) primarily to support primarily SMEs to access bank lending and overdrafts. See full details of this loan in our previous blog here.

The loan was originally announced in the Chancellor’s Budget and has had numerous additional measures included since then. The latest being a 12-month interest-free period, rather than the originally announced six months.

 

Paying sick pay to employees

As covered in our earlier blog here legislation is being devised to all SMEs to reclaim Statutory Sick Pay for sickness due to absence as a result of COVID-19.

How to access the scheme

A rebate scheme is under development. Further details will be provided in due course once the legalisation has been passed.

 

Sick pay and the self employed

If you have COVID-19 or are following advice to stay at home and you fall within the self employed category, you can now more easily make a claim for Universal Credit (providing you meet the usual eligibility criteria) or new style Employment and Support Allowance.

If you are eligible for new style Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to stay at home.

 

Minimum Income Floor and the self employed

From 6 April the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak.

New claimants will not need to attend the jobcentre to demonstrate gainful self-employment.

 

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres and other public venues, is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so it is important that businesses check their own terms and conditions within their policies and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics, it is however, worth checking.

 

Government guidance notes

To review the full guidance for employers, businesses and employees use the links below:

COVID-19: support for businesses

COVID-19: guidance for employees

 

Here to help

We will continue to provide you with the latest information from the Government and give you further support during this challenging time.

The PM+M team are on hand to discuss any concerns and provide assistance where required. Please contact your usual PM+M team member or if you are making a new enquiry, please call our main switchboard on 01254 679131.

 

 

This information is correct as of 23 March 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.

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