Huge support for UK plc: COVID-19. What action should you take NOW? ***UPDATED 27th APRIL 2020***
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.
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 19 March, where an RTI submission was made on or before that date.
How to access the scheme:
- designate affected employees as ‘furloughed workers’, and notify employees of this change (for those unaware, furloughed means a period of time that a worker is allowed to be absent temporarily from work). 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.
For employees to qualify for this scheme they should not undertake work for you while they are furloughed.
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.
Review your staff resourcing in light of the support offered. Has anyone been made redundant that could now be furloughed? Who of your existing workforce should you look to furlough? Prepare ahead of the mechanism for receiving the cash being introduced.
Read our blog on The Coronavirus Job Retention Scheme
The next quarter of VAT payments will be deferred. The deferral will apply from 20 March 2020 until 30 June 2020, 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. VAT refunds and reclaims will be paid by the government as normal.
Don’t pay your next VAT payment. If you pay by Direct Debit, be sure to cancel it ASAP to avoid the relevant payment being automatically collected by HMRC.
Income Tax payments
Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
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 applications required. No penalties or interest for late payment will be charged in the deferral period.
Don’t pay your self-assessment due 31 July 2020. Could the funds be put to good use for 6 months (remembering you’ll need to pay it by 31 January 2021)?
HMRC Time to Pay/Deferral
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 https://www.gov.uk/difficulties-paying-hmrc .
No action required for your next VAT payment, as above. Call HMRC to agree a deferral for the latest PAYE/NI due. For those with a company financial year end of 30 June, corporation tax payments will be due on 1 April 2020 – do you need to arrange a time to pay? If so do it now.
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).
- The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
Cash grants are now being paid. Check with your local authority to ensure they have your bank details.
Coronavirus Business Interruption Loan Scheme (CBILS)
- 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.
- No interest will be charged for the first 12 months.
Get your financials up to date and forecasts prepared, ready for the mechanism for making applications to go live.
Bounce Back Loan Scheme announced 27th April
There has been some welcome news for small businesses in the wake of the COVID-19 pandemic as the government announced a new fast-track micro loan scheme.
The Bounce Back Loan Scheme is designed to help SMEs borrow between £2k and £50k, with the government guaranteeing 100% of the loan. There is a simplified application process and eligibility criteria with the aim that many applicants will receive funds as quickly as within 24 hours from approval, if not a matter days.
Bounce Back loans will be free of interest and repayments for the first 12 months. Loan terms will be up to six years and there will be guidance over interest rates for the remaining terms with pressure on banks not to profiteer.
Also worth noting if you have been able to get a CBILS loan up to £50k, you will be able to arrange for this to be transferred through your lender to Bounce Back Loan Scheme up until 4 November 2020.
The Bounce Back Loan scheme will be open from the 4 May 2020.
As with CBILS get your financials up to date, ready for the mechanism for making applications to go live.
If you’ve already had a loan approved under CBILS for less than £50k, make sure you speak to your funder to look at transferring it to the Bounce Back Scheme before 4th November 2020.
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