26 March: The Brian Jukes’s first blog on the Government Coronavirus Support Announcements, here with a focus on the Support available to Businesses
Job Retention Scheme
Under the Coronavirus Job Retention scheme, government grants will cover 80% of the salary of 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 continue for at least three months. It only includes workers who were in employment on 29 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 (not yet set up). 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. It is unclear what this means in practice, but we are interpreting this for the moment as the figure of £2,500 being the gross cost and this being the maximum amount HMRC will pay. In other words, the employer will be reimbursed £2,500 for any employee with a full employment cost (gross + employer’s NI + employer’s pension contributions) in excess of £3,125.
Note that the employer can choose to pay the difference between the grant and the normal pay but they don’t have to (subject to employment law).
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. Businesses 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.
Deferment of VAT payments
There will be a deferral period for VAT which will apply from 20 March to 30 June 2020. Businesses will not need to make a VAT payment during this period. They will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period. Any VAT repayments will be paid as normal.
HMRC Time to Pay Arrangements
Any business that pays tax to the UK government and has outstanding tax liabilities will be able to apply for their case to be reviewed by HMRC with a view to arranging a bespoke time to pay agreement.
This applies to all businesses including the self-employed. HMRC has set up a dedicated helpline: 0800 0159 559.
Statutory Sick Pay
Employers will be able to reclaim up to 2 weeks of SSP payments per employee where those SSP payments related to Coronavirus. This applies to all UK employers with 250 employees or less as at 28 February 2020.
The reclaim will not be via RTI, instead, HMRC will set up a new portal to facilitate this.
IR35 for the Private Sector
Changes to the IR35 off-payroll working rules in the private sector have been deferred by 12 months to April 2021.
HMRC will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. No action is required and this will apply to their next council tax bill in April 2020 meaning that there would be no rates payable for those businesses for 2020/2021.
The retail, hospitality and leisure sectors in England can also apply for a cash grant of up to £25,000 per property. For rateable values of under £15,000, they will receive £10,000. Between £15,001 and £51,000, they will receive a grant of £25,000. No action is required as local authorities will write to eligible businesses.
Small businesses (any sector) eligible for the Small Business Rate Relief or Rural Rate Relief will receive a grant of £10,000. Obviously not applicable for businesses that don’t have business premises.
Business Interruption Loan Scheme
The British Business Bank will launch a scheme from the week commencing 23 March 2020 to support businesses with a turnover of no more than £45 million per year. The government will provide lenders with a guarantee of 80% on each loan. This applies for loans of up to £5m in value and for up to 6 years. No interest will be charged for the first 12 months.
The scheme is now open for applications as from Monday 23 March. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan.
The major high street banks are on this list of 40 providers. Gov.uk states that more information can be found on their website.
If a company’s accounts are unlikely to be filed on time owing to being affected by Coronavirus then an application can be made to extend the period allowed for filing. Here is the link.
If an application is not made and there is a late filing then the normal penalty regime would apply, so it is important to make the application ahead of the deadline.