Coronavirus Pandemic - Update on new Government Measures - Business Survival Guide
Coronavirus pandemic – Update on new Government measures – Business Survival Guide
It has only been five days since our last iNews on 18th March 2020, however many new measures have since been released by the Government to support businesses through the current crisis and we also now have some experience in accessing the support available.
A lot of detail is still outstanding, however for now, we have summarised the latest position below:
New Government Measures to help Businesses
1. 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.
The Government intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020 (claims will be backdated), however this will be extended if necessary.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
All UK businesses are eligible.
What is a furloughed worker?
We understand that a furloughed worker is “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” per GOV.UK.
It is noted that employers will need to notify employees of this change in employment status to furloughed, but that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
Coronavirus Job Retention Scheme (CRJS) will be administered by HMRC.
Employers will need to:
Designate affected employees as ‘furloughed workers’ (see further below).
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).
As noted above the grant is a reimbursement to the employer therefore the employer will make the wage/ salary payment to the furloughed worker and then be reimbursed by HMRC.
When will the scheme be live?
No set date but the following are indications it will not be immediate:
“HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.”
“HMRC are working night and day to get the unprecedented Coronavirus Job Retention Scheme up and running and we expect the first grants to be paid within weeks.”
“If your business needs short term cash flow support, you may be eligible for the Coronavirus Business Interruption Loan Scheme.”
2. Support for businesses through deferring VAT
An addition to the previously announced Time To Pay Arrangements for Tax payments, the Government have announced they are deferring Valued Added Tax (VAT) payments for 3 months.
All UK businesses are eligible, and the deferral is automatic with no application required.
Businesses will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
3. Support for businesses through deferring income tax payments
They are also deferring Income Tax payments for the self-employed, that would usually be due 31st July 2020 to 31st January 2021.
Again, this is an automatic offer with no applications required.
No penalties or interest for late payment will be charged in the deferral period.
4. Support for larger firms through the COVID-19 Corporate Financing Facility
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
All UK businesses are eligible, and the scheme is expected to be available in the next few days.
5. Support for nursery businesses that pay business rates
The government are introducing a business rates holiday for nurseries in England for the 2020 to 2021 tax year. This applies to businesses based in England.Properties that will benefit from the relief will be hereditaments occupied by providers on Ofsted’s Early Years Register that are wholly or mainly used for the provision of the Early Years Foundation Stage.
No action is required as this will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.
6. Update on measures included in our previous iNews
All previously announced measures are included in our iNews of 18th March 2020, however we have provided an update below, where relevant:
Time to Pay Arrangements - HMRC have 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.We have so far agreed payment holidays for PAYE for several clients, HMRC appear to be accepting a 10-week deferral without any financial evidence being supplied.
- Coronavirus Business Interruption Loan Scheme - The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.You should talk to your bank or finance provider (not the British Business Bank) as soon as possible 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.It is expected that the scheme will be available in the next few days.
- Support for businesses that pay little or no business rates – You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Cash grants for retail, hospitality and leisure businesses - You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
- Support for businesses who are paying sick pay to employees - A rebate scheme is being developed. Further details will be provided in due course once the legislation has passed.
If you have any questions at all in relation to the above measures please do get in touch with our Tax Partners, Steve Crompton or Lucy Williams on the details below: