CORONAVIRUS JOB RETENTION SCHEME
In order to encourage businesses not to lay off any workers, they will be able to apply to HMRC for a grant to cover 80% of the salary of any employee for whom work is not available, up to £2500 per month. This will be for an initial three-month period, and is back-dated to 1 March 2020. This much we know:
- Any employer in the country (small or large, including charitable or non-profit) will be eligible for the scheme.
- Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the coronavirus outbreak.
- The employer will have to designate affected employees as furloughed i.e. you are changing their status
- UK workers of any employer who is placed on the CJRS can keep their job.
- It can apply to anyone who was on the payroll at 29 February 2020, even if they have subsequently been made redundant, as long as they are reinstated on the payroll
- The actual mechanism of how this will work has still be clarified by HMRC but they have said it will be backdated to the date of the announcement. It appears that the employer is unlikely to receive the reimbursement before May due to the lags in the system
- The furloughed employee must not undertake work for the employer
- It is believed the employer does not have to top up the salary to 100%
- This scheme does not apply to self-employed contractors
This is an area on which the devil will be in the detail. We have found the following on the Gov website:
“To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.”
It does suggest that the £2,500 includes ER’s NI and ER’s pension contributions, so the £2,500 won’t be the maximum gross pay.
Also there may be a bit of resentment that some people get paid for not working.
One employee single director companies might be tempted to claim this (assuming they have been paying themselves a salary) but we suspect that this will be pushed back.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch on Monday to support businesses to access bank lending and overdrafts. The Government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to small and medium businesses. 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.
Practical steps – The loans can be accessed through high street lenders and most other specialist lenders to business. Approach one of the 40+ accredited lenders with a borrowing proposal.
As far as we can ascertain, at the time of writing, there is no facility to receive direct cash grants from the Government (other than for businesses that do not pay business rates – see below). This may of course change quickly.
GENERAL TAXATION – TIME TO PAY
The original deferral plans (for all taxes) are still in place. However, it has proved to be extremely time-consuming to get to speak to HMRC to agree a deferral of payments. The Chancellor has therefore announced that all VAT payments due over the next three months can be automatically deferred until 31 March 2021. We understand this applies to any VAT payment between 20 March and 30 June. No interest will be charged.
Some anticipated questions and our take on the answers are:
- Will I still have to submit on time? A. Yes, unless there is good reason
- If I am late submitting will the normal surcharges regulations apply? A Yes, unless there is a reason in relation to situation (likely to be quite easy to argue for some)
- I get refunds, will they still come at the expected time (like normal)? A Yes the chancellor has said (fingers crossed, although might be slightly slower than normal)
- I pay by direct debit, do I cancel it and have to reset it up again after? A. HMRC have advised that you should cancel your direct debit if you don’t want to pay.
- I want I pay my VAT can I still do that? A. Yes if you want, just pay to HMRC bank with VAT number as reference like normal
Practical step – if you expect your sales to drop below the VAT threshold of £85,000 you might benefit from deregistering for VAT.
For those needing to make Income Tax Payments (being the second payment on account for tax year 2019-20) on 31 July, these have been deferred until 31 January 2021. There was no indication that this measure is to be restricted in any way.
Practical steps – HMRC have set up a dedicated helpline on 0800 0159 559 to discuss late payment of tax with businesses effected by Coronavirus. We are happy to try to contact HMRC on your behalf. We may to do this in writing, as the telephone service is overwhelmed currently.
It is a decision for each taxpayer but we would advise everyone against paying even if they have plenty cash reserves and to transfer to savings instead. If this goes on longer than expected they may need that cash and gives more options.
PAYE and Corporation tax
As far as we know in order to delay PAYE payments a call needs to be made to HMRC on their helpline to support businesses affected by coronavirus (COVID-19) 0800 0159 559
The Government will introduce a 100% business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
Practical steps – this will be dealt with automatically by the local authority charging business rates.
ONE-OFF CASH GRANTS
The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
Funding will not be available until April.
Practical steps – Information on how to claim and further detail is not yet available.
Mortgage lenders have agreed they will support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to 3 months. This will give people the necessary time to recover and ensure they do not have to pay a penny towards their mortgage in the interim.
Clarification is needed as to whether this covers business loans, or only personal mortgages.
Practical steps – Borrowers should contact their lenders for more information.
Companies House has announced it will consider three month extensions to the filing of accounts. https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts .
Practical steps – It is recommended that clients do their best not to rely on this if they can possibly help it, as Companies House are notorious for not accepting appeals. This may change, if the law is changed to cater for Coronavirus delays.
SUPPORT FOR EMPLOYERS PAYING SICK LEAVE
The Government will bring forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
- Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force.
Practical steps – The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. It is likely that in the first instance, relief will be available as a deduction from the PAYE liability but this is not confirmed. If you have substantial costs in this respect you may wish to consider offsetting against your PAYE liability. In any case you could consider asking for the whole PAYE to be delayed anyway. We have successfully deferred clients PAYE liabilities by two months this week.