Building business resilience during times of national and global uncertainty
Originally published on Mon, 23rd March 2020
Following the Chancellor’s announcement on Friday 20 March 2020 we have summarised the initiatives and measures for you, all of which are very helpful but we must stress that the full details and practical application of the initiatives have yet to be announced. As soon as we have further details we will let you know.
The Coronavirus Job Retention Scheme
For the first time in Britain’s history the Government is stepping in and helping to pay people’s wages through the new Coronavirus Job Retention Scheme.
Any employer in the Country whether small or large, charitable or non-profit will be eligible for the Scheme.
Employers will be able to contact HMRC for a grant to cover the wages of employees who are not working but have been granted a leave of absence and kept on the payroll rather than laying the employees off.
Government grants will cover at least 80% of the salary of retained workers – up to a total of £2,500 per month per employee with employers having the option to top up salaries further should they choose to do so.
This measure will allow employers to retain their staff even if they cannot afford to pay them. The Scheme will cover the cost of wages backdated to 1st March 2020 and will run initially for at least three months although it may be extended for longer if required.
HMRC are working around the clock to get the Coronavirus Job Retention Scheme up and running and it is hoped that this will be operational before the end of April.
I should stress that so far as we can deduce the scheme is only applicable to staff who are not working. The details of the scheme will therefore be vital for clarity.
So far as we understand the details will be released early this week and will we hope identify in detail who and how such claims can be made and the financial assistance provided.
I will of course keep you fully informed as soon as we know.
Coronavirus Business Loan Intervention Scheme
It was initially planned for the Scheme to be interest free for six months – this has now been extended to twelve months and will be available from Monday 23rd March 2020.
In addition further measures will be introduced next week to further support larger and medium sized companies to enable them to access the credit they need.
Again the full details of who and how to apply for the loans will we understand be released this week. We are sorry we don’t have any further details at the moment but are really hoping they will be released today – especially bearing in mind they are meant to be available from today.
Again we will of course keep you fully informed as soon as we know.
Further cash flow assistance through the tax system was also announced for support with the next quarters VAT payments.
The next quarters VAT payments will be deferred for all businesses. No business will have to settle their VAT liabilities for this next quarter from now until the end of June. Businesses will have until the end of the financial year to repay those bills.
As previously advised the helpline to defer all PAYE/VAT and Corporation Tax liabilities is still in place. This latest enhancement merely clarifies the situation with regards to VAT - there is a blanket agreement to defer this next quarter’s payment.
Again we are waiting for clarity on this latest announcement and its practical arrangements regarding the filing of such VAT Returns but our guidance at this stage would be to file but not pay.
Overview of measures
The Government will:
Pay people’s wages up to 80% of their salary to enable the employee to be granted a leave of absence rather than being laid off.
Defer £30bn of taxes until the end of the financial year.
Lend unlimited sums of money interest free for twelve months.
Abolish business rates altogether this year for those in the hospitality, retail and leisure business.
Provide cash grants of up to a maximum of £10k or £25k for small businesses depending on your rateable value.
Self employed individuals
The safety net for self employed people has been strengthened by suspending the minimum income floor for everyone affected by the economic impacts of Coronavirus.
Every self employed person can now access, in full, Universal Credit at the same rate as Statutory Sick Pay.
There does appear to be a gap in the level of support provided to the self employed either trading in their own names or through a limited company. We sincerely hope that this gap will be addressed with further measures.
Self assessment personal tax payments on account
All Self Assessment Tax payments on account due on 31 July 2020 will be deferred until January 2021.
How to contact us
One of our core values at Watson Associates is to ‘Partner’ our clients. This means helping you to navigate both the good times and the uncertain times and our resolve is as strong as ever to deliver meaningful and helpful advice through the coming months. Please do contact us at the office or by email to clarify anything you have read or have questions about and we will do our best to help you.
The content of this information has been collated from the statement given by the Chancellor on Friday evening – you can read the full statement here https://www.gov.uk/government/speeches/the-chancellor-rishi-sunak-provides-an-updated-statement-on-coronavirus
And for further guidance on COVID-19: support for businesses click here https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme