Last night the Chancellor stood in 10 Downing Street and announced some new support for small businesses.
At this point in time, we still do not understand the detail of the various measures that have been announced – rest assured we will update you as soon as things become clearer.
They can be summarised as…
Coronavirus Job Retention Scheme
HMRC will reimburse 80% of furloughed (basically another word for redundant) workers wage costs, up to a cap of £2,500 per person per month. HMRC are working urgently to set up a system for reimbursement as currently their systems are not able to facilitate payments to employers.
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE 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 be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 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. 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.
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
VAT and Income Tax Deferral
The next quarter of VAT payments will be deferred, 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.
If you want to take advantage of this then we suggest you should also cancel your DD for HMRC VAT via your online banking
Income Tax payments
The self-assessment tax payment you should be making on 31 July 2020 has been deferred until 31 January 2021.
To reiterate these are deferrals not write offs, so both the tax and the VAT will still be payable.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
The Time to Pay helpline has fallen over a number of times this week and has been unable to cope, so this relief is something that was already happening in practice anyway.
HMRC Time to pay
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 on 0800 0159 559. The helpline has been difficult to access so the VAT and the self assessment deferment schemes are automatic and you do NOT need to apply for them.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The interest free period on loans under this scheme was extended from 6 to 12 months.
As far as we can see all the rest of the reliefs have stayed the same.
You can get full details of everything that is currently available to small businesses (basically loads of loans!) here…
Liric Coronavirus Catch-Up
I am going to attempt an online meeting to answer any questions you have about how this may affect your business. I will provide further details of this as soon as I can.
We will email separately with some practical advice to help you in this difficult time, but one thing we would say is to try and not worry about what has not yet happened. We are here to help and support you.
And a final word……Stay safe. Do what you can with what you have. Control what’s in your control. Help as many people as you can through this period with any spare resources you have, whether that’s time, money or love. This will not last forever, nor for very long and we will get through this… together… and be stronger at the other side.
Dont forget to join our WhatsApp group for latest updates and discussion https://chat.whatsapp.com/EJhUepkQqm20pckeERxsG1
Lisa and the Liric Team