Chancellor Rishi Sunak announced on Friday (20 March 2020) a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by coronavirus.
CORONAVIRUS JOB RETENTION SCHEME
Under the new Coronavirus Job Retention scheme, government grants will cover 80%, up to a cap of £2,500 per month 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.
VAT
VAT payments will be deferred from 20 March 2020 until 30 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.
Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay.
INCOME TAX
Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
SELF-EMPLOYED
Self-employed people can now more easily make a claim for Universal Credit or new style Employment and Support Allowance. Hopefully further support will be announced by end of this week (27 March).
From 6 April they are increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for 1 year. Both will increase by £20 per week on top of planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.
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.
STATUTORY SICK PAY
Employers will receive a refund for up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19, which is £94.25 a week.
BUSINESS RATES HOLIDAYS AND CASH GRANTS
No rates payable for the 2020-2021 tax year for any business in the retail, hospitality leisure sectors and for nurseries
In those sectors, if your rateable value is between £15K and £51k, you'll also receive a cash grant of up to £25,000 per property. Please visit your local authority website for details on how to obtain the grant and the eligibility criteria.
Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget). Please visit your local authority website for details on how to obtain the grant and the eligibility criteria.
The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
CORONAVIRUS BUSINESS INTERRUPTION SCHEME
These should be available from Monday 23 March and are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
They are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
No interest will be charged for the first 12 months.
COVID-19 CORPORATE FINANCING FACILITY
The Bank of England has set up a scheme to finance working capital by purchasing commercial paper from larger business ‘making a material contribution to the UK economy’. Businesses do not need to have previously issued commercial paper in order to participate. The scheme will operate for at least 12 months.
MORTGAGE HOLIDAY AND RENT
Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don't pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants in private and social accommodation will not be evicted from their homes for 3 months if they struggling to pay rent due to coronavirus outbreak. At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
INSURANCE CLAIMS
Businesses that have cover for both pandemics and government-ordered closure should be covered. The government and insurance industry confirmed that government ordered closure is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.
The detailed guidance about support for businesses is available here.
Let's work together through tough times, so please contact us if you have questions info@acbaccountancy.co.uk.
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