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Coronavirus COVID-19: the latest guidance for businesses and individuals

View profile for Andrew Crabtree
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SUPPORT FOR BUSINESSES

Coronavirus Job Retention Scheme

HMRC will set up a new online portal so that all UK employers will be eligible for assistance where an employee has been designated as a ‘furloughed worker.’ HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. The current plan is that this will be in place for 3 months, at which point it will be reviewed. This will be backdated to 1 March 2020.

Employers must set out which of their employees are ‘furloughed workers’ and inform particular employees. Furlough is the equivalent of lay off. So you can lay off staff, continue to pay them and recover 80% of that cost up to £30k per annum.

The current guidance states ‘You will remain employed while furloughed. Your employer could choose to fund the difference between this payment and your salary, but does not have to’.

Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not yet set up to facilitate payments to employers. Businesses needing short-term cash flow support may benefit from a VAT deferral (see below) and may also be eligible to apply for a Coronavirus Business Interruption Loan.

For employed directors paid via basic salary and dividends, providing you can justify that you can no longer work, you can be considered as a furloughed worker and follow the above guidance. Full details are not yet available.

Deferment of VAT payments

VAT payments can be deferred for up to 3 months. Again, all UK businesses will be eligible and the scheme will run between 20 March 2020 and 30 June 2020. There is no need to apply for this scheme. Businesses will be given until the end of 2020/2021 to settle outstanding VAT liabilities that have accumulated as a result of the 3-month deferral.

Time to Pay

Any business that pays tax to the UK government and has outstanding tax liabilities will be able to apply for their case to be reviewed by HMRC with a view to arranging a bespoke time to pay agreement. This applies to all businesses including the self-employed. HMRC has set up a dedicated helpline: 0800 0159 559.

Statutory Sick Pay

Employers will be able to reclaim up to 2 weeks of SSP payments per employee where those SSP payments related to Coronavirus. This applies to all UK employers with 250 employees or less as at 28 February 2020. The reclaim will not be via RTI, instead, HMRC will set up a new portal to facilitate this.

IR35 for the Private Sector

Changes to the IR35 off-payroll working rules in the private sector have been delayed by 12 months to April 2021.

Business Rates

HMRC will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. No action is required and this will apply to your next council tax bill in April 2020 meaning that there would be no rates payable for those businesses for 2020/2021.

Cash Grants

The retail, hospitality and leisure sectors in England can also apply for a cash grant of up to £25,000 per property. For rateable values  under £15,000, they will receive £10,000. Between £15,001 and £51,000, they will receive a grant of £25,000. No action is required as local authorities will write to eligible businesses.

Business Interruption Loan Scheme

The British Business Bank will launch a scheme from the week commencing 23 March 2020 to support businesses with a turnover of no more than £45 million per year. The government will provide lenders with a guarantee of 80% on each loan. This applies to loans of up to £5m. No interest will be charged for the first 12 months.

Corporate Financing Facility

The Bank of England are due to announce plans to buy short term debt from larger companies that are ‘fundamentally strong’. Full details are not yet available.

Companies House

If a company’s accounts are unlikely to be filed on time owing to being affected by Coronavirus then an application can be made to extend the period allowed for filing. If an application is not made and there is a late filing then the normal penalty regime would apply, so it is important to make the application ahead of the deadline.

SUPPORT FOR INDIVIDUALS

Income Tax

The 2nd payment on account of tax that is due by 31 July 2020 will be deferred until 31 January 2021. Self-employed taxpayers are eligible for this deferment. No penalties or interest for late payment will apply during this deferral period. Contact the support line on 0800 0159 559.

Statutory Sick Pay

Individuals will be eligible for SSP for the first day of absence if the absence is Covid-19 related. The individual will need to visit https://111.nhs.uk/ in order to obtain an isolation note in line with advice issued from Friday 20 March. They will still be entitled to the normal maximum of 28 weeks in any 3-year period with the same employer, however, there is no need to wait for 3 working days before they would be eligible where Covid-19 applies.

The self-employed will be eligible to make a claim for Universal Credit or new style Employment and Support Allowance. Self-employed people will receive a rate equivalent to SSP.

Mortgage and rent holiday

Tenants, as well as mortgage borrowers, can apply for a 3 month payment holiday. Interest will continue to be charged on any amount they owe. The government has announced their intention is that no one can be evicted from their home over the next 3 months where this applies. Check with your lender to find out if you are eligible.