Update – 21st March 2020
The following new measures are being introduced as announced by the Government on 20 March 2020:
CORONAVIRUS JOB RETENTION SCHEME
The biggest announcement in yesterday’s speech was the Government’s promise to fund 80% of employee’s wages for the next 3 months, taking effect, and backdated, to 1 March 2020. The Chancellor also stated that this 3-month period would be extended if we are still in the same situation come 1 June 2020.
The grant will cover 80% of each affected employee’s wages, up to a maximum of £2,500 per month per employee. We await detail of whether this factors in employer auto-enrolment pension contributions and employer national insurance contributions.
The announcement stated that it is available for employees who have been either laid off due to the virus, or who are currently not working because of the virus, i.e. unpaid leave. The Chancellor did not specifically mention how this would impact those employees who are still working, either at full or limited capacity, and we wait to see if the scheme will cover the salaries of those still working.
If you had been recently laid off because of the virus, you are encouraged to contact your former employer to be reinstated onto the payroll as is the Government advice.
This applies only to employees/employers who operate through a PAYE payroll system, it is currently unclear if the IR35 legislation, for those who have had their contracts changed before the announcement of the delay, will affect this.
This headline announcement is a huge relief for employers and employees alike with March salaries soon to fall due, however there is currently no method or process for being able to claim this money.
We expect further information in the coming weeks, but Government estimates that these grants will not be paid out until the end of April earliest.
HMRC and Payroll software providers are working together to put this scheme in place, it is expected that the application will be applied through your payroll software.
For our clients who currently engage their payroll through us, we will provide you with the details as soon as they become available.
Many of you will have an upcoming VAT bill due 7th April 2020. However, the Chancellor has announced that VAT liabilities for the next quarter will be deferred until the end of the financial year (31st March 2021).
This applies to all VAT bills falling due from now to end June 2020. We would anticipate then that, unless further extensions are announced, your next VAT liability will be no earlier than 7th July 2020 and this will apply to a VAT quarter ending 31st May 2020 or later. Again this needs to be clarified with detailed guidance from HMRC.
If you have a Direct Debit set up with HMRC for VAT, you may want to consider cancelling to avoid any payments still being taken.
31ST JULY SELF-ASSESSMENT PAYMENTS ON ACCOUNT
For those in the self-assessment system, the July 2020 payment on account, for the 2019- 2020 tax year, has been postponed to 31st January 2021.
If you have other taxes falling due in the coming months, you should call HMRC’s Coronavirus specific helpline for Time To Pay Arrangements on 0800 0159 559.
We understand that, for our clients who have contacted HMRC in this manner, they have been granted extensions up to June/July 2020 for taxes such as PAYE and Corporation Tax, but have been advised to call again at that time for further extensions or payment plans.
BANK OF ENGLAND BASE INTEREST RATE CUT TO 0.1%
Somewhat overlooked behind all the major announcements from the Government, was the Bank of England’s decision to reduce the base interest rate to 0.1%, a further cut from 0.25% announced just days before.
This will help those on tracker loans and mortgages. Also if you have any money held up in fixed term deposits, some major banks are allowing these to be withdrawn penalty free in order to obtain much need cash.
MOTOR VEHICLE OR FLEET INSURANCE
While not a Government initiative, we advise that clients who have on-the-road vehicle insurance to consider if they need this in place for the coming months.
If your business is transport reliant, and you need to close down for a temporary period, it is worth considering filing a Statutory Off Road Notification and also considering reducing your fleet insurance to Third Party only.
We have been informed from a few clients that some insurance companies are refunding or reducing premiums in the coming months in these instances from forced closures. For those working from home, this could also be considered on personal cars or any vehicle surplus to current requirements.
Anyone on the Government’s Universal Credit benefit scheme will see a £1,000 a year increase in the benefits for the next 12 months. Those on the working tax credit will also receive this same increase.
There is a significant number of eligibility criteria to apply for Universal Credit, and is dependant on the income of your household.
Please use the following link https://benefits-calculator.turn2us.org.uk to check your eligibility.
The Government has also removed the minimum income floor cap, which applied to, and restricted, the amount of Universal Credit a self-employed person could obtain in their first year of trading, as well as ensuring Universal Credit, for those self-employed, would match the Statutory Sick Pay rates for employees.
However, it is reported that there is a 5-week waiting period from application to be placed onto the scheme.
EMPLOYMENT AND SUPPORT ALLOWANCE (ESA)
If you have contracted Coronavirus, or are self-isolating, it is encouraged you apply for the ESA, which applies if you’re too sick to work. To claim this you must have been making national insurance contributions in the past 2/3 years and obtain a sick note from the NHS 111 online website.
For those businesses who import goods from abroad, it is advised you email the Department for International Trade (DIT) at COVID19@trade.gov.uk, who may be able to help you find alternative suppliers.
Additionally, if you are an exporter and in need of financial support or advice, it is recommended you contact: firstname.lastname@example.org
Alongside the new announcements, we also have some revisions to our previous notice on 18 March 2020:
SMALL BUSINESS GRANT
The small business grant (available for business with properties eligible for Small Business Rates Relief) may be able to obtain some relief if their business comes within the sliding scale of rateable value between £12,000 – £15,000. We await further guidance expected 1 April 2020.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
The Government has extended the interest free period to 12 months, previously 6 months.
Again, these loans are expected to come available this week commencing 23 March 2020, and you should contact your bank at the earliest possible opportunity.
Your bank may require cash flow forecasting or an analysis of your previous year results to obtain financing, please contact us if you need assistance with this.
We previously advised that the mortgage holiday was only expected to apply for homeowner mortgages, but this has been extended to Buy To Let mortgages.
In addition, emergency legislation is being put in place so that any renter who cannot pay their rent as a result of the virus, cannot have eviction proceedings brought against them for the next 3 months.
CASH FLOW MANAGEMENT
As cash flow tightens, you need to know how every £ is spent and where to identify unnecessary expenditure.
Any spending on advertising or marketing may not be essential to you in the current climate, it may also be necessary to suspend subscriptions, reduce overheads or negotiate with your supply chain for extended credit terms where possible.
We can assist in identifying any cost savings or unnecessary expenditure. If you’re worried about cash flow, then please do not hesitate to contact us.