As you know, the fallout from the Coronavirus pandemic continues, most businesses are adversely affected.
Please see link here as regards to the support available. We have summarised below the main points for small businesses to help understand clearly the help available during these extraordinary times.
Paying 80% of employees wages
Chancellor Rishi Sunak has pledged that the Government will help businesses financially affected by the coronavirus by paying the wages and safeguarding millions of workers.
He urged that employers do not lay off staff who were unable to carry out their jobs as the country is put on hold to tackle the spread of the pandemic. It is also understood that the wage subsidy will also apply to those companies who had already laid-off workers, as long as they were reinstated into their workforce and given a leave of absence instead.
All UK businesses are eligible to access the scheme and to do so they would need to:
Designate affected employees as ‘furloughed’* workers and notify employees of this change.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC are expected to provide further details of how this will work in due course.
- The wage protection scheme will cover the cost of wages, which is related to gross pay, and be backdated to 1st March 2020 and will initially run for three months but will be extended by the Government if it considers this necessary.
The scheme is expected to make the first grants to businesses “within weeks”, according to a Treasury spokeswoman.
In terms of small company Directors’ using this and getting 80% of their salary, the answer is YES. Directors’ will need to follow the same rules as employees who have been furloughed, and this means, that they will NOT be able to do ANY work for their company during the period in which a claim is made.
VAT Payment Holiday
The Government will be supporting businesses by allowing them to defer VAT payments for three months.
The deferral will apply for payments that would normally arise from 20th March 2020 to 30th June 2020, for VAT periods ending February, March and April 2020.
Businesses will be given until April 2021 to pay any liabilities that have accumulated during the deferral period. No penalties or interest will be charged in the deferral period.
All UK VAT registered businesses will be eligible for the deferment and it will be applied automatically.
Importantly, HM Revenue and customs will continue to pay VAT refunds as normal.
The VAT payment holiday will be applied automatically with no application process required. Please note VAT returns will need to be submitted when due, otherwise penalties will apply.
Business Rate Relief and cash grants
Grant funding has also been announced of £10,000 for all businesses, whatever their sector, who already receive small business or rural rate relief. Businesses will not need to apply for grant funding, you will be contacted by your local authority.
Please note, the position is not yet made clear on if and how cash grants would apply to those operating their business from home and those who do not pay business rates bill. I will update after it is announced.
IR35 changes delayed
New rules affecting contractors working for the private sector, directly or through an agency, that were due to come into force from 6th April 2020 until 6th April 2021, will now be deferred. The decision is “a deferral, not a cancellation, and the Government remains committed to reintroducing this policy”.Initial Support for Self Employed Individuals
There was relatively little content relevant for self-employed individuals and the Chancellor has suggested that specific measures will be introduced in the coming week.
The key announcements that are relevant for the self-employed were around the Universal Credit system.
The Minimum Income FloorThis currently means that benefits for self-employed individuals are effectively capped at a level linked to the minimum wage – which will be suspended from 6th April. This means that those on zero/low income can claim Universal Credit in the same way as someone who’s unemployed.
Increase in Standard Allowance
From 6th April the Government will increase the standard allowance in Universal Credit and the basic element in Working Tax Credit by £20 per week on top of any planned annual increases. This increase will apply for a full year and all new and existing claimants will be eligible.
Payments on Account Deferred
The Government announcements also included support for those self-employed individuals paying income tax under self-assessment. Payments on account due on 31st July 2020 will be deferred until 31st January 2021. No penalties or interest will be charged in the deferral period.
Please note we do not get involved with the Universal Credit system. If you would like support on this aspect, please contact your local Citizens Advice Bureau. Low-risk loans available
It was announced at the Budget that there will be a Coronavirus Business Interruption Scheme, which will encourage banks to lend to small businesses with competitive interest rates and debt guarantee of up to 80% by the government.
The government will also waive the 2 per cent it usually charges borrowers annually for the guarantee and will support loans of up to £1.2m.
Please feel free to contact us if you would like any further information.