Insights

In addition to the package of temporary measures announced on 17 March 2020, aimed at supporting and protecting UK businesses affected by the coronavirus (COVID-19) pandemic, on 20 March 2020 the Chancellor has announced additional emergency measured to:

• protect workers at risk of being laid off
• defer VAT and Income Tax payments

We set out below the details of these additional proposals

We at Statura will continue to monitor any relevant development / announcement and will strive to keep our clients updated. In the meantime, please speak to your usual Statura contact should you wish to discuss the content of this document or indeed the way in which the COVID-19 outbreak is affecting your business in more detail.

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. All UK businesses are eligible.

In order to access the scheme, the employer will need to:

• designate affected employees as ‘furloughed workers,’ and notify them 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;
• 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. Employers can top up salaries further if they choose to.

The Coronavirus Job Retention Scheme will be backdated with effect from 1 March 2020 and will run initially for three months. HMRC are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

The government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months and, for the self-employed, Income Tax payments due in July 2020 under the Self-Assessment system to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020 and all UK businesses are eligible.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For self-employed individuals, payments of Income Tax under Self-Assessment 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.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

As you may recall from our previous 'Coronavirus Update' article new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support primarily small and medium sized businesses to access bank lending and overdrafts.

The Chancellor has announced that the government will now cover the first 12 months of interest payments, compared to the 6 months previously planned.

Further details, including on the lenders providing access to this scheme will be announced in the coming days, and the scheme will be available from early this week, commencing 23 March 2020.