KEY MEASURES

The Chancellor Rishi Sunak has announced unprecedented measures to support the self-employed, businesses and employees. He said COVID-19 is “a public health emergency but also an economic emergency” and “will do whatever it takes“.

We are here to provide you with whatever support needed to navigate your way through these unprecedented circumstances. We have below listed the key announcements but for further detailed information, please email your usual Relationship Partner or contact person, or request a call back.

Key measures include:-

• On the 26th March 2020, the government announced it is to setup a new Self-Employed Income Support Scheme. The taxable grant will pay 80% of average profits over the last 3 financial years, capped at £2,500 per month and will be available for at least the next 3 months. The first payments are expected in June 2020 and will be backdated to March 2020. The Chancellor confirmed HMRC will automatically contact self-employed individuals who have filed a tax return. There is no need to apply but there will be some limitations. Read More.
  • Company directors are not classed as self-employed therefore excluded from this scheme, but can be furloughed and claim under the Job Retention scheme.
• Coronavirus Job Retention Scheme a is now live. The Government to help employers pay people wages via the COVID-19 Coronavirus Job Retention Scheme. It is understood any business that asks employees to take a temporary leave of absence due to the needs of an employer but kept on the payroll, also known as “furloughed workers“, will be eligible for the scheme. Employers will be reimbursed 80% of the salary, up to a cap of £2,500 per employee, per month and backdated from 1 March 2020, and open until end of October 2020. Employers could choose to fund the differences between this payment and the salary, but does not have to. To claim Coronavirus Job Retention Scheme, employers will need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC are working urgently to set up a system for reimbursement. It is understood the first set of payments from HMRC will be paid late-April.  How to apply for Coronavirus Job Retention Scheme and Furloughed Employees;
  • Directors of Limited companies and PAYE members of LLPs can be furloughed in the same way as other employees and continue to complete statutory duties but will only be able to claim 80% of their PAYE salary (not dividends), up to £2,500 per month so long as they were on the payroll on 28th Feb.
• Up to £330 billion of Government backed and guaranteed loans, equivalent to 15% of GDP,  with more to be made available if needed. This will be available via:-
  • • New lending facility for commercial and corporate businesses on “attractive terms”. Further details to be announced;
    • Up to £5 million Business Interruption Loan scheme for SMEs. As well as loans, there are many other types of finance supported by the programme, such as overdraft. This will be interest free for 12 months (government will cover the first 12 months of interest payments) and can be applied for via over 40 lenders including the big four banks — Barclays, HSBC, Lloyds and RBS. It is our understanding that the Business Interruption Loan scheme will be available for viable businesses but unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. Full details will be released on 23 March 2020.If you are thinking of applying, It would be wise to have the following information ready:-
      • Cash flow statement showing the impact of COVID-19 over the next 3-6 months,
      • Latest year end accounts,
      • Latest management accounts (full P&L and Balance Sheet).
• Bounce Back Loan scheme for small and medium-sized businesses to borrow between £2,000 and £50,000. The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan;
• For businesses with fewer than 250 employees, the cost of providing 14 days of statutory sick pay per employee will be refunded by the government in full;
• The Chancellor confirmed VAT payments due between 20 March and end June can be deferred until a later date but must be paid before 31 March 2021, whilst any VAT refunds and reclaims will be paid as normal. This is a very generous move and represents a major boost to businesses. It also opens up some very significant opportunities for businesses to structure themselves to maximise the potential benefits. If you are interested in exploring how this can help your business, please contact Richard Collier our VAT Director, or your usual contact. NB – If your next VAT return is for the period ended 31 March, please seek advice as soon as possible, to avoid missing this deadline for maximising the opportunity;
• Clients who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.
• Upcoming self assessment payments due on 31 July 2020 will be deferred to 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;
• Business Rates Holiday for 12 months for all retail, hospitality, leisure and nursery businesses irrespective of rateable value. We understand local authorities will automatically be sending revised 2020/21 rates bill in the coming weeks;
• £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000. It is not yet clear when or how businesses will access the grant, but as it is linked to rateable value, it may be administered by the local authorities;
• One off cash grants of £10,000 to businesses who pay little or no business rates because of small business rate relief (SBBR). We understand If your business is eligible for SBRR, you will be contacted by your local authority – you do not need to apply. Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly;
• All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. We understand that HMRC is willing to allow businesses defer tax payments but there are significant delays when calling. If you are concerned about being able to pay your tax due to COVID-19, please contact your usual Relationship Partner or VAT Director, Richard Collier;
• Mortgage lenders will offer 3 month holiday;
• IR35 reforms are to be delayed for a year, but details are yet to be released.
• Moreover, if COVID-19 has affected your company and you need more time to file your accounts, you should apply for an extension before your filing deadline.