On Friday 20 March, the Prime Minister, Boris Johnson, and Chancellor, Rishi Sunak announced further unprecedented economic intervention as they vowed to stand together and support businesses and individuals in the fight against the Coronavirus.
The packet of measures announced, in addition to those that have been announced previously, mean that the Government is delivering one of the most comprehensive responses in the World to the Coronavirus.
The new measures announced include:
- Support for wages – The government have promised to reimburse businesses 80% of wages for furloughed workers, up to a cap of £2,500 per month, for any type of business. This includes small and large businesses as well as charities and those in the not for profit sector. The support will be backdated to 1st March and will be available for at least 3 months but the Government have not ruled out extending this in due course.
A furloughed worker most not perform any work for their employer whilst furloughed, but will remain employed during this period.
Businesses 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)
Deferral of VAT payments – business will not be required to make any VAT payments between 20 March 2020 and 30 June 2020. 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 and VAT refunds and reclaims will be paid by the government as normal.
Coronavirus Business Intervention Loan Scheme (“CBILS”) – loans will be available from early in the week commencing Monday 23 March and the interest free period will now be extended to the first 12 months (previously the first 6 months)
Deferral of self assessment payments – no self assessment tax payments on account will be payable in July. The amounts due will instead be deferred until 31 January 2021. No late payment interest of penalties will be charged during the deferral period.
- The Universal Credit standard allowance will increase by £20 per week with effect from April on top of the planned annual uprating. This means that for a single Universal Credit claimant (aged 25 or over) the standard allowance will increase from £317.82 per month to £409.89 per month
- The self employed can now access Universal Credit when they are off sick to bring their earnings up to the equivalent rate of Statutory Sick Pay (“SSP”) for employees
Working Tax Credit (“WTC”) – the basic element of WTC will also increase from 6 April by £20 per week. This has the same effect as above for those who are not ill but claiming credit whilst working.
Renters – additional support for renters with the Local Housing Allowance now covering 30% of the market rent in your area. This will benefit all private renters who are new or existing Universal Credit housing element claimants, or existing Housing Benefit claimants,
- Café’s, pubs, and restaurants must close with effect from Friday 20 March. Takeaway food outlets have been given a reprieve and can stay open
- All of the UK’s nightclubs, theatres, cinemas, gyms and leisure centres have been asked to close “as soon as they reasonably can”
Deferral of VAT payments
HMRC have updated their guidance on the above to say that those businesses who usually pay by direct debit and wish to take advantage of the deferral should contact their bank to cancel the direct debit arrangement if they are unable to pay. The usual recommendation is that this is done 5 working days before the return is due.