When the Chancellor Rishi Sunak was appointed into his position in February, little did he know that not only would he be delivering a budget amidst the start of Coronavirus Pandemic, but also that he would have to deliver immediate changes to support a country that faced an economic crisis like no other.
Many felt that the Government was proactive with its support in its initial budget memorandum, but that support is now dwarfed by the Chancellor’s speech delivered yesterday evening. Since the election in December the Government has certainly changed its mantra for business from “thrive” to “survive”.
We wanted to highlight some of the changes, as we have received so many messages from businesses and individuals we support to provide some meaningful information.
Enclosed are the planned changes and when we expect them to be rolled out: –
Coronavirus job retention scheme
Designed initially for 3 months, the government will support businesses by stepping in to pay staff wages to businesses regardless of their size.
Like the initial business rates changes announced in the budget, Government grants will be paid to cover 80% of the salary of retained workers up to a total of £2,500 a month. The scheme will be backdated to 1 March 2020.
The Chancellor stated: ‘For employees that are furloughed (temporarily laid off) but not working, the government will pay 80% of salaries and this will be open for three months initially and it will be kept under review. This will the scheme for longer if necessary,’
When will this change come in? The Government said it will be working “night and day” to ready the changes, but it does require complex adjustments to the PAYE system, and then updates rolled out to payroll software companies. This includes automatically adding furloughed workers to payroll systems. The Government has indicated that these changes will come during April 2020.
VAT Deferral Programme
Business that are VAT registered will have their VAT payments deferred until the end of June 2020.
At an estimated cost of £30 billion, VAT registered Companies will be given an extension to pay any VAT due in this period to the end of the 2020-2021 tax year.
When will this change come in? Within an a period beginning 20 March 2020 through to 30 June 2020. At this stage we are awaiting the detailed response, but we expect MTD systems to be adjusted in the coming days. This should be an automatic process, so no application will be required. We understand that VAT registered business will be given the option to “proceed” or “waive” VAT payments during this period, depending on its cash flow and choice.
Please note the following:-
- If you have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to defer that payment until a later date.
Please note the payment must be made before 31 March 2021.
- There will be no interest charged on any deferred VAT payment and HMRC advise that you do not need to inform them. However if you wish to call to confirm then this is fine.
- If you pay your liability via Direct Debit it is normally automatically takes payment automatically, there HMRC currently advises to cancel this direct debit to be safe.
Self-Employment Support Programme
In its support of the self-employed individuals, self-assessment tax payments due and payable by 31 July 2020, will be deferred until 31 January 2021.
They will also be able to access statutory sick pay through the benefit system at the same rate as that paid to employees.
When will these changes come in? With system changes, we expect the SSP payments to be available during April 2020.
Adjustment to Business Interruption Loan Scheme
Businesses will be given an additional 6 months of interest free payments on loans agreed with participating banks. This period has been raised from 6 months to 12 months. As announced yesterday, our team at WHA will be able to assist with the application process. For more information click here:
Earlier this week, the government deferred plans to introduce IR35 off payroll working rules for contractors in the private sector from April 2020 to April 2021.
For benefit claimants, a £7 billion package has been put together to ‘support the safety system’, increasing Universal Credit standard allowance and working tax credit by £1,000 for one year.
In an attempt to put into place social distancing, all cafes, bars, pubs, gyms and restaurants across the UK have now been forced to close. This is a big blow to the hospitality sector. Grants for business rates have already been announced and the changes in this blog post will help, but we feel for all of the businesses in this sector and its business owners and works workers.
For the full detailed Guidance relating to these changes please visit the specific Covid-19 response .Gov.uk pages for:-
All in all, these unprecedented support changes have been designed to match the challenges during these unprecedented times. We are happy that the government is stepping in with the support outlined yesterday, but time is of the essence and the support needs to be made available as soon as possible.
At WHA, we want to provide you with full support during this difficult period by sharing information announced by the government, but also how to claim the various support packages. As we receive information, we will pass it to you.
Please feel free to contact a member of our team with any additional questions that you have on 0208 878 8383.