Covid-19 Update

Covid-19 Update

24/03/2020 Update

The current Covid19 outbreak is bringing many financial challenges to UK businesses and as such the government is announcing various support packages which seem to be changing on a daily basis. Below is a summary of the announcements as we understand them today and some practical issues to consider. We will endeavour to keep you up to date as we are made aware of further details.

In these unprecedented times, daily government announcements seem to be met with a general air of disbelief and Friday evening saw another sweeping range of support for employers and individuals put forward by the Prime Minister and Chancellor.

Below is a summary of the information available so far, but it is worth noting, as with many of these announcements, the need for the information to calm worries out paces the detail and so no doubt further detail will be made available as and when it is resolved.

Coronavirus Jobs Retention Scheme

The most significant announcement on Friday related to a support package designed to encourage business in retaining their staff rather than redundancies or other personnel reduction measures. The key features and information currently available are as follows:

  • The scheme will allow eligible businesses to claim a grant for 80% of the salary cost, up to a cap of £2,500 per month, for any “furloughed” employees.
  • All business in the UK are eligible to apply, there are no sector or size restrictions in place.
  • Each business will be required to designate any affected employees as “furloughed” employees and will need to notify the employee of this change.
  • You will then need to submit information about the affected employees to HMRC via a new online portal which is in the process of being set up. Further detail about how this element of the scheme will operate, will be announced in due course.
  • The scheme will be back dated to the 1 March 2020, but it seems that there may be a delay of a few weeks before the first grants are paid to employers and so the Coronavirus Business Interruption Loan Scheme is available to bridge the gap if necessary.

What is a "Furloughed" employee?

The government have described a Furloughed worker as “…those employees that would otherwise have been laid off during this crisis.” And that a furloughed worker “…should not undertake work for [the employer] while [they] are furloughed.” The purpose of the scheme is to avoid redundancies and support employee’s financially who are laid off.

Re-designating an employee as “furloughed” is not a given and the government have advised that …”changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation…”

Deferral of VAT and Income Tax

Also announced on Friday was the proposal to AUTOMATICALLY defer both the VAT payments which would have been due between 20 March and 30 June 2020 until 31 March 2021, and the 31 July Income Tax payment for the Self Employed until 31 January 2021.

Both of these offers are automatic and no application is required, simply do not pay either of these payments if applicable. All interest and penalties will be waived during the deferral period.

If you are due a VAT refund in the quarter ending 30 June then this will be paid by HMRC as normal.

Nursery businesses - Rates holiday

Pervious announcements of a 12 month Rates holiday for businesses in the Retail, Hospitality and Leisure sectors has now also been extended to Nursery business for the 2020 to 2021 tax year. To qualify:

  • your business must be based in England.
  • You must be a registered provider on Ofsted’s Early Years Register.
  • The property must be wholly or mainly used for the provision of the Early Years Foundation Stage.You will not need to apply for the holiday, it will simply be applied to your April council tax bill.

You will not need to apply for the holiday, it will simply be applied to your April council tax bill.

Coronavirus Business Interruption Loan Scheme

Pervious announcements of a 12 month Rates holiday for businesses in the Retail, Hospitality and Leisure sectors has now also been extended to Nursery business for the 2020 to 2021 tax year. To qualify:

  • your business must be based in England.
  • You must be a registered provider on Ofsted’s Early Years Register.
  • The property must be wholly or mainly used for the provision of the Early Years Foundation Stage.You will not need to apply for the holiday, it will simply be applied to your April council tax bill.

You will not need to apply for the holiday, it will simply be applied to your April council tax bill.

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