Following recent announcement from the government, we have summarised below what has been announced so far. Unfortunately, detailed information at the moment is limited, but we will provide updates as we know more.
Coronavirus Job Retention Scheme
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.
Applicants will need to:
- designate affected employees as ‘furloughed workers,’ and notify your employees 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. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
Deferral of VAT and Income Tax Payments
VAT payments due in the next 3 months can be deferred to the end of the tax year. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
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 2020/21 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.
Business Interruption Loan Scheme
Delivered by the British Business Bank, the Coronavirus Business Interruption Loan Scheme launches today for businesses with turnover up to £45 million.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.
The government will provide lenders with a guarantee of 80% on each loan. The scheme will support loans of up to £5m in value. The first 12 months of the loan is interest free.
Support for larger companies through the COVID-19 Corporate Financing Facility
Under the Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. It is unclear exactly which companies will qualify at this stage.
This will support companies affected by a short-term funding squeeze, and aid in finance of short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
The scheme will be available early this week. More information is available from the Bank of England.
Businesses that have cover for pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
Our teams are still checking all updates from HMRC to see how we can help. As soon as we know more we will be in touch. Please contact your KJG team if there is anything we can help with at this stage.