COVID-19 – Job Retention Scheme and Income Support Measures

Following Chancellor Rishi Sunak’s announcement yesterday, we present a summary of the significant new supportive measures being instituted.

Coronavirus Job Retention Scheme – what it means for employers
The UK government has committed to cover up to 80% of salary (up to a maximum of £2,500 per employee, per month) payable to employees that are not working due to the impact of coronavirus and who would otherwise have had their employment contract terminated. Employers are free to top-up the payment at their discretion.

This measure is being backdated to 1 March 2020 and is going to be in place for a minimum of 3 months.

All employers are eligible to apply for this scheme via an online portal (yet to be developed) and it is aiming to make the first payments by the end of April 2020. Information on the circumstances of employees will have to be provided to HMRC via this portal.

It should be noted that where employees can work from home it is unlikely that this is going to be available, it is also unlikely to be a available for director/shareholder salaries.

It is a reimbursement scheme, so there will still be a short term cash-flow impact to salaries being paid.

Former employees who were laid off after 28 February will also be able to apply to their former employer to request that the relevant claim be made.

For those off sick due to COVID-19 statutory sick pay of up to 2 weeks per employee will be refundable on application under measures implemented earlier in the week.

Automatic VAT Deferral
The UK government has deferred collection of the next quarter of VAT payments (this covers the period 20 March 2020 to 30 June 2020). Subsequent quarters will be payable as normal as things currently stand.

The liability in respect of the next VAT quarter will be due before 5 April 2021 and we would advise that, if cash-flow is or becomes an issue, it would be best to defer this as long as possible to keep funds free for other pressing costs like payroll. However it would be worth setting up a reminder to ensure that this liability doesn’t get overlooked and that payment is made before the ultimate deadline.

All businesses are eligible for this deferral and it applies automatically so no application is required.

VAT refunds and reclaims will be paid as normal.

Deferral of July Payments to Account
Payments on account which were due to be paid by 31 July 2020 will be deferred until 31 January 2021. No interest will be charged in the interim. Again, this is being applied automatically and no claim needs to be made.

Keep in mind that in January 2021 you will be due to pay a higher sum (both the payment to account and the balancing payment) than you would otherwise have had to pay. This may require planning to ensure adequate funds are in place.

HMRC are giving greater access to their Time to Pay scheme for those struggling to make tax payments as a result of the impact of coronavirus. This is by application and needs negotiation and agreement with HMRC. Call 0800 0159 559.

Business Interruption Loan
Mr Sunak announced that the Business Interruption Loan would be interest free for 12 months now, which is an extension to the 6 month period previously publicised. It is offering loans of up to £5m for small and medium sized enterprises. For more information see https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee

Income Support for the Self-Employed
The Coronavirus grant has been extended to £10,000 from £3,000 however it appears to be strictly linked to business rates and will be available and paid automatically via the local authority to all businesses that are eligible (and presumably have previously claimed) rural relief or small business bonus relief. This may mean that it is not available to sole traders who do not have a business premises.

Mr Sunak has scrapped the Minimum Income Floor for Universal Credit and increased the basic payment element of both Universal Credit and Working Tax Credits. The commitment is to ensure that self-employed people who cannot work are receiving an equivalent to statutory sick pay during the crisis. Statutory sick pay is currently £94 per week. For more information and to apply for these please visit https://www.gov.uk/universal-credit.

Moving Forward
Things are changing on a daily, if not hourly, basis at present and JRW are doing everything possible to keep ourselves and our clients updated. We are here to help you with any concerns you have and will advise and assist wherever possible with claims that you would like to make.

The majority of our staff are going to be working from home in the coming weeks but we intend to retain a skeleton staff in our offices and, until government advice changes, these offices will be open. We are implementing the government’s social distancing advice and will take all reasonable precautions to protect our staff and clients.

Every member of staff will be available by phone or for video-conferencing if needed. We are here for you now, albeit potentially remotely, as much as we always have been. We urge you to keep in touch.