In what are already very difficult times for businesses and individuals alike, the Chancellor has set out a package of temporary and targeted measures to support us through this period of disruption caused by COVID-19.
Although exact details on many of the measures are still to be released, details of support to businesses include:
- Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme will be a government grant – to reimburse employers for 80% of furloughed workers wage costs, to a cap of £2,500 per month.
The latest guidance says that employers can choose to top-up pay, either for the unfunded 20% of pay or the amount above £2,500 for higher earners, but this will not be a formal requirement to obtain access to the scheme.
Further, the scheme will be:
- Backdated to March 1st
- Open initially for at least three months but extended ‘for longer if necessary’.
Total funding pot available
As per the Chancellor’s speech “I am placing no limit on the amount of funding available for the scheme. We will pay grants to support as many jobs as necessary.”
Who is eligible for the scheme?
All UK businesses are eligible (or in the Chancellor’s words “Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.”)
Coronavirus Job Retention Scheme (CRJS) will be administered by HMRC.
Employers will need to:
- Designate affected employees as ‘furloughed workers’ (see further below)
- 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)
As noted above the grant is a reimbursement to the employer therefore the employer will make the wage/ salary payment to the furloughed worker and then be reimbursed by HMRC.
When will the scheme be live?
No set date but the following are indications it will not be immediate:
- “HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.”
- “HMRC are working night and day to get the unprecedented Coronavirus Job Retention Scheme up and running and we expect the first grants to be paid within weeks.”
- “If your business needs short term cash flow support, you may be eligible for the Coronavirus Business Interruption Loan Scheme”
What is a furloughed worker?
We understand that a furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” per GOV.UK news story.
It is noted that employers will need to notify employees of this change in employment status to furloughed, but that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
- Deferring VAT and Income Tax payments
No VAT payments will be due between April and June (although returns will still need to be submitted). Liabilities will need to be cleared by March 2021.
For individuals, no payments on account will be due in July, with the balance being payable in full by January 2021.
- A Statutory Sick Pay relief package for SMEs
Companies will receive full reimbursement of statutory sick pay, from day 1, for up to 14 days. This will be dealt with through payroll and offset against PAYE.
- A 12-month business rates holiday for all retail, hospitality and leisure businesses
Local authorities are expected to “re-bill” as soon as possible.
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief with a rateable value of less than £12,000
This will be administered by local authorities, who will automatically be in touch with applicable businesses in due course. No time frames are yet known.
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
As above, this will be administered by local authorities, who will automatically contact applicable businesses.
- The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
Banks are also open to deferring capital payments for up to 6 months.
- The HMRC Time To Pay Scheme
For debts already overdue, agreement can be reached with HMRC for staged payment.
As further details are released, we will update all our clients. However, should you need any urgent support, please do not hesitate to get in touch with us.
HMRC guidance will be updated on their dedicated page for businesses: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-that-pay-business-rates
A range of useful links can be found here: https://www.salisburys.com/covid-19-useful-links/