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This is what we know so far following the Chancellor’s announcement on 20 March.
The situation is fast moving and details of how some of the arrangements will work are still being addressed, including the various processes/systems required to put everything into practical effect.
At first sight, it is also apparent that there are still some gaps, particularly in respect of the self-employed (sole traders) who find their earnings reduced as a result of the Coronavirus and those doing business through their own limited companies.
In the meantime, some further guidance on how to access government financial support if you or your business has been affected by COVID-19 has now been published.Click here for the link.
1. Coronavirus Job Retention Scheme
All UK businesses are eligible.
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during the crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Businesses that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan (See Update 1 issued on 18 March.)
2. VAT Payments
All UK businesses are eligible.
VAT payments that would otherwise be due during the period 20 March to 2020 to 30 June 2020 will be deferred.
Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically so you do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
It is still necessary to file VAT returns on time.
3. Income Tax Payments
If you are self-employed, Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
4. Universal Credit
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
5. HMRC Time to Pay
We mentioned this in our previous note but mention it again as it may provide some much needed respite. We have already had some experience of contacting the new helpline and whilst it took some time to get through can report that we found HMRC’s response to be very helpful and understanding.
By way of reminder the contact number is 0800 0159 559.
6. IR35 'Off Payroll Working'
Although not part of yesterday’s announcement, you should be aware that the changes to the IR35 rules which were due to be introduced in April 2020 having been delayed for 12 months. Therefore the existing rules continue to apply until April 2021.
HMRC have said that any Status Determination Statements already issued will have no standing in law and will not be used as evidence in any enquiry dispute during the coming year.
Clark Benefit Consulting Limited
"Our business was growing and our old accountants just weren’t able to offer the timely and proactive advice that we needed. Paul and Martin came highly recommended so we moved to Ashton Allsop. The difference was night and day and they had an immediate impact, they spotted issues not seen before and identified allowances we should have used from HMRC. We speak regularly, we work with them through Xero and other tools they make available and everything is made clear and understandable. We were so impressed that we’ve moved our bookkeeping and payroll and they now complete our R&D applications. They provide a fantastic service and have saved us so much time and money, whilst reducing our total accounting costs. We consider them an extension of our company and couldn’t work without them."
Stephen Hickey, CEO Digital Control Rooms