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Yesterday, The Chancellor announced new measure to support businesses through the challenging times ahead and we now have more details on how these will work in practice.
The Coronavirus Job Retention Scheme
Under this scheme, which is open to all UK businesses, HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
There are two tasks to complete to access the scheme:
HMRC has to both build the online portal and set out the details of information required. Our expectation is that the first payments will be processed in around one month from now.
Another consideration is that, to qualify for this scheme, a ‘furloughed worker’ should not undertake work for the business.
The scheme is intended to run for three months from 1st March 2020 but our expectation is that this period will be extended.
VAT Payments
VAT payments due between 20th March 2020 and 30th June 2020 for all UK businesses have been deferred. In practice, for the bulk of businesses, this means the payments due on your March, April and May quarterly or monthly returns.
This is going to be an automatic process which no action required by businesses and the intention is for the payments to be made by the end of the 2020-21 tax year.
If your business has a VAT rebate due in this period it will be refunded in the normal way.
Income Tax
To support the self-employed, the Income Tax payments due on 31st July 2020 have been deferred until 31st January 2021.
Again, this is an automatic offer with no applications required and no penalties or interest for late payment will be charged in the deferral period.
Cash Grants for Retail, Hospitality and Leisure Businesses
The Retail and Hospitality Grant Scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, the grant will be £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, the grant will be £25,000.
A business is eligible, so long as:
The properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
For those wondering, in this context a hereditament is a property which is liable to a business rate.
There is no application process for these grants with the relevant local authority due to write to all eligible businesses in their area. However, for those eligible businesses, we would recommend closely monitoring the website of your local authority on this.
Coronavirus Business Interruption Loan Scheme
The British Business Bank is working hard to get to go live on the scheme and are now expecting the scheme to be available in week commencing 23rd March 2020.
The government will cover the first twelve months of interest payments for any loans arranged under the scheme.
Summary
We have deliberately made this an informational blog and we must commend the government as a whole and Rishi Sunak, as Chancellor of the Exchequer, in particular, for what has been done so far.
However, there are a lot of pressure points on delivery with HMRC needing to build new systems to cater for the Coronavirus Job Retention Scheme and the reimbursement of Statutory Sick Pay, local councils needing to process cash grants to all the relevant businesses and the banks having the manpower to administer the financial support under Coronavirus Business Interruption Loan Scheme.
Moreover, there are glaring omissions which means that many businesses and self-employed are left with little or no support.
Tomorrow we will publish an overview of the landscape of the week and the perils and pitfalls ahead.
In the meantime, if you have any questions, please email support@cooperfaure.co.uk and we will compile an FAQ posting with thoughts and advice.
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