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Following last night’s announcements, we wanted to keep you posted with all the latest measures being put in place to potentially support you and your business through the coronavirus pandemic. Some of the detail won’t be out yet, but we wanted you to know what we do at least at this point. As more information becomes available, we will let you know.
The unprecedented times call for unprecedented measures and they were bold and they were big. However, there is still a gap here for the self-employed and we understand (and hope) there may follow more on Monday, although nothing is confirmed at this point.
Other potentially useful information includes:
- Previous Packages announced;
- Detail of the original Budget, although some measures have now been superseded by better support;
- In case you are just starting on your remote working journey; and
- The Government’s website on these measures.
We will continue to keep you updated but feel free to look out our blogs and social media (Facebook, Instagram, LinkedIn and Twitter) for regular updates.
If there is anything we can potentially do to help, please do get in touch with us.
Announcements 20 March 2020
Coronavirus Job Retention Scheme
For first time in British history, the government will pay wages on behalf of employers.
The grant will pay 80% of wages for employees not working, up to £2,500 per month.
This will be in place for at least three months and will help businesses, not-for-profits and charities of all sizes. There is also no cap on the amount.
We understand this will be available from April 2020, backdated to 1st March 2020 and it will be administered by HMRC (likely PAYE department).
Although the timing of the availability of it is not ideal (and we hope it will be revised so you have it in advance of payday), this is a huge measure designed to help employer’s keep their teams in work by helping cashflow, so when we come out of the other side of this, we will be ready to kick on with our businesses. £2,500 is also above the median wage, so is quite generous. Being a grant, rather than a loan, it will also not be payable at a later date.
VAT Deferment
If you or your business is VAT registered, you will not pay any VAT until at least the end of June (and this could be extended) and again there is no cap. The payment can also be postponed until the end of the financial year (which we assume they mean 31 March 2021) and represents a £30bn injection into the economy.
There isn’t much more clarity here about this, but we would assume that the payment holiday will be automatic, but you would have to apply to defer the payment to the end of the financial year to HMRC in the usual way. Don’t forget there is the special coronavirus helpline from HMRC where they may be able to arrange other payment plans for you, even above and beyond the time to play arrangements.
Once we get clarity on the exact delivery here, we will of course let you know.
Be careful here. Whilst this could be a welcome cashflow boost too, this is a deferral rather than a grant; the VAT will still need to be paid at some point. Don’t forget when you collect HMRC from your customers, you are effectively collecting it on behalf HMRC and it is not your money. Therefore if you do utilise these funds, make sure you can pay these later in the year/next year when they fall due.
Business Interruption Loan
This has been further improved with the interest-free period on any lending increasing from six to twelve months, but perhaps most importantly the scheme has been accelerated to week commencing Monday 23rd March 2020 which is weeks earlier than planned. More information can be found here.
If you think you are eligible, we suggest you investigate this as soon as the criteria are confirmed, if this could be the lifeline you need right now. Like with the VAT deferral however, it is a loan and it will need paying back eventually. We would expect the system to be overwhelmed initially, but given the size of the lenders behind this, they should get up to speed soon.
Self-Assessment Tax Return Payments and Employment Support Allowance
For those of you who were due to pay your second Self-Assessment Tax Return payment on account on 31 July 2020, this will now be deferred to 31 January 2021. This is a great cashflow help, but the second payment on account, as things stand, will still be due.
Self-employed will also now be entitled to the equivalent of Statutory Sick Pay, which is £94.25 per week, for up to 28 weeks, if you are too ill to work. This is through the ‘Employment and Support Allowance’, you can claim via Universal Credit. This was previously less generous. Although this might help, the benefit here is very small.
Navigating the complexities of Self-Assessment Tax Returns can be challenging, but with the deferral to January 2021 and the availability of Employment and Support Allowance, there are financial reliefs. Consulting with a knowledgeable self-assessment accountant can provide valuable insights to optimize your tax strategy.
Other Benefits
There will be an increase in standard Universal Credit by £20 a week (£1,000 per year), with the same rise for those still on the working tax credit scheme (to cost £7bn per year), in addition to support for those struggling to pay their rent via Universal Credit with £1bn further support here.
We are not clear on the timings of when these will go live, but if you claim Universal Credit make sure all your information is up to date and you are applying for all the benefits you can especially at this time.
Call to Action
This is a difficult time for us all, but it is also an opportunity for us to come together and support one another.
If you are cancelling work with tradespeople, electricians, bathroom fitters, plumbers, builders etc, if you can postpone rather than cancel, so these businesses can be assured of their pipeline, and if you can afford to give the business a deposit now, this would be incredibly helpful.
If you have had to cancel an appointment with a small business, be it a hairdresser, beauty therapist, restaurant etc maybe consider buying a gift voucher at the same time for when you can eventually go back.
Although the Government is helping businesses in a variety of ways some of these smaller businesses, depending upon they are set up, may not be eligible for any significant government support, therefore if you can please help them, so they don’t have to take unnecessary risks, please do so.
We are also finding a lot of the smaller shops can have better stock than the supermarkets. Please do everything you can to support your small and local businesses, especially at this time.
Further Updates
When further details come out on the above and other support which might be available to you, we will of course be in touch with you. As always, the devil is in the detail.
Party politics aside, the measures to support are big and they are bold. We’d like to see them come quicker and we’d like to see more specific support for the self-employed, but the government does need to ensure the architecture is in place to support any measures that they provide before they go live (insofar as possible), which is partly the reason for the timings of the measures.
Black and White Accounting
This is a difficult time for everyone and we must come together to get through this. Our thoughts are with you, your family and your friends especially at this time.
If there is anything we can do to help you at this difficult time, please do get in touch by contacting Black and White Chartered Certified Accountants, populate the “Got a Question” form on the right, or call us on 0800 140 4644.
