Since the Chancellor of the Exchequer’s announcement on 17 March regarding financial support for businesses affected by the coronavirus outbreak, he has announced further “unprecedented” measures to help businesses maintain cashflow and workforce at this uncertain time.
On 20 March, Rishi Sunak introduced the following measures for businesses:
- The Coronavirus Job Retention Scheme
- Deferral of VAT payments until 5 April 2021
- Deferral of Income Tax payments until 31 January 2021
The Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme has been set up to help UK businesses keep as many of their employees as possible – even if they are not currently working – where employers would have otherwise made their staff redundant as a result of the crisis.
Employers will need to do the following to access this support scheme:
- Designate affected employees as “furloughed workers” and notify them of this change, as this change of employment status remains subject to existing employment law and could be subject to negotiation
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal, which is to be finalised
Those designated as a furloughed worker cannot carry out any work for their employee during this time, but they will remain an employee.
HMRC will reimburse 80% of furloughed workers’ wage costs, up to £2,500 per month, and are currently working on setting up the system to have this reimbursement in place.
The Government intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020 but will extend this if necessary.
You can find out more about the scheme here.
Deferral of VAT payments until 5 April 2021
Mr Sunak announced a VAT payment deferral to help businesses manage their finances during this time. VAT returns are to be prepared, filed and submitted by their due date as usual, but payments due from 20 March 2020 and 30 June 2020 will be automatically deferred, with taxpayers given until 5 April 2021 to pay any amounts due during this period. Plus, in the deferral period, no penalties or interest for late payment will be charged.
All UK businesses are eligible and no application is required, but if you pay VAT by direct debit, you should cancel this to take advantage of the deferral.
Deferral of Income Tax payments until 31 January 2021
Providing some relief for self-employed workers during this time, the Government has also announced that Income Tax Self-Assessment payments due on 31 July 2020 may be deferred until 31 January 2021.
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
As with the deferred VAT payments, this automatically applies, so those eligible will not need to do anything to get this offer. However, if you are still able to pay your second payment on account on time, it is recommended that you do so. Plus, no penalties or interest for late payment will be charged in the deferral period.
More information from the Government on payment deferrals is available here.
Time to Pay offer
HMRC has set up a dedicated helpline to support businesses and self-employed with any concerns regarding paying tax on time due to COVID-19. You can call 0800 024 1222 from Monday to Friday between 8am and 4pm. Find out more about the helpline here.
Rest assured, TBL Accountants are here to keep you informed of all updates during this time so you can be aware of all the support being made available to you and your business. If you have any questions or enquiries, please get in touch with the team here or call us on 01702 466 886.
TBL Accountants are your local accountancy firm operating in Southend and across Essex. We specialise in a variety of services as personal, business, and charity accountants. Want to find out more? Get in touch with our team today.
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