The Chancellor Rishi Sunak has announced a package of measures to help businesses and organisations. The package will come as a great relief to businesses across the country as they continue to meet the demands of cash flow and supporting their employees.
We've broken down the details of the package and how it can help your business
Job Retention Scheme
Grants from the Government will cover 80% of the employment costs of PAYE employees who would otherwise have been laid off, backdated to 1 March 2020, up to a cap of £2,500 per month. It will be the employer’s decision whether to fund the difference
The scheme is intended to run for at least 3 months from March 1st 2020. This period may be extended if it is deemed necessary. Someone already let go can be brought back and the termination in effect reversed.
The scheme is available for all employers, there are no requirements. It will become available before the end of April. The HMRC are working on a system to make payments to employers.
To apply you will need to designate affected employees as ‘furloughed workers’ and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
Then you will need to 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.
PAYE and NIC will continue to apply as normal on payments to furloughed employees. A grant receipt is taxable income for the business but salary expenses will be offset.
Statutory Sick Pay relief package for SMBs
Small and medium-sized businesses can reclaim up to two weeks’ Statutory Sick Pay (SSP) per eligible employee paid for sickness absence due to Coronavirus. If you're a director of a limited company, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum salary requirement for SSP of at least £118 per week.
This scheme will start the day after the regulations on the extension of SSP to those staying at home comes into force. It is available for all businesses with fewer than 250 employees as of February 28th 2020.
The method for reclaiming hasn't been announced by the Government as of yet so keep records of staff absences and payments of SSP.
Deferral of VAT payments
VAT payments will be deferred for the next quarter. So businesses will not need to make a VAT payment until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
This is available for all UK businesses and comes into effect from March 20th. The deferral will be applied automatically.
Grant for recipients of small business rate relief
This is a one-off cash grant of £10,000 available to small businesses already receiving small business rate relief (generally, businesses with one property with a rateable value < £15,000) and/or rural rate relief, based in England, and occupying property.
The grant is being administrated by local authorities and they will write to you if you are eligible for this grant.
HMRC Time To Pay scheme
The HMRC are now offering more generous payment terms for taxes. Call HMRC’s dedicated Covid-19 helpline on 0800 0159 559 for more information.
Coronavirus Business Interruption Loan Scheme
Loans of up to £5million and interest-free for 12 months are being made available. The borrower remains liable for 100% of the debt. The lender receives a guarantee of 80% of the loan amount from the Government to enable more loans to be approved.
There are other types of finance being supported by this scheme. They include overdrafts, asset finance facilities and term facilities. For more information visit the CBILS website.
This scheme is available to UK-based businesses with a turnover of no more than £45 million. The business must be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility but would be considered viable in the longer-term. It is available from March 23rd 2020.
For the full information from the Chancellors announcement please visit the Government website. You can also find more information on how the Government can support your business during the COVID-19 outbreak.
For a checklist on how to prepare your business for working remotely click here.