Inca COVID-19 Update: Wages Support Scheme & Tax Payments Deferment
23rd March 2020
Welcome to our Covid-19 update, bringing you practical information and guidance to help you trade through these challenging times.
Business Interruption Loan Scheme – Update
Since our last email update, this scheme has gone live – see https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/. The government has extended the interest-free period from 6 months to 12 months. Loans can run for up to 6 years, and there are no fees. Please don’t wait to get in touch either with the British Business Bank or your own bank
The Coronavirus Job Retention Scheme
This scheme was first announced late on Friday. We’ve already had questions from clients as you might expect. One recurring query is whether the scheme applies only to businesses that are required to shut. The answer is “No”. All businesses are eligible, but employees must be “furloughed” – in other words, not working.
Please review your employment contracts and consult with your HR adviser to check you can implement this scheme with your employees. While it’s unlikely an employee will refuse to participate – the last thing you’ll want is a claim for constructive dismissal from an employee you’re trying to help.
The scheme covers 80% of wages for furloughed employees – up to a cap of £2,500 per month (£30,000 per year). The initial scheme is for three months, but the Chancellor has stated it will be extended if necessary. It can be backdated to 1st March 2020.
HMRC is currently setting up a new system for reporting and reimbursement.
We still have a number of questions about the scheme, including:
– Are directors covered?
– Does this replace SSP during the two weeks isolation?
– What if you have a new employee, will they be covered?
– If you’re a brand-new business, will you be covered?
– If you want an employee to do some work, can this be implemented part-time?
We’ll keep digging and update you as soon as we can.
VAT Payments Deferment Scheme
If you are VAT registered, any VAT you are expecting to pay to HMRC between 20th March 2020 and 30th June 2020 does not need to be paid, but you must still file your returns. [MN1] If you have your VAT payments collected by direct debit, you will need to cancel the direct debit if you want to take advantage of this opportunity.
HMRC is not cancelling your debt – you will still owe it – they are simply giving you until Spring 2021 to settle. This scheme is only operating for a single quarter at present; we’ll keep you informed if this changes. If you are due a VAT refund, this will come back to you as normal – it is not delayed.
Self-Assessment July Payments Deferred
If you are due to make a payment on account in July 2020, this is no longer required. Instead, you will make this payment in January 2021 along with any payment on account towards 2020-21 tax. Once again, this is a deferment to help protect cashflow, not a cancelling of the debt. You don’t need to do anything to take advantage of this offer.
Sorry – still nothing significant here other than the deferment of self-assessment payments on account but we’ll keep looking. You should certainly be speaking about Universal credit, talking to your mortgage provider or letting agent as there are other measures in place to provide some basic assistance. You’ll find some background here, but we don’t currently have better links. https://www.gov.uk/government/news/chancellor-announces-workers-support-package
We hope you find this information useful. Please feel free to share it with other business owners in your contact sphere.
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