Published: 26/03/2020 By Dean Clark(1) Coronavirus Job Retention Scheme (CJRS)
Under this new scheme, the Government has agreed to support Employers in reimbursing 80% of the cost of staff wages, up to £2,500 per month, for all employees who have been ‘furloughed’ (i.e. have stopped working due to the impact of COVID-19, but to be kept on payroll).
This is to safeguard employees from being made redundant.
Note – In all cases to be ‘furloughed’ and eligible for this Government grant, employees/staff must be entirely inactive and not work at all for the employer. The scheme can be backdated and applied to all staff on the payroll as at 28/02/2020.
If we are currently providing payroll support to you/your business, we shall provide full assistance in the operation of this scheme and liaise with you as to the information we will need to report to HMRC on your behalf.
The link below also provides useful guidance on the Coronavirus Job Retention Scheme, as prepared by a leading Accountancy body: -
Furthermore, and at the time of writing, what is not yet clear is whether this support will be extended to directors of owner managed, Limited Companies. My current understanding is that a director may be eligible for this grant, but only if they too are also completely inactive and not working, (i.e. the business has effectively ceased completely for a short period of time). Additionally, and most notably, early indications suggest the 80% Government subsidy is likely to only apply to the salary element, ‘and not dividends’. Presently a high percentage of director/shareholders, take a low/modest salary, and supplement this salaried income with a dividend(s). Should the above assumption be correct, the CJRS will result in directors only receiving 80% of this low salary base.
We are waiting on further clarification on this matter and will provide a further update once known.
(2) Coronavirus Business Interruption Loan Scheme (CBILS)
This has been introduced to help smaller businesses hit by the coronavirus, with the intention being to offer loans to business to help them through these difficult financial times.
Your ‘business’ bank should by now be promoting the details of this loan scheme on their website and giving out the relevant contact details so you may start the loan application process should you wish to do so. Loans should be offered on an initial interest free period for the first 12 months, and with no loan fees chargeable either.
The terms of the loans should be up to 6 years, with 80% of the loan value guaranteed by the Government, albeit the borrower is required to repay 100% of the loan value.
If you do proceed with making an application, please let me know if you require any assistance, as there has been some suggestion banks may require, amongst other things, a cash flow forecast and/or budget to support the loan application.
A useful link, explaining in detail the workings of the scheme, the application process, and much more is attached below: -
(3) VAT Deferral
In additional to the above (CJRS & CBILS), HMRC have granted a deferral of any VAT liability ordinarily due for payment between now and 30th June 2020. This payment will be deferred until 2021.
Taking the current VAT quarter as an example (Quarter-End date 31st March 2020), typically the resulting VAT liability would be paid around the 7th - 10th of May 2020.
Based on the current information available, payment can be deferred until the same time next year and rolled up with the corresponding VAT liability for March 2021.
It should be noted that the VAT return must still be prepared and filed, however Vatable businesses need take no further action, the deferral will be applied automatically.
Note - (As a further safeguard, it is advisable to speak with your bank to ensure they do not process the direct debit mandate, if typically, HMRC receive their quarterly VAT payments via an automated direct debit arrangement. You should ensure the direct debit is cancelled 5 working days before the payment is due!)
(4) Current Tax Arrears
Following the impact of the current COVID-19 pandemic, HMRC has set up a designated phone helpline, aimed specifically at businesses and individuals concerned about not being able to pay their current tax due to Coronavirus.
Their helpline is designed to give practical help and advice in these difficult financial circumstances, with emphasis placed on helping to agree formal time to pay arrangements.
The helpline number to call is 0800 024 1222 (Open weekdays 8am to 8pm and 8am to 4pm Saturday) Alternatively call 0800 015 9559.
(5) Self-Assessment Tax Payment – 31st July 2020
If you have a personal tax liability to pay this coming July (E.G the 2019/20 second payment on account), as with VAT, (see above), this too may be deferred.
HMRC has introduced a further measure designed to ease financial pressures and are allowing for this tax payment to be deferred, with payment becoming due and payable next January, (2021), together with the 2020/21 first payment on account.
As with the VAT scenario, this is believed to be an automated measure, and no formal application may be necessary.
(6) Mortgage Holiday
Most mortgage lenders are offering further support and assistance if you are concerned about any aspect of your mortgage because of the Coronavirus situation. Special measures being offered include a repayment holiday, allowing you to take a break from making your contractual monthly mortgage payment for up to 3 months.
Presently this offer appears to extend only to residential customers, however additional measures may soon be introduced for ‘buy to let’ mortgage customers.
Usually, your mortgage lender will require proof that you are not able to work as a result of the coronavirus situation. Please speak with your mortgage lender direct if you need to discuss your situation with them and they will advise as to how to request a mortgage holiday.
(7) Cash Grants – ‘Small Business Rate Relief’ (SBRR)
The Government is currently making £25,000 grants available to ‘Retail, Hospitality and Leisure’, businesses with a rateable value between £15,001 and £51,000.
One-off grants for a lower amount of £10,000 are also being made available to smaller businesses, also being disrupted by COVID-19. These grants are available to businesses with a rateable value of £15,000 or less.
Presently, and in both cases, you need not take any further action. The Government and Local Authorities will contact you direct.
(8) COVID-19 & Self Employed
As at the time of writing, (26/03/2020), we are currently awaiting further Government advice and clarity as to the additional financial measures which are to be made available to the many self-employed individuals, equally adversely affected by the COVID-19.
An announcement from the Chancellor is imminent and further details will be circulated once the full details have been published.
The HMRC helpline number for the Self Employed to call is 0300 456 3565
For more information please view our dedicated coronavirus page here