The chancellor announced on Friday a raft of new support and lifelines for businesses, self-employed people and the British public who are affected by the Covid-19 situation. The chancellor talked about how the government will be helping with jobs and keeping the public in work so that we can continue to pay our rents and mortgages, buy food and pay our bills.
If you haven’t already seen our blog on this over the weekend please have a read the link is provided below:
In his speech the chancellor spoke about a combination of measures for jobs and to protect individual’s income. Strengthening the safety net for those who work for themselves and provide more generous support and benefits for those who are without employment and hard up plus helping people stay in their homes.
One of the biggest measures to be introduced was a Government Corona Virus Job Retention Scheme. This is available for any employer in the country small or large, charitable or non-profit will and all will be eligible for the scheme. Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but kept on payroll rather than being laid off. Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month.
Employers can top up salaries further should they choose to. This means that employees in any part of the UK can retain their jobs even if their employer cannot afford to pay them and receive at least 80% of their salary.
The scheme will cover costs of wages backdated to March 1st and will be open for at least three months initially and extend for longer if necessary. There was no limit placed on the amount of funding to be made available for the scheme.
The government will pay grants to support as many jobs as required and the first grants are expected to be paid within weeks. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
The chancellor reiterated his previous speeches where he has made cash available through loans, grants and guarantees.
He also announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will now be interest free for 12 months rather than 6 months as he had previously mentioned. These loans will now be available from Monday.
Further measures were also announced that will be coming out next week to ensure medium and large businesses can also access the credit they need.
You are eligible for the Coronavirus Business Interruption Loan scheme if:
• your business is UK based, with turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria
More details are to come.
There was also key cashflow support measures through the tax system which were mentioned, designed to keep people in jobs by assisting businesses with their cash retention. This is planned by deferring the next quarters VAT payment effective from 20 March top 30 June. This means no business will pay any VAT liability from now until the end of June and businesses will have to the end of the financial year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
This equated to a direct cash injection of £30billion or 1.5% of GDP to businesses.
He went onto summarise what this actually means from the government
• Paying wages up to 80% of staff furloughed rather than laid off to protect their jobs
• Deferment of £30billion of taxes to the end of financial year by delaying collection of the next quarters VAT from businesses
• Unlimited sums of money to be lent interest free for 12 months via the CBILS
• Abolishment of business rates altogether this year if you are in hospitality, retail or leisure
• Cash grants of £25,000 for small business properties
But what if the worst happens?
To strengthen the safety net the chancellor will be increasing Universal Credit standard allowance for the next 12 months by £1,000 a year, alongside the same increase for working tax credit basic element for the same 12 month period. This he mentioned will benefit 4 million of the most vulnerable households.
He went onto then discuss measure he is introducing to help all the self-employed individuals by suspending the minimum income floor for everyone effected by economic impact of the Corona virus.
This means self-employed individuals can access in full Universal Credit at a rate equivalent to Statutory Sick Pay (SSP) for employees.
It was also announced that to further support the self-employed in the tax system, the next self-assessment liability payments due 31 July 2020 will be deferred to 31 January 2021.
• This is an automatic offer with no applications required.
• No penalties or interest for late payment will be charged in the deferral period.
• HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities. Check out our blog on this which will be out shortly.
In addition to the assistance previously mentioned to help homeowners who may find themselves struggling due to the financial situation of Covid-19 to pay their mortgage, with the introduction of a three month mortgage holiday being made available if they need it. He also injected £1billion of support for renters to help those in the rental sector who may be struggling by increasing housing benefit and Universal Credit so that the local housing allowance will cover at least 30% of market rents in the renters local area.
Here at SRC-Time we are sure this will lead to lots of questions, but we are here to help and will working tirelessly to obtain all the information and let you know as soon as possible. We will help all our clients in every way possible to ensure we get all the available and required cash injections needed to sustain business as usual.
We will be uploading and emailing all relevant information as and when we are made aware and are here to help, so call or email us on 01273 326556 and email@example.com
Here at SRC-Time, we will endeavour to keep you updated with all the latest information regarding financial aid at this testing time. Please note that the Government makes fresh announcements every day so please ensure that you have the latest information.