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Coronavirus: Business update – Latest announcements

21st March 2020

On the 20th March the Chancellor announced a vast range of measures to be introduced to support UK businesses. The latest announcement came after most UK schools closed their doors to a majority of pupils indefinitely from the same day, in an effort to stem the spread of the virus.

Prime Minister Boris Johnson also announced that all cafes, pubs, bars, clubs, restaurants, gyms, leisure centres, nightclubs, theatres and cinemas must close, as the government brought in stronger measures to enforce social distancing.

The latest measures to support businesses, along with the steps your business can take to access this support are detailed below.

Coronavirus Job Retention Scheme

The scheme enables all UK employers to access finance to enable them to pay up to 80% of an employees’ gross salary (limited to a salary threshold of £2,500).

The finance is a grant not a loan, so it is not repayable.

Employers may top up the difference if they so wish, so wage levels remain constant.

The scheme is for employees who are not working and who would have otherwise been laid off because of the crisis.

The scheme will last three months and is backdated to take effect from 1 March 2020, being applicable to any employee that was on the payroll as at 28t February 2020. The government may extend this period if necessary.

Details of effected employees will need to be sent to HMRC through a new online portal, which will be rolled out shortly. The first grants are expected to be paid in April 2020. More detailed guidance is due shortly.

Cash Flow Support – Business Interruption Loan

This was originally set up to support loans of up to £1.2m in value but this has now been extended to £5m. The government will provide lenders with an 80% guarantee for each loan.

In a further development, the first 12 months of finance provided will be interest free, as the government will fund the interest due in this period in full.

The scheme is expected to be launched on Monday 23 March 2020 and will be offered by all major banks.

In order to get things moving, it is recommended that you contact your bank as soon as you can, to go over your business plan. By doing this your finance provider will be able to act more quickly when the scheme launches.

The main condition for a business to use this scheme, is that it must have a turnover level of under £45m.

Details of further conditions of the scheme and a list of accredited lenders may be found per the link below:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

Cash Flow Support – VAT

From now, VAT due by businesses has been deferred, so that no VAT is due for payment until the end of June 2020.

Businesses will have until the end of the 2020/21 tax year (12 months from now) to settle VAT liabilities that arose in the deferment period. The government will still pay any VAT refunds as per normal.

There is no need to apply for deferment it applies automatically to all businesses.

Income Tax Support for the Self Employed

Income Tax and Class 4 NIC originally due to HMRC due by 31 July 2020 will be deferred until 31 January 2021. This is for the 2019/20 Second Payment on Account.

This deferment is for self-employed individuals only.

No penalties or interest charges will apply in the deferment period.

There is no need to apply for this tax deferment, it will apply automatically.

Tax Credit Support for Families

Both the Universal Credit Standard Allowance and the Working Tax Credit basic element will increase by £1,000.

This increase will apply for at least the next 12 months.

We are here to help and advise you in these difficult times and will continue to  update you as and when further measures are announced.

Other Useful Links

Cronavirus: Business Update – Business Rates & IR35 

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