Chancellor moves to protect employees' wages
The Chancellor of the Exchequer has announced a package of support to help workers, in addition to the package set out for business.
The Chancellor Rishi Sunak has announced a package of measures aimed at protecting employees during the coronavirus crisis.
The government will pay 80% of salary for staff who are unable to work but who are kept on by their employer, up to a maxium of £2,500 a month, under what is being called a 'job retention scheme'.
The wage subsidy will also apply to firms that have already had to make workers redundant due to the coronavirus, so long as they are brought back into the workforce and given a leave of absence instead.
Announcing the plans last week, Sunak said they were "unprecedented measures for unprecedented times."
The cover for wages will be backdated to the start of March and last for three months but could be extended for longer 'if necessary'.
- Business interruption loans will now be interest free for 12 months, not six months, and will be available from today (23 March 2020).
- Next quarter's VAT bill payment will be deferred until June; self-assessment is also being deferred.
- The self-employed will now be able to access universal credit at the same level as Statutory Sick Pay (SSP). Universal credit and housing credit payments will also increase.
Article source: Construction Manager
The measures announced by the government in full are:
Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees' salary for those employees that would otherwise have been laid off during this crisis. Employers 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; and
- 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.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
- HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
Deferring Valued Added Tax (VAT) payments for 3 months
The deferral will apply from today (23 March 2020) until the end of June. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as usual.
Income Tax payments due in July 2020 under the Self Assessment system will be deferred to January 2021
Income Tax Self-Assessment payments due on 31 July 2020 will be deferred until 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 Time to Pay
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. You can contact HMRC's dedicated COVID-19 helpline to get practical help and advice by calling 0800 0159 559.
Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 12 months of that finance interest free.