Every day seems to bring a new wave of information for us all to digest. But on Friday, the Chancellor unveiled a whole host of measures designed to protect businesses – and their employees.
Since then, the phone has been ringing off the hook – which is totally understandable.
Each and every one of you is trying to figure out what this means for you and how it will work in practice.
Here, I aim to lay out the detail behind the biggest of these benefits – and help you work out if you are eligible to apply for help.
Let’s start with the big one – the Coronavirus Job Retention Scheme.
Coronavirus Job Retention Scheme
What is it?
Well first of all it’s huge and will be something many of you will need in the coming months as you struggle to protect the future of your business and jobs for your staff.
In short, it means that the government will pay up to 80% of wages for workers' at risk of being laid off due to the coronavirus pandemic.
Eligibility
Any employer in the country will be able to apply. The scheme will be open for three months initially but will be extended if required.
How to access the scheme
You will need to:
· designate affected employees as ‘furloughed workers,’ and notify your employees of this change
· submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal
What happens next?
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.
What does it mean for the employee?
As an employer, you must discuss the Coronavirus Job Retention Scheme with any employee you aim to classify as a furloughed worker before you take any more steps.
For the employee this would mean that you are kept on your employer’s payroll, rather than being laid off.
You cannot undertake work for them while you are furloughed.
This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
Your employer could choose to fund the differences between this payment and your salary, but does not have to.
How we can help
If you make the decision to furlough any of your staff, we can help you navigate the online portal on the HMRC website and access the benefit.
Deferring VAT and Income Tax payments
What is it?
This is also a huge relief to many businesses we work with. The Government will support businesses by deferring Valued Added Tax (VAT) payments for three months.
If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be also deferred to January 2021.
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
Eligibility
All UK businesses are eligible. If you are self-employed you are eligible for the deferred Income Tax payments.
How to access the scheme
This is an automatic offer with no applications required.
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.
Self-employment measures
On Friday night – following the announcements - former Labour leader Ed Milliband tweeted: "This is a very welcome announcement for employed workers. I am afraid it appears inadequate for the millions of self-employed, gig economy workers."
IPSE, which represents self-employed workers, said the government had done "nowhere near enough".
Treasury minister Stephen Barclay said it would be "operationally" hard to protect self-employed incomes.
But he said the self-employed were being helped by measures such as the deferral of self-assessment tax requirements, payment holidays for mortgage payers and the strengthening of the welfare "safety net".
Sick pay is the main change here. The chancellor has announced that the “self-employed can now access in full universal credit at a rate equivalent to statutory sick pay for employees”.
The current statutory sick pay rate for employees is £94.25 per week of statutory sick pay for up to 28 weeks. The government announced last week that the money will be payable from day one instead of day four for affected individuals.
We are here for you
As always, we will do everything we can to help you maximise your income and manage your finances effectively – particularly through this very challenging and difficult time.
We continue to monitor the situation and will do our utmost to keep you abreast of changes as they occur.
As always, we you, your families and your colleagues good health. Stay safe.