Claiming wages for furloughed employeesFor businesses struggling to keep their staff on, they are entitled to furlough employees. This means that employees can be placed on temporary suspension and the UK Government will offer a grant for up to 80% of usual monthly wages (up to a limit of £2,500), plus national insurance contributions and pension contributions. The furlough scheme is temporary and is in place for 3 months from 1 March 2020 (although the Government may extend this). The scheme is available to businesses operating a payroll scheme before 28 February 2020. While employees are on furlough leave, they cannot do any work, but they can undertake training or voluntary work. Employees will also still pay normal taxes out of their wages. The online service for employers to claim is not yet available, but HMRC should make it available by the end of April 2020.
The Self-Employment Income Support SchemeSelf-employed individuals are entitled to claim a taxable grant of 80% of trading profits (limited to £2,500 per month), available for 3 months (although the Government may extend this). The grant is subject to income tax and national insurance contributions, as normal, but is not subject to repayment. This is available to self-employed persons who filed a self-assessment in January this year. For those wishing to take advantage of the scheme, HMRC will be in touch by mid-May and will make payments by early June 2020. Individuals may claim for universal credit while they wait for the grant.
The Coronavirus Business Interruption Loan SchemeThe Government has introduced the Coronavirus Business Interruption Loan Scheme (CBILS) to support SMEs with an annual turnover of up to £45 million. The loans are for up to £5 million, for a period of up to 6 years. There are 40 lenders throughout the UK, including all major banks, and so businesses looking for access to the funding are advised to contact their own bank first. Businesses are eligible for the loan if they have a borrowing proposition which the lender considers ‘viable’. This may exclude certain start-ups that are currently loss-making. For those businesses, the Government is currently considering the option of offering convertible loans to businesses, which could be repaid after this crisis is over or that convert into equity stakes (i.e. the Government would own a stake in the business). The Government is also currently considering whether additional grant funding might be provided by InnovateUK (a body which provides support to innovative businesses).
Tax BreaksThe Government has proposed a range of tax breaks for SMEs to assist with the effects of Covid-19. For businesses that are VAT registered, and would have a VAT payment due between 20 March and 30 June, they have the option to defer the payment, or pay VAT as normal. However, VAT returns are still required to be made on time. There will be no interest or penalties on any deferred VAT payment. Businesses do not need to tell HMRC that they are deferring their VAT payments. Remember, if you pay your VAT by direct debit, you should cancel your direct debit. The Government hasn’t yet issued information on how deferred VAT will be repaid at a later date. Businesses in the retail, hospitality and leisure sectors will not be required to pay business rates for the 2020-2021 tax year. This is applicable to shops, restaurants, bars, cafes, pubs, cinemas, live music venues, leisure properties and hospitality properties. Businesses do not need to take any action to take advantage of this – the local council will apply the discount automatically. Businesses can calculate the amount they will save by using this calculator: https://www.gov.uk/calculate-your-business-rates Self-assessment payments on account, which are normally due on 31 July, may be deferred until 31 January 2021. No action is required on the part of anyone looking to take advantage of this.
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