Business/employment support announcements 20 March 2020
The government have tonight (20 March) announced significant measures on social interaction and employment support. They have ordered bars, pubs, restaurants, cafes, gyms, leisure centres, cinemas and other venues to close as soon as possible and not to reopen tomorrow, and have advised people not to go to bars etc this evening. This is to enforce medical advice against prolonged social interaction to assist in slowing down the spread of the coronavirus.
At the same time they have announced a support package for employers aimed at preserving the jobs of employees who may otherwise be laid off as a result of these measures or by the general economic slowdown being caused by efforts to contain the pandemic.
Details will be available ‘soon’ but in essence the Coronavirus Job Retention Scheme will cover 80% of the wages/salary of an employee on a business’s PAYE scheme where that employee is not working but is not laid off, up to £2,500 per month, initially for 3 months. This is not restricted to any particular business sectors so is available to all, so long as the individual is on the employer’s PAYE scheme.
As far as we understand the initial announcement, this will not cover any part of the salary of an employee who continues to work. Obviously there will be many questions arising, for example what about a restaurant that continues to do takeaway but only engages its chefs for half the hours it would normally? We hope that this and other questions will be addressed as soon as possible so that informed decisions can be made.
The funding should take the form of a grant from HMRC but initial indications are that it will be late April before the first grants are available. Businesses may therefore require to revert to the new Business Interruption Loan Scheme if funds are required before then.
Other announcements included a general deferral of VAT payments for the next quarter until the end of the year. Again more details will be needed but it should be noted that this is a timing measure and the VAT will still be due.
Also deferred will be the next round of self assessment payments. Tax payments due on 31 July 2020 (2nd instalment for tax year 2019/20) will now fall due on 31 January 2021 alongside the balancing payments for that year plus the first instalment for 2020/21.
It was also announced that loans made under the Business Interruption Loan Scheme would be interest free for the first 12 months rather than 6 as previously announced.
This all represents massive social change as well as unprecedented fiscal action. It is understandable that details are sketchy and many questions need to be resolved but clarity is needed, and fast, as decisions need to be made. We will do our best to keep clients informed but due to the level of enquiries it is difficult to respond individually as fast as we would like. We would therefore recommend that clients regularly check our News page or follow us on social media for updates.