The Chancellor has taken actions unprecedented in the history of the country. The main aim was making sure that workers jobs can be saved until the end of the current crisis.
2/ For the first time in our history, the British government is going to step in and help pay people’s wages.— Rishi Sunak (@RishiSunak) March 20, 2020
Government grants will cover 80% of the salary of retained workers, up to a total of £2,500 a month, that’s above UK median earnings level.
The headline announcement was aimed at allowing businesses to retain workers rather than laying them off by giving them a furlough status under which 80% of their wages will be paid by the government.
Coronavirus job retention scheme
- Employers can apply to HMRC to receive money to pay to furloughed workers (those given leave of absence).).
- Receive 80% of there salary capped at £2,500.
- To all employees on PAYE (including zero hours contracts but with no statement of how this will be calculated).
- Initially available for three months and backdated until 1st March.
The exact arrangements are to be confirmed, with the Chancellor stating that it will be up and running within weeks and by the end of April at the latest.
Tax Deferments to Support Cash-flow
VAT payments for this quarter are being deferred, meaning no payments from 20 March 2020 until 30 June 2020. You have until the end of the 2020/21 tax year to pay.
Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.https://www.businesssupport.gov.uk/vat-deferral/
There will be no Self-Assessment tax payments for the self employed due in July. These payments on account are pre-payments against the tax due in January 2021 when the total amount will now need to be paid based on your actual income as declared in your tax return. Other self assessment tax will be due.
- CBILS interest covered for 12 months (previously announced at 6 months) in an act designed to make it more attractive for lenders to provide you with credit.
- Changes to Universal Credit and Working Tax Credit benefits to make them more accessible to those in need, including the self-employed.
- Increases to housing benefit and universal credit for renters.
More detail on the support for employees is available on the government’s website.
The Chancellor also hinted that there will be more fiscal stimulus to come in partnership with the Governor of the Bank of England. With interest rates already dropped to a never before seen 0.1% this may be a hint that quantitative easing is being considered.