d&t Head of Tax, Richard McDermott summarises government support following COVID- 19 outbreak

Government Support Following the COVID-19 Outbreak

It was just a few months ago we were all working towards a positive start for the New Year, then global events took a rapid and unexpected turn.  Even the Budget which was announced less than a month ago, is already out of date.   We are living in a constantly evolving situation, so I have sumarised the most up to date guidence and support being provided by the Government and HMRC to help businesses.

Furloughed workers

To encourage companies not to make staff redundant, HMRC will cover 80% of a worker’s salary while they are furloughed (not working), up to a maximum of £2,500 per month.  This will run for at least three months, backdated to 1st March 2020.  It will be at the discretion of the company if they choose to pay the employee the remaining 20% but the reality in many cases is that they will be unable to do so.

HMRC is still setting up a Coronavirus Job Retention Scheme scheme, we have yet to find out how to access this and how it is claimed.  This payment is likely not to be in place until end of April, so if you need support before this date you may be eligible for a Coronavirus Business Interruption Loan.  Full eligibility criteria will be published when the scheme goes live and d&t will be publishing advice asap on how to access this scheme on our website as soon as we can.

VAT deferral

Businesses will not need to pay any VAT from 20th March 2020 to 30th June 2020, and will be given until 5th April 2021 to pay any liabilities.  If a VAT refund is due these will still be repaid as usual.

Income Tax deferral

The self-assessment payment on accounts due on 31st July 2020 will no longer need to be paid by the self-employed.  This will however result in larger balancing payments being required on 31st January 2021.

Self-employed / Statuatory Sick Pay (SSP)

As self-employed workers cannot claim SSP, so temporary measures have been introduced to enable them to claim Universal Credits at the same rate as SSP for employees.  However, this is only £94.25 per week so negligible compared to the amounts claimed by ‘furloughed workers’.  For example, a furloughed worker on a salary of £37,500 will be paid £2,500 per month, whereas a self-employed person with annual income (on average) of £37,500 will be only able to claim £408 per month!

HMRC is coming under strong criticism for neglecting the self-employed at this time, and it is expected (and hoped) that further measures will be introduced iminantly to support them.

Sick Staff

If you are able to continue trading and employing staff as normal then nothing will change unless your staff have to self-isolate.  In this case, you will have to pay them sick pay for the length of time that they are isolated for. 

If you pay SSP only, then the rate you need to pay is £94.25 per week until 6th April when it will increase to £95.85 per week.  Staff are only eligible to receive SSP if they earn over £118 per week. 

For illnesses that are coronavirus related there will be no waiting days and SSP is payable from day 1 rather than day 4. If staff are not eligible for SSP then you will need an SSP1 form to give to your employee. 

Employers who had under 250 members of staff as of 28th February 2020 are able to claim 2 weeks SSP per employee from the government for any Coronavirus related illness.  This is for any staff member that have been off sick from 13th March 2020 onwards with a Coronavirus related reason and is eligible for SSP.

Directors who are paid over £118 per week (£512 a month or £6,136 a year) are also eligible for SSP and the 2 weeks SSP reclaim. 

Updated advice can be found at: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

The world and business has suddenly changed beyond recognition.  One thing is for certain, there will be more tough times ahead. For financial advice, information about payroll or further facts about support available for businesses at this challenging time, please contact us where we will aim to provide the most up to date information.

By Richard McDermott, Head of Tax at d&t