This evening’s press conference brought in a new wave of measures to help businesses and people survive financially through the coronavirus pandemic. Chancellor Rishi Sunak announced the unprecedented measures as the UK takes its next steps in social distancing.
Update: With the announcement of non-essential retail business closure on 23/03/2020, the assistance offered to hospitality, leisure and restaurants will be extended to retail businesses forced to close.
Businesses That Must Close From Friday Night
Following advice to the public earlier this week that they should not go to pubs, bars, clubs and restaurants, the government has now made the decision to formally close these businesses. In addition gyms, leisure facilities, cinemas and theatres are to close. And this decision will be reviewed on a monthly basis, leaving these business types with a somewhat unsure future ahead. PM Boris Johnson did, however, say that takeaway food would still be permitted – with many of these restaurants having already made a move towards offering takeaway and delivery.
Shortly after this announcement Chancellor Rishi Sunak did mention the closing of ‘shops’, though we believe he was misspoken. As far as we can see shops will be allowed to remain open.
Wages For Staff Who Can No Longer Work
On a closely related note Chancellor Rishi Sunak announced the measures which have just been made available for businesses to continue to pay their employees rather than being forced to make them redundant; The Coronavirus Job Retention Scheme.
The government is to pay 80% of an employees usual wages as a grant to the business, up to a maximum of £2,500 a month – the business can choose whether or not they are able to pay the remaining 20%.
This will come as a relief for many businesses and individuals at risk and is a welcome move by the government at this time. The scheme will be applicable from the 1st March 2020 and will last at least 3 months with no cap on the available funding.
To access the scheme, affected businesses should contact HMRC. Funding is thought to be available before the end of April – which means some businesses may be a little short for this month’s wages, but between this and other measures below it is hoped that minimal interruption to salaries can be achieved.
The Chancellor also announced that the next quarter of VAT due would be deferred and would only be payable by the end of the financial year. Regular VAT payments will be expected from June onwards as the situation currently stands.
It is hoped that this deferral will free up crucial funds to help ensure businesses weather the difficulties of this and following months, including keeping the workforce paid.
Important Note On VAT Deferral
Remember to cancel any direct debits you have set for VAT payments if you wish to take advantage of the VAT deferral offer from the government – but also please be aware you’re still expected to file your VAT return, no interest or penalties will be applied this quarter for deferring payment to next quarter.
Business Interruption Scheme Interest-Free Period Extended
The Business Interruption Scheme announced earlier this week will now have a 12 month interest-free period as opposed to a 6 month period. This scheme has received criticism because taking a loan may be a difficult decision for a small business and even riskier in the current climate when there is little idea of the timeframes involved.
In addition to this loan scheme there are a few government grants already announced, take a look at this blog for details.
Financial Support For Individuals
A range of measures was also announced to support workers who may not receive standard salary packages, The Chancellor said he’d chosen well established and easy routes to get these funds to the people who need them quickly rather than setting up a new scheme which would take considerably longer.
Firstly Universal Credit will be boosted by £1000 per applicant over the next year, and that the working tax credit basic element would also be increased by £1000 for the year.
Measures have also been put in place to help self employed, gig workers and anyone who previously didn’t meet the minimum wage requirements for Universal Credit:
“I’m strengthening the safety net for self-employed people too by suspending the minimum income floor for everyone affected by the economic impact of coronavirus.
“That means that self-employed people can now access, in full, Universal Credit at a rate equivalent to statutory sick pay for employees.
“Taken together, I’m announcing nearly £7 billion of extra support through the welfare system to strengthen the safety net and protect people’s incomes.”
Self Assessment payments are also to be deferred to Jan 2021 which will hopefully allow the self employed a little more flexibility during this time.
If your business is being affected negatively by the current coronavirus crisis please speak with your accountant, we’re here to help you navigate this in the most efficient way possible.