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24
Mar

Updated COVID-19 Economic Measures - 24 March 2020

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With the increasing concern over the current coronavirus situation we wanted to assure that its business as usual here at LBW Chartered Accountants. 

What is LBW doing to ensure continued service? 

Our culture and technology already provide the opportunity for all of our staff to work from home with very little disruption to your service. Our telephone system is cloud-based and therefore all of our staff will still be at the end of a telephone should you require them.

How will LBW communicate with you and update you on new information?

Our aim is to continue to communicate with you via regular updated newsletters with further support across our social media channels such as Twitter, Facebook and our website.  We aim to bring you up to date information as soon as we have it in a clear and concise manner.

 

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SELF EMPLOYED HELP UPDATE

From our ongoing conversations with clients we appreciate that the self-employed community have concerns regarding help and support available to them.  We understand that the government are urgently discussing and debating financial help for the self-employed.

The Chancellor spoke in the Commons earlier and said the following:

“There are genuine practical and principle reasons to roll out a similar scheme for freelancers.  Of course, there have been people whose incomes have been impacted by what is happening.  But there are also millions of people who are self-employed whose incomes may not have been impacted and indeed might be increasing. The ability for the Government to distinguish between those people based on tax returns that are over a year and a half out of date, pose some very significant challenges in terms of fairness and affordability."

He added that the Treasury had been looking into measures in "intense detail" over the past week, but would not commit to a date when more help would be made available.

Clearly we will keep you updated of any changes to the help available to the self-employed once we are aware of them and the Government has made an announcement on them.

GOVERNMENT BACKED LOANS (Coronavirus Business Interruption Loan Scheme)

The scheme went “live” yesterday some of the high street lenders are starting to put information out there now on their websites, so please find a few links below that may be of use to you:

Please note the below links are not an exclusive list of finance providers – the full list can be found by clicking here.

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It may also be worth speaking to your existing lenders to see if you can rearrange existing finance facilities in place prior to committing to taking on any new debt, this could include capital repayment holidays or extension of terms etc.

INCOME TAX PAYMENT ON ACCOUNT - DEFERRED

We are awaiting some clarification from the ICAEW with regards to the eligibility for deferring the self-assessment payment due on 31 July 2020.  Currently their understanding is, it is limited to the self-employed i.e., the deferral does not apply to those that are in self-assessment but are not self-employed. The ICAEW Tax Faculty has sought clarification from HMRC but their current understanding is that the deferral applies to any taxpayer who was self-employed in the 2018/19 tax year on which the payment on account is based.

We will of course provide clarity here once ICAEW has provided clarity to its members.


Below is a summary of announcements that have already been made, we have previously communicated this in greater detail in earlier newsletters

CORONAVIRUS JOB RETENTION SCHEME

Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.

To claim under the scheme employers will need to:

designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and

submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.

VAT PAYMENTS - DEFERRED

The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.

The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.

INCOME TAX PAYMENT ON ACCOUNT - DEFERRED

Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.

Eligibility is limited to the self-employed i.e., the deferral does not apply to those that are in self-assessment but are not self-employed. The Tax Faculty has sought clarification from HMRC but our current understanding is that the deferral applies to any taxpayer who was self-employed in the 2018/19 tax year on which the payment on account is based.

HMRC TIME TO PAY

HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.

BUSINESS RATES HOLIDAYS AND CASH GRANTS

No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.

In those sectors, if your rateable value is between £15K and £51k, you'll also receive a cash grant of up to £25,000 per property.

Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).

The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.

GOVERNMENT BACKED LOANS (Coronavirus Business Interruption Loan Scheme)

The Coronavirus Business Interruption Loan Scheme (CBILS) provides support for businesses to access funding if certain eligibility criteria are met.

STATUTORY SICK PAY (SSP)

If you're a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.

The government will refund £94 per week, maximum £188, to your company.

It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.

UNIVERSAL CREDIT

Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.

MORTGAGE AND RENT HOLIDAY

Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don't pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.

Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.

COVID-19 CORPORATE FINANCING FACILITY

To support larger firms, the Bank of England has announced a new COVID-19 Corporate Financing Facility to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt.

This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.

The Government will very soon be announcing further information on this facility.

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