We will struggle to answer your questions individually especially as details are thin on the ground. I am sending out blogs and newsletters as I get the information.
From the Chancellor on Friday, with added comments from Clearways Accountants
“Today I can announce that, for the first time in our history, the government is going to step in and help to pay people’s wages. We’re setting up a new Coronavirus Job Retention Scheme. Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.
Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.
Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s above the median income. And, of course, employers can top up salaries further if they choose to.”
Clearways Accountants – grants for maternity leave take several weeks to process, with the influx of applications how will HMRC cope?
We don’t know how this will be checked, some director’s only pay themselves once a year and so for the year-to-date there is no monthly wage?
What about directors, will it be open to officers. There is no detail on this yet.
What about director/shareholders. Traditionally owner/directors have taken a low salary and dividends. Will dividends be counted towards the £2,500 per month cap?
“That means workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months – and I will extend the scheme for longer if necessary. I am placing no limit on the amount of funding available for the scheme. We will pay grants to support as many jobs as necessary.
I can assure you that HMRC are working night and day to get the scheme up and running and we expect the first grants to be paid within weeks – and we’re aiming to get it done before the end of April.
Clearways Accountants – once we know the detail we will be applying for all our out of work contractor directors, especially those in the outside broadcast sector who have no work, and with all sport cancelled will have nothing for the foreseeable future.
“I can announce today that the Coronavirus Business Interruption Loan Scheme will not be interest free, as previously planned, for 6 months – it will now be interest free for twelve months. Thanks to the enormous efforts of our critical financial services sector, those loans will now be available starting today Monday.”
Clearways Accountants – I recommend that you all apply for this loan. It is better to have it approved and not use the facility than struggle if cash gets tight.
“To help businesses pay people and keep them in work, I am deferring the next quarter of VAT payments. That means no business will pay any from now until the end of June; and you will have until the end of the financial year to repay those bills.”
Clearways Accountants – hurrah, something that saves cash now. If you have been using my accounting spreadsheet properly you should have a buffer of money put aside for corporation tax and now your VAT payment will not be collected (by direct debit) or need paying. This will help cashflow for a large number of contractor/small business. The time frame for repayment will probably be extended if this goes on for more than a couple of months.
“To strengthen the safety net, I’m increasing today the Universal Credit standard allowance, for the next 12 months, by £1,000 a year. For the next twelve months, I’m increasing the Working Tax Credit basic element by the same amount as well.
And I’m strengthening the safety net for self-employed people too, by suspending the minimum income floor for everyone affected by the economic impacts of coronavirus. That means every self-employed person can now access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
Clearways Accountants – this is still a massive shortfall for the self-employed.
“And to support the self-employed through the tax system, I’m announcing today that the next self-assessment payments will be deferred until January 2021.”
Clearways Accountants – this is helpful but the tax is still required in January 2021. In our view another payment scheme will be required. We have recommended to the Institute’s that loans and deferral payments are calculated in a similar way to student loan repayments i.e. based on profits. NOTE this is only available to the self-employed
Keep coming back to this site as we will post updates when I have the information.