Deferral of VAT payments
The Chancellor announced a VAT payments deferral on 20 March to support businesses with cash flow during the pandemic. This means that if you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to defer the payment until a later date or pay the VAT due as normal.
If you choose to defer VAT payment as a result of COVID-19, you must pay the VAT due on or before 31 March 2021. HMRC will not charge interest or penalties on any amount deferred. However, you will still need to submit your VAT returns to HMRC on time. HMRC will continue to process VAT reclaims and refunds as normal during this time.
You do not need to tell HMRC that you are deferring your VAT payment. Simply cancel your Direct Debit.
After the VAT deferral ends VAT payments due following the end of the deferral period will have to be paid as normal.
Self-employment Income Support Scheme
On 26 March 2020 the Chancellor unveiled a £9 billion self-employed income support scheme to help the self-employed survive the COVID-19 outbreak. He stated that, “the Government will pay self-employed people who have been adversely affected by the coronavirus a taxable grant worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month”.
The cash will be available for three months but that could be extended if the crisis continues for longer. HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
- Be self-employed or a member of partnership
- Have lost trading/partnership trading profits due to COVID-19
- File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so
- Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
- Have trading profits of less than £50,000 and more than half of total income come from self-employment. This can be with reference to at least one of the following conditions:
- Your trading profits and total income in 2018/19
- Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19
HMRC is urgently working to deliver the scheme; grants are expected to start being paid by the beginning of June 2020.
Coronavirus Job Retention Scheme
All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. They need to simply designate affected employees as ‘furloughed workers,’ meaning employees that cannot carry out any work for the company and would therefore be laid off without the Government's support. And notify the 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.
Once the information is submitted to HMRC about the employees that have been furloughed and their earnings through a new online portal HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Please note that as per the scheme the employers are not required to pay the remaining 20% of the furloughed employees’ salary. However, the company may choose to do so depending on the employee. Moreover, the scheme does not extend to dividends and employees that may still work for the firm at reduced hours.
- All UK-wide employers with a PAYE scheme that was created and started on or before 28 February 2020 will be eligible including businesses, charities, recruitment Agencies (agency workers paid through PAYE) and public authorities
- It is essential that the employer has a UK bank account
- All employees that were on payroll as of 28 February 2020 can benefit from the grants, including full-time employees, part-time employees, agency workers; and zero-hour/flexible workers. This includes those whose employment was terminated on or after 1 March 2020 as a result of the COVID-19 outbreak, as long as they are then re-hired. However, in order to qualify for the grant, employees must be furloughed and stop working for the employer
How wages are calculated:
- For full-time and part-time employees, the full salary before tax must be used for the calculation
- For workers with variable earning or on a hourly rate, employers must use whichever is higher between:
>their average monthly earnings for the 2019/20 tax year; and
>their earnings from the same monthly period in 2019
Checklist for documents required for the claim:
- the claim amount
- your ePAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
The online service you’ll need to use to claim is not available yet. The government expects it to be available by the end of April 2020.
Stay tuned at bizfundingclub.com/blog for more detailed articles and summaries or follow us on twitter @bizfundingshow for live updates as it all unfolds.
Although the Government has announced generous and wide-ranging business support measures, if you are a business that is not eligible for the scheme(s) and still looking for funding to support your venture through these times have a look at Loan Finder and gain access to over 140 funders and products with funds available from £500 to £50 million! It's simple, efficient, free and fair.
However, if you’re looking for equity funding, Grants or R&D - drop us a line at email@example.com for tailored support and advice.