Covid-19

What is the Coronavirus Job Retention Scheme (CJRS)?

CJRS allows for employees to receive 80% of their current salary for hours not worked, up to a maximum of £2,500.

CJRS was first introduced by the Government in March 2020, and while it was due to be replaced by the Job Support Scheme, has been extended until 31 March 2021 following the announcement of further restrictions on businesses in November 2020 in England.

Who is eligible? 

All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

If you let go of an employee due to your concern about the end of the furlough scheme coming to an end before 31 October 2020, you can rehire them under the scheme.

More information can be found at Gov.UK.

What is the Job Support Scheme? 

The Job Support Scheme (JSS) aims to top up the wages of employees unable to work full-time because of coronavirus restrictions over the winter.

The new scheme is set to replace the Coronavirus Job Retention Scheme, which was due to end in November, but has since been extended unti l31 March 2020. It is not clear at which point the JSS will takeover.

However, under this scheme there are two strands of support:

• JSS Open: for businesses that are operating, but facing decreased demand.
• JSS Closed: for businesses that are legally required to close their premises as a direct result of coronavirus restrictions.

JSS Open requires an employee work a minimum of 20% of their usual hours, with the employer to continue to pay them as normal for the hours worked. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. The result is employees will continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

JSS Closed will mean an employee unable to work due to COVID restrictions will receive around two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

How long will the scheme run for?

At the moment the Government has stated it will run until at least 30 April 2021.

What businesses are eligible for this scheme?

Just like the Coronavirus Job Retention Scheme, businesses will have to apply. It is open to employers who didn’t take part in the furlough scheme. All small and medium-sized businesses are eligible, but larger businesses will be required to prove they’ve been adversely affected by coronavirus.  Employees cannot be on a redundancy notice while taking part.

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

The changes being made include:

• Giving companies greater breathing space from creditors seeking to ensure their debts for a period of time while they seek a rescue or restructure;
• Protecting their supplies to allow them to continue trading during this period; and;
• A new restructuring plan, which will bind creditors

Key safeguards for creditors and suppliers will be included to ensure they are paid, while existing laws against fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against reckless misuse of these new measures.

Wrongful trading provisions are also being suspended retrospectively from 1 March 2020 for three months so directors can keep their businesses going without the threat of personal liability.

More information: 

You can find out more in Business Secretary, Alok Sharma’s announcement on the 28 March and our article on the New Restructuring Tools to be added to Insolvency Law.

When will deferral of VAT payments apply? 

Businesses which deferred their VAT due to coronavirus will no longer have to pay a lump sum at the end of March. Businesses will be allowed to spread their deferred VAT bill over 11 smaller repayments with no interest to pay.

Am I eligible?

All VAT-registered UK businesses are eligible.

How do I access it?

This is an automatic offer with no applications required. UK Registered businesses will not need to make VAT payments normally due with VAT returns during this period.

Taxpayers will be given until the end of the 2020-21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Do I need to cancel my direct debit if I want my VAT payment to be deferred?

Businesses who normally pay by direct debit should cancel their direct debit with their bank if they wish to defer their VAT payments. HMRC has now confirmed that it will not automatically cancel collection of VAT payments by direct debit.

Businesses will also need to remember to reinstate their direct debit mandate once the deferral is over and to make arrangements to pay the accumulated VAT by the end of the 2020/21 tax year.

Will interest be due if payment has been deferred? 

HMRC will be inhibiting all default surcharges and interest will not be accrued on amounts deferred as a result of this announcement.

Would there be penalties if I do not render my VAT on time? 

HMRC said that while surcharges would be “inhibited” during the deferral period, businesses need to continue to render their VAT return on time.

If you’re in temporary financial distress because of COVID-19

If you are experiencing financial difficulties more help is available from HMRC’s Time to Pay service.

More information:

For more information please read the Government’s guidance on deferring VAT payments and HM Government’s Business Support page on VAT deferral.

When does the deferral of income tax apply? 

The deferral for income tax self assessment applies to the second payment on account for 2019/20 due on 31 July 2020 which is deferred until 31 January 2021. This is an automatic offer and no application is required.

Am I eligible? 

All taxpayers with a second self-assessment payment on account due on 31 July 2020 can defer payment until 31 January 2021. It is not necessary to be self-employed to be eligible for the deferral.

How do I access it?

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment of your July 2020 payment on account until January 2021.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of coronavirus and have outstanding tax liabilities.

When can I access it?

On 31 July 2020 when your self-assessment payment on account, ordinarily due to be paid on that date, may be deferred until 31 January 2021.

Do I have to defer my tax payment? 

The deferral is optional. Taxpayers can still pay the July payment if they wish to avoid a larger payment in January 2021.

Do I need to cancel my direct debit? 

Any taxpayer who wishes to defer payment needs to cancel any direct debit set up for this payment on account and ensure they reinstate it in time for the January 2021 payment.

Should I still file my self assessment returns?

Self assessment returns should still be filed by their due date and it may be advantageous to file the 2019/20 return as soon as possible after 5 April 2020.

This might help facilitate the tax payment due in January 2021 and highlight any refund due, including as a result of any loss relief available.

If you’re in temporary financial distress because of COVID-19

If you are experiencing financial difficulties more help is available from HMRC’s Time to Pay service.

More information: 

For more information, please see the Government’s page on being unable to pay your tax bill on time, and the Government’s Support for Businesses page.

What are ‘Bounce Back Loans’?

The scheme aims to help small and medium-sized businesses borrow quickly. Loans of between £2,000 and £50,000 are on offer.

The Government has revealed a repayment plan for the Bounce Back Loan. The loan can be extended extended from six to 10 years, nearly halving the monthly repayment for businesses.

Businesses who are struggling can now choose to make interest-only payments and anyone in real trouble can apply to suspend repayments all together for up to six months.

Businesses credit rating will not be affected by this.

The scheme is open to applications until 31 January 2021. Find out more at Gov.UK.