Corona Virus & UK Economy News
What will be the effect on the UK economy news. Since the public lock-down was announced on 23rd March 2020 in an unprecedented speech by Boris Johnson to the nation, Chancellor of the Exchequer Rishi Sunak has made several announcements in order to prevent the UK economy from crumbling.
Coronavirus job retention scheme
Under this scheme, all employers are able to access support to continue paying part of their employees’ salary for those employees (known as ‘furloughed workers’) that would otherwise have been laid off during this crisis. It is worth pointing out that all UK businesses are eligible, and the scheme has now been extended for a further month to 30th June 2020. Provisional estimates are that this scheme alone will cost the Treasury an eye-watering £40 billion!
Effectively, HMRC will reimburse 80% of furloughed worker wage costs, up to a cap of £2,500 per month. The HMRC portal for dealing with claims went live on 20th April 2020.
Business interruption loan scheme – critical loans
This scheme was launched on 23rd March 2020 to support small and medium sized businesses to access bank lending and overdrafts. The government provides lenders with a guarantee of 80% on each loan to give lenders confidence to provide ‘crisis funding’ to businesses up to £5 million. The government is not charging lenders for this guarantee and businesses can access the first twelve months of this finance interest free, as government will cover the first twelve months of interest payments.
My personal experience of clients trying to access this funding has been very disappointing, with banks being extremely slow at processing applications and then preferring to offer an alternative fee paying/interest charging product!
Business rent protection
Commercial tenants who cannot pay their rent because of the financial impact of Coronavirus will be protected from eviction. This will mean that no business will be forced out of their premises if they miss a rental payment in the next three months.
Personal rent protection
From 26th March 2020, landlords will have to give all renters three months’ notice if they intend to seek possession (i.e. serve notice that they want to end the tenancy). This means the landlord can’t apply to start the court process until after this period.
This protection covers most tenants in the private and social rented sectors in England and Wales, and all grounds of evictions. This includes possession of tenancies in the Rent Act 1977, the Housing Act 1985, the Housing Act 1996 and the Housing Act 1988. After three months, if the tenant has not moved a landlord will then need to apply to court in order to proceed.
Statutory sick pay (SSP)
The UK government news has brought forward legislation to allow small and medium sized businesses and employers to reclaim SSP paid for sickness absence due to Coronavirus.
Businesses which are unable to pay VAT due between 20th March 2020 and 30th June 2020 now have the option to defer that payment until 31st March 2021 and eligibility is automatic.
Self-employed income support scheme (SEISS Scheme)
On 30th March 2020, Rishi Sunak announced that self-employed individuals or members of a partnership can apply for a taxable grant of 80% of average monthly profits measured over the last three years up to £2,500 based on submitted self-assessment tax returns. These are the ones for the tax years 2016/17, 2017/18 and 2018/19. Taxpayers were given until 23rd April 2020 to bring their tax affairs to order, including submission of the 2018/19 tax return.
The SEISS scheme is available for self-employed individuals or members of a partnership with average trading profits of less than £50,000.
A self-employed individual or a member of a partnership can claim if you:
- Have submitted your self-assessment tax return for the tax year 2018 to 2019 and the previous two years;
- Traded in the tax year 2019-2020;
- Are trading when you apply, or would be except for Coronavirus;
- Intend to continue to trade in the tax year 2020-2021;
- Have lost trading profits due to Coronavirus.
Deferral of self-employed on account payments
The tax payments due on 31st July 2020 for the tax year 2019/20 through the self-assessment system do not need to be paid now until 31st January 2021.
The UK government has announced that those affected by Coronavirus will be able to apply for Universal Credit and can receive up to a month’s advance up front without physically attending a jobcentre. The seven waiting days for ESA for new claimants will not apply if they are suffering from Coronavirus or are required to stay at home – so it will be payable from day one
Get your tax affairs in order pre-release
5th April 2020 marked, almost unnoticed by most commentators, the end of another tax year – 2019/20. Remember to contact The Tax Academy CIC to review your tax affairs to ensure they are up-to-date and to file any outstanding tax returns to avoid tax penalties from HMRC.
There is nothing worse than being released from prison and finding that you have tax penalties and tax debt that need to be resolved with HMRC. (see our main advert page 38).
Paul is a Tax specialist and Tax author. The Tax Academy CIC is the leading provider of tax support in prisons.