UK’s response to COVID-19 outbreak

Mar 23, 2020

Last week, the Chancellor announced further measures of support for businesses and employers. The coronavirus job retention scheme will pay 80 per cent of the salary of retained workers up to a maximum of £2,500 per month, for an initial three-month period. This is in addition to the measures previously announced. Read our special newsletter from last Wednesday setting these out.

In addition to the job retention scheme, the following measures were also announced:-

  • VAT payments due between 20 March 2020 and 30 June 2020 are being deferred until the end of the current tax year 5 April 2021. VAT refunds and reclaims will be paid by the government as normal;
  • The second self-assessment income tax payment on account for 2020/21 which is due on 31 July 2020 is being deferred to January 2021. No penalties or interest for late payment will be charged in the deferral period; and
  • The Coronavirus Business Interruption Loan Scheme, launched at Budget, will now be interest free for twelve months.

The guidance for employers and businesses has also been updated:-

Under the 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. All UK businesses are eligible.

Businesses 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 reimburse 80 per cent of furloughed workers wage costs, up to a cap of £2,500 per month. We understand that HMRC are working urgently to set up a system for reimbursement as any existing systems are not set up to facilitate payments to employers.