- Government announced the Coronavirus Job Retention Scheme on Friday (20 March 2020)
- 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 the COVID-19 crisis who are designated as ‘furloughed’
- HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers
- The scheme will be backdated to the 1 March 2020 and will be open before the end of April for at least three months
- Government have deferred Valued Added Tax (VAT) payments for 3 months. This is an automatic decision and will not require businesses to apply
- The deferral will apply from 20 March 2020 until 30 June 2020
- If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021
Aspire Comment
Government has been announcing new measures daily in order to deal with the current outbreak of the COVID-19 virus as effectively as possible to ensure as many businesses and jobs survive these unprecedented times.
The use of the Job Retention Scheme will include changing the status of employees who would have been laid off due to the COVID-19 crisis to “furloughed workers” which will keep the individual on the company’s payroll and allow the employer to claim a grant of up to 80% of their wage for all employment costs, up to a cap of £2,500 per month. It is important that despite these difficult, unprecedented times where the goalposts are regularly shifting, business decisions such as choosing to utilise these schemes or switch to alternative working arrangements are completed correctly and in line with the current employment law requirements.
We are not sure yet how this will impact those individuals who are engaged by contracting intermediaries, commonly known as umbrellas, or agencies. Individuals engaged on a temporary basis may be engaged on various contacts including zero-hour contracts, 336 guaranteed hours contracts or contracts which include a lay-off clause. We are seeking further clarification on this point.
We were surprised to see Government deferring Valued Added Tax (VAT) payments for 3 months automatically. It has always been the stance that it is not good business practice to utilise VAT payments as cash flow but the deferral of VAT payments by the Government during this time would appear to encourage such action.
View the full guidance here.
The information changes so rapidly and we will try our best to keep you updated but for full and accurate updates, we would recommend checking the Government website.
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https://www.aspirepartnership.co.uk/News/3402/the-good-work-plan-1-month-to-go-top-10-tips
