On 20 March, the chancellor announced an extension of his economic support measures for businesses with a new workers’ support package. This includes the ‘coronavirus job retention scheme’, deferral of VAT payments due for the period to 30 June until the end of the 2020/21 tax year, and deferral of income tax self-assessment payments on account for the self-employed until 31 January 2021.
The ‘coronavirus job retention scheme’ involves a commitment by the government to pay up to 80% of the wages of workers who cease working for a temporary period but remain on their employer’s payroll. All UK businesses are eligible for the scheme, which will cover up to £2,500 per worker each month. Payments will be backdated to 1 March and the scheme will be open initially for 3 months, to be extended if necessary. Employers will need to:
designate affected employees as ‘furloughed workers’ and inform them of the change, while remaining within existing employment law; and
provide HMRC with details of the employees and their earnings through a new online portal.
HMRC is working to adapt its systems to cope with payments to reimburse employers.
Commenting on the announcement, IFS director Paul Johnson said: ‘It is clearly a policy designed in haste and will require considerable speed and flexibility from HMRC to deliver. As a result, there are obvious concerns about its design. An employer with 10 employees might have enough work to keep them all occupied half time. This policy gives a very clear incentive to furlough half of them and keep half of them on full time. There may also be concerns about policing this especially for owner managed companies paying wages to the owner’.
All UK businesses will be able to defer their VAT payments during the period from 20 March 2020 until 30 June 2020, with no application required. They will have until the end of 2020/21 to pay any liabilities that have accumulated during the deferral period.
Self-employed taxpayers will be able to defer their income tax self-assessment payments due on 31 July 2020 until 31 January 2021. No application will be required and no penalties or interest for late payment will be charged in the deferral period.
In addition, working tax credits payments will be increased by £1,045 to £3,040 per year from 6 April 2020 until 5 April 2021.
On 20 March, the chancellor announced an extension of his economic support measures for businesses with a new workers’ support package. This includes the ‘coronavirus job retention scheme’, deferral of VAT payments due for the period to 30 June until the end of the 2020/21 tax year, and deferral of income tax self-assessment payments on account for the self-employed until 31 January 2021.
The ‘coronavirus job retention scheme’ involves a commitment by the government to pay up to 80% of the wages of workers who cease working for a temporary period but remain on their employer’s payroll. All UK businesses are eligible for the scheme, which will cover up to £2,500 per worker each month. Payments will be backdated to 1 March and the scheme will be open initially for 3 months, to be extended if necessary. Employers will need to:
designate affected employees as ‘furloughed workers’ and inform them of the change, while remaining within existing employment law; and
provide HMRC with details of the employees and their earnings through a new online portal.
HMRC is working to adapt its systems to cope with payments to reimburse employers.
Commenting on the announcement, IFS director Paul Johnson said: ‘It is clearly a policy designed in haste and will require considerable speed and flexibility from HMRC to deliver. As a result, there are obvious concerns about its design. An employer with 10 employees might have enough work to keep them all occupied half time. This policy gives a very clear incentive to furlough half of them and keep half of them on full time. There may also be concerns about policing this especially for owner managed companies paying wages to the owner’.
All UK businesses will be able to defer their VAT payments during the period from 20 March 2020 until 30 June 2020, with no application required. They will have until the end of 2020/21 to pay any liabilities that have accumulated during the deferral period.
Self-employed taxpayers will be able to defer their income tax self-assessment payments due on 31 July 2020 until 31 January 2021. No application will be required and no penalties or interest for late payment will be charged in the deferral period.
In addition, working tax credits payments will be increased by £1,045 to £3,040 per year from 6 April 2020 until 5 April 2021.
