We send out an email update to all our clients each month; we don't usually post it here, but this is an update to this month's news that we sent out this morning...
We thought we’d be following up our Budget email with some further updates pretty soon, and here we are. There were some more announcements last night. On the lending and Business Rates items, there’s no detail yet about how things will work in practice, but we wanted to let you know about them as soon as we could. If you’ve got immediate concerns about payment of tax due to coronavirus, HMRC have set up a helpline for businesses to call them (although we imagine you can expect a lengthy queue):
https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19
At the moment, the people who don't really have much in the way of specific support are the self-employed, consultants, freelancers and the like, especially if IR35 wasn't a problem for you and you rent your home. The Chancellor did say in the Budget that the government would make claiming Universal Credit "quicker and easier" (from which one would logically conclude that if and when things settle down they'll revert to making it slow and hard), but that's about it. Supposedly there will be more announcements soon though, in which case we'll be emailing you yet again.
So, last night’s news. The first thing is that the IR35 changes due to come in from 6 April have been postponed for a year. This will not be of any help to contractors who’ve already switched to PAYE status in anticipation of the change, or end users like HSBC and Vodafone that had already stopped using contractors entirely. But there are still plenty of contractors and freelancers wrangling over status and day rates with clients and agencies, so it’s one fewer thing to worry about for them. Of course, IR35 still exists, and contractors remain responsible for determining their own status and paying employment taxes if they consider it appropriate. But the compulsion for medium and large customers to make the call, which in practice they’ve largely been dealing with by forcing contractors on to PAYE or into umbrella companies (which is also PAYE) has been put back until 2021.
Next, the reduction in Business Rates for retail and leisure business was extended. None of them will have to pay Business Rates at all in 2020-21. Local authorities are supposed to get guidance from that from the government on Friday, probably you’ll hear from them some time after that. Plus, the £3,000 cash grants that were to be given to similar businesses occupying commercial premises but not paying business rates to begin with have been increased – up to £25,000 in some cases. And businesses in other sectors who similarly have premises but pay little or nothing in rates will also now get (smaller) grants. Funding for that is supposed to be provided from some time in April, so don’t expect any money to appear in your bank account right now.
The announcement with a big number in front of it was £330bn of loans and loan guarantees to be made to businesses. It’s said that these loans will be on attractive terms, but there’s no definition of what that represents right now. This funding will supposedly start to become available next week. Big companies will get money from the Bank of England, but you can expect most businesses to be getting such loans through more usual lenders. Of course, a loan isn’t a grant, and in the long-term it won’t save a business that has been fatally compromised by the outbreak. But for sound businesses that will be able to get back on their feet, but in the meantime need help to bridge a gap and cover wages and overheads, this is likely to be an attractive route to take.
And, on the domestic front, homeowners who are struggling to pay their mortgage will be eligible for a three-month payment holiday. Note, though, that this isn’t a cost saving – interest will still be building up on the amount you owe, and you’ll still have to pay it all back in the end. So it’s a cashflow break, but in fact you’ll wind up paying a bit more over the life of the mortgage as a bit more interest will be building up. You wouldn’t just automatically take the holiday if you’ve got the ability to pay.
There’s some more info – and a recap on the things we’ve already told you about on Statutory Sick Pay and the like – here:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
We hope that’s of some help and interest. We’re happy to hear from you if you’ve any questions about it – but, again, do bear in mind that nobody can answer the question “how exactly will this work?” at this point, because that information isn’t available yet!
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