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HMRC issues guidance on 80% financial support for firms and self-employed

27 March 2020
HMRC update on Covid-19

HMRC provides guidance on the Coronavirus Job Retention Scheme that will pay up to 80% of employees' salaries and implements a similar scheme for the self employed as CITB suspends its levy and Barbour estimates £25.55billion worth of construction work has been suspended this week.

HM Revenue & Customs has today issued guidance on its Coronavirus Job Retention Scheme and a new, similar scheme now introduced for the self-employed.

Both schemes offer to meet 80% of income up to a ceiling of £2,500 a month. Employees have to be retained on ' furlough' (leave) by their employers. The incomes of the self-employed will be averaged from tax returns of the past three years.

But in announcing the help for the self-employed yesterday (26 March), the Chancellor, Rishi Sunak, said: “I must be honest and point out that in devising this scheme in response to many calls for support, it is now much harder to justify the inconsistent contributions between people of different employment status.”

He added: “If we all want to benefit equally for state support, we must all pay in equally in future.”

The comments indicate the government’s roll-out of the IR35 tax reforms on self-employment that were due to take effect in April but have been postponed by the Coronavirus pandemic, will go ahead when it is over.

HMRC says of the Coronavirus Job Retention Scheme for companies that it has been "working night and day to develop this scheme" and has now published some details of it.

Employers can see what the Revenue has come up with so far on the Gov.UK website here and there is a separate announcement for employees here.

HMRC says the guidance will be updated as the scheme is developed, and if there are any further changes made by the government.

Those who are self-employed received an email from HMRC on Thursday (26 March) telling them they will receive 80% of their declared profits averaged over the past three years up to £2,500 a month back-dated to the start of March if their income stopped at that point.

The support for both employed and self-employed initially lasts for three months, although the government has said it will be extended if the pandemic goes on longer. HMRC told self-employed people they will not receive any money until after June, when the amount due will be paid in a lump sum.

HMRC has also issued a bit more guidance on deferring VAT payments. The Chancellor announced on 20 March that VAT payments could be deferred to help businesses with cash flow during the COVID-19 pandemic.

All businesses with a UK VAT registration can defer VAT payments due between 20 March and 3‌0‌‌ June until 3‌1‌‌ March 2021, although you must continue to submit VAT returns as normal.

You do not need to inform HMRC if you wish to defer payment. You can opt in to the deferral simply by not making VAT payments due in this period. If you pay by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to collect on receipt of the VAT return automatically.

Should you wish, you can continue to make payments as normal during the deferral period. HMRC will also continue to pay repayment claims as normal.

Meanwhile, CITB has suspend training levy collections. It says its Board met on 25 March to discuss this and other issues relating to the pandemic and gave approval to suspend the issue of its levy bills, due for payment in April, for an initial period of three months. The bills will subsequently be issued for the full year. The aim is to provide immediate financial relief to construction employers during the present crisis.

And it certainly is a crisis. Analyst Barbour ABI has calculated that the stalling of construction projects and closure of sites in the four days from 23 March brought to a halt £25.55billion-worth of construction work, HS2 and Crossrail being among the projects that have largely or entirely stopped this week.

The figure relates just to the construction work involved, not to the overall value of the project.

The government has published an advice poster that can be downloaded below....

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