The Chancellor announced various measures on 20 March to support businesses during the Coronavirus crisis. These include a scheme to pay 80 per cent of the salaries of ‘furloughed workers’ and deferral of VAT payments.
The Coronavirus Job Retention Scheme is available to all UK businesses and HMRC will reimburse 80 per cent of the wage costs of workers designated as ‘furloughed’, up to a cap of £2,500 per month. Businesses will be able to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal which is being established alongside a system for reimbursement.
The government is also supporting businesses by deferring VAT payments for 3 months and for self-employed people, income tax payments due in July 2020 under the self-assessment system will be deferred to January 2021.
The VAT deferral will apply from 20 March 2020 until 30 June 2020. There is no requirement to apply to the scheme which will be automatic for all UK businesses. Businesses will not need to make a VAT payment during this period and will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during the deferral period.
VAT refunds and reclaims will continue to be paid by the government during this period, and VAT returns are still expected to be submitted as normal.
