Chancellor Announces Further Measures on the Economic Response to Coronavirus

Last Friday (20th March), the Chancellor set out the next stage of the Government’s economic response to the COVID-19 emergency.

Coronavirus Job Retention Scheme

This is a UK wide scheme which will pay a grant to any business for each worker they identify as furloughed. A furloughed worker would remain employed by the business but would not undertake any work or be expected to be available for work.

This is to support firms who would otherwise be faced with no choice but to make these workers redundant or ask them to take a period of unpaid leave.

Any UK employer with a PAYE scheme, who promises to retain these staff even though they won’t be doing any work for the employer, will be eligible to apply directly to HMRC for a grant under this scheme.

These grants will cover 80% of the salary of retained workers up to a total of £2,500 a month- more than the median monthly earnings.

Deferring Tax Payments through VAT and Income Tax Self-Assessment:

The Chancellor is deferring VAT payments due between now and the end of June. No business will have to make a VAT payment to HMRC in that period. They will have until the end of the financial year to pay.

Income Tax Self-Assessment payments due in July 2020 will be deferred until January 2021, benefitting millions of self-employed taxpayers.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.

Universal Credit (UC) Standard Allowance and Working Tax Credit (WTC) Basic Element:

From 6 April 2020, the Chancellor is increasing both the UC standard allowance and the WTC basic element for the next 12 months, by £1,000 a year.

The UC standard allowance will increase by £86.67 per month (equivalent to £20 per week) on top of the planned annual uprating. The WTC basic element will also increase by £20 per week, on top of the planned uprating. All existing WTC recipients will benefit and all UC claimants, both new and existing, will benefit from these measures. These new rates will be automatically reflected in claimants’ awards.

It is estimated that 2.5million households will immediately benefit from the UC measure, as well as those who become unemployed or whose earnings decrease because of the impact of COVID-19. A further 1.6million households will benefit from the WTC measure, including those whose work hours decrease because of the impact of COVID-19.

UC Minimum Income Floor (MIF):

From 6 April 2020, the Government are temporarily relaxing the MIF for all self-employed UC claimants affected by the economic impacts of COVID-19, for the duration of the outbreak.

This means that if self-employed claimants’ work, and therefore earnings, have significantly reduced due to the impact of Public Health England COVID-19 guidance on self-isolation and social distancing, and the wider economic impacts of the outbreak, their UC award will increase to reflect their lower earnings.

Overall, from 6 April, this measure will benefit many of the c.150,000 self-employed people who currently claim UC and who experience a significant loss of earnings as a result of COVID-19. Of the c.5m self-employed people in the UK, around 55% are likely to be eligible for UC support if they find themselves unable to work.

Housing Support for Private Renters- Local Housing Allowance (LHA):

This will be a particularly stressful time for renters. The Government have already taken steps to protect tenants, with the Secretary of State for Housing previously announcing that no renter in private or social accommodation needs to be concerned about the threat of eviction for at least the next three months.

From this April, the Chancellor has announced, all new and existing private renters claiming Universal Credit and Housing Benefit will benefit from additional housing support. All Local Housing Allowance rates will be uplifted to the 30th percentile of market rents. This worth an extra £14 a week on average for the 1.2 million existing claimants and any Universal Credit claimants who rent in the private sector. This will benefit renters in every part of our country, protecting against rent arrears during a difficult time for many renters.

New Universal Credit claimants can receive an advance of their first month’s award on day 1 of their claim in needed. The Government has removed the requirement for claimants to attend a jobcentre to receive their advance.

Coronavirus Business Interruption Loan Scheme:

The Chancellor announced that the interest free period of the Coronavirus Business Interruption Loan Scheme has been increased from 6 to 12 months.

Further Information:

BEIS have developed guidance specifically for employers and businesses which is available at:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

The Government’s COVID-19 Action Plan and further guidance can be found at:

https://www.gov.uk/government/publications/coronavirus-action-plan

https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public