The government will pay 80% of workers’ wages plus allow deferred VAT and self-assessment payments as part of its latest coronavirus measures.
This package of measures, which Chancellor Rishi Sunak described as ‘one of the most comprehensive in the world’, aims to minimise rates of unemployment and financial hardship for both employed and self-employed workers.
It was announced as the government instructed all bars, restaurants, cafes, cinemas, theatres, gyms, clubs, leisure centres and other businesses to close, in an attempt to curb the spread of COVID-19.
This comes just days after the Chancellor announced a £330bn package of loans and financial aid for struggling businesses, and the Bank of England reduced the base rate for the second time this month to a historic low of 0.1%.
Here, Which? explains what the new measures are, and how your pay might be affected.
- You can keep up to date with our latest advice on the coronavirus outbreak over on our coronavirus advice hub.
Coronavirus job retention scheme to pay 80% of wages
The government announced its coronavirus job retention scheme, which will pay grants to any employer – regardless of its size – to pay up to 80% of the wages for any retained workers who are not actively in work but are still on the payroll.
The grants will pay each worker up to £2,500 a month, and can be granted by contacting HMRC. The grants will be available before the start of April.
The Chancellor said the grants can be backdated to 1 March 2020, and will initially cover at least three months – but this might be extended and there is no limit on the scheme.
Self-employed benefits and tax deferment
For any self-employed workers who lose out on work due to being ill with coronavirus, or while self-isolating, the minimum income floor will be suspended. This means that they will be able to apply for a rate of Universal Credit that is equivalent to statutory sick pay.
Additionally, self-assessment tax bill payments owed by self-employed workers are being deferred to January 2021.
This will particularly affect those who pay tax by payment on account (in which case, the next payment would be due 31 July 2021), or those with alternative tax payment arrangements.
To support those on low incomes and those who have already been made redundant, several means-tested benefits payments will be increased.
The Chancellor says this will benefit four million households in the UK.
In addition, renters will benefits from increases to housing benefit and the housing element of Universal Credit, so that the Local Housing Allowance will cover at least 30% of the market rents in each area.
- Find out more: Universal Credit explained
Deferred VAT payments
Any businesses that pay VAT will have payments for the next quarter deferred, covering VAT payments that would be due from now until the end of June.
These deferred payments do not need to be paid until the end of the next financial year (5 April 2021), but – as it stands – businesses will still have to pay the VAT bill for the next quarter at the usual time.
Other financial help available
If your income has been adversely affected by the coronavirus outbreak, there are a number of other measures in place to help.
- Statutory sick pay: the Prime Minister announced that all those who have to take time off sick from work, either while ill or self-isolating, will receive statutory sick pay from day one, rather than day four. Self-employed and gig economy workers can apply for Universal Credit or employment support allowance (ESA) in lieu of statutory sick pay.
- Mortgage payment holidays: homeowners and landlords can apply for three-month mortgage holidays – we’ve explained exactly how this works in our recent news story.
- Tax help for self-employed and businesses: HMRC has set up a dedicated coronavirus helpline for self-employed workers and business owners who are concerned about making tax payments. Call 0800 015 9559; 8am to 8pm Monday to Friday; 8am to 4pm Saturday.
- Universal Credit: claimants who cannot attend meetings with work coaches because they’re in self-isolation won’t face sanctions – as long as this is agreed to by their work coach ahead of the meeting.