The Chancellor Rishi Sunak announced a temporary set of measures in Friday evening’s daily press conference to support people and businesses during the COVID-19 pandemic, some of which will be instrumental in helping the UK construction industry to stay afloat during these unprecedented times. Read on the find out more.
The Coronavirus Job Retention Scheme
One of the Chancellor’s top priorities when it comes to protecting and boosting the UK economy is the retention of UK jobs. As a result, the Government has launched the Coronavirus Job Retention scheme which will be available to all UK employers.
The scheme will see HMRC reimburse up to 80% of workers’ wages, up to a total value of £2,500. This should ease the pressure on businesses immensely (provided their workforce are employed).
Businesses will be required to designate employees as ‘furloughed workers’, notifying both the employees and HMRC through a new online portal. HMRC are working round the clock to get a system up and running for reimbursing employers.
If your construction business would otherwise be looking to let certain employed staff go during this period of uncertainty then this scheme could help you retain those workers for at least a period of 3 months.
You can read the official Government advice on the scheme here.
Deferred VAT & Income Tax Payments
Another one of the Chancellor’s measures to support businesses throughout the COVID-19 crisis is deferred VAT payments for 3 months. This should help give the construction industry a well-needed boost, and it’s estimated these measures across the entire economy are equivalent to 1.5% GP.
For the self-employed, Income Tax payments which were due in July 2020 will be deferred until January 2021.
As with the Job Retention Scheme, all UK businesses are eligible for these deferred payments, and businesses do not need to do anything to apply, as this is an automatic offer.
Taxpayers will have until the end of the 2020/2021 tax year to pay for anything accumulated during the deferral period. This is great news for the construction industry certainly in the short term, and will give cash flow a much-needed boost during these uncertain times.
VAT refunds and reclaims will continue to be paid by the government as normal too.
Find out more about deferred VAT and Income Tax payments from the .Gov website here.
Statutory Sick Pay for small & medium-sized businesses
Another one of the measures announced by Chancellor Rishi Sunak included a Statutory Sick Pay (SSP) refund for employers who have paid out to due sickness related to COVID-19.
Under these measures businesses will be able to get a refund for up to 2 weeks of SSP per eligible employee. The .Gov website notes that businesses need to maintain records of staff sickness and SSP payments, but a GP note will not be required to claim the refund.
To be eligible for the scheme businesses must have fewer than 250 employees – this number will be determined by the number of recorded employees as of 28th February 2020.
If your construction business has already paid out SSP to employees as a result of COVID-19 then this refund could help with your business’ cashflow.
The Government is working to set up a repayment system which will be implemented as soon as the legislation is passed.
You can find out more here.
Coronavirus Business Interruption Loan Scheme
A temporary measure due to be launched this week, this scheme will be delivered by the British Business Bank, and will support SMEs to get access to bank lending and overdrafts to help keep them afloat.
The Government plans to step in to give lenders a guarantee of 80% on each loan, in order to give lenders the confidence to continuing providing finance to small and medium-sized businesses.
There will be no charge for this guarantee and the scheme will be eligible for loans up to £5m.
Businesses will need to turn over no more than £45m per year to be eligible, and there is also some further eligibility criteria set out by the British Business Bank. Once launched, all the major banks will be taking part, and there are 40 accredited lenders in total.
It’s advised that businesses talk to their bank or finance provider as soon as possible, so your finance provider can act quickly as soon as the scheme is launched.
For construction businesses struggling to raise cash to pay outstanding supplier invoices in a time where ongoing projects are not being invoiced for, a loan backed by the Government could provide a much-needed boost.
Further information on the Coronavirus Business Interruption Loan Scheme can be found on the British Business Bank’s website here.
Conclusion: Some useful measures to help construction & other wider economy
We, like the Government, hope these drastic measures will help to keep British businesses afloat during these uncertain times, and encourage all our customers to review the measures and decide which are appropriate for them.
At the time of writing (23rd March 2020 09:00am) we are still waiting to see if the Chancellor will introduce further measures to help protect the hundreds of thousands of self-employed construction subcontractors, and we will update this post accordingly.