The UK became the first country in the world to respond to the coronavirus by having its central bank directly finance its government, rather than through the intermediary of the government debt market. It involves the government’s account at the Bank of England (the “Ways and Means facility”) being extended to a temporarily unlimited amount. That will enable the government to raise money faster in the short term, avoiding the need to tap the gilts market.
If you have at least one year’s self-assessment history and have filed your 2018-19 tax return, you are eligible as long as you have trading profits of under £50,000 per annum.
You will receive a taxable grant of 80% of your average profits. You do not need to apply, you should receive details in the post and the grant in June.
In general, the reimbursement by an employer of employee expenses is treated for tax purposes as earnings from the employment for the tax year in which they are paid (ITEPA 2003 ss 70 and 72) and will be taxed in the normal way. There is, however, an exemption for ‘homeworking arrangements’ which covers payments made by an employer to an employee in respect of reasonable additional household expenses incurred in carrying out duties of their employment at home (ITEPA s 316A). This is currently up to £4 a week (or £18 a month) but, as announced in the Budget, will be increased to £6 a week from 6 April 2020. An exempt homeworking payment under s 316A can be made to employees who work at home under a voluntary homeworking scheme (which is a crucial difference to other expenses claimed by employees outside of these arrangements).
Costs that may be covered by such homeworking payments include additional costs of heating and lighting the work area or the metered cost of increased water use, provided that the additional household costs are reasonable and incurred in carrying out the employee’s duties. There might also be increased charges for internet access, home contents insurance, business telephone calls or the additional cost incurred as a result of business rates liability (EIM01474). Broadband costs will only be tax exempt if the employee is not already paying for a broadband connection (EIM01475). Payments for costs that would be incurred whether or not the employee worked at home – for example, mortgage interest, rent, council tax or water rates – will not be tax exempt.
The chancellor has announced that payments under income tax self-assessment, normally due on 31 July 2020, will be deferred until 31 January 2021.
During this period, individuals will not be charged any penalties or interest for late payment.
The deferral will apply automatically to all. Taxpayers who believe that their 2019/20 income will be lower than their 2018/19 income can make a claim to reduce their payments on account.
Deferment of VAT payments is effective immediately. Businesses should cancel their VAT direct debits to HMRC now; otherwise payments will still be taken automatically.
These VAT direct debits should be restarted after 30 June 2020. The deferment applies to VAT payments due to be made to HMRC between 20 March 2020 and 30 June 2020. HMRC says that interest will not be applied to the deferred VAT payments.
However, VAT returns must still be submitted on time: it is only the payment which is deferred.
Oil prices have fallen due a combination of the Saudi oil price war and a glut in supply due to lack of demand.
The US Senate has struck a $2,200,000,000,000 deal. This helped the DJIA jump 11.4% the best one-day gain since 1933. The Fed has also restarted QE. In QE3 the Fed purchased $60b per month, now they are purchasing $125b per day.
The UK base rate is cut to an all-time low of 0.1% and the Bank has also announced an emergency £200bn of bond buying.
Sterling fell to its lowest level against the US dollar for 3 decades as the USD strengthened amid fears about the economy.
The UK has announced loan guarantees of £330bn, France €300bn, US $1,200bn to support the economy.