Extension of Government COVID Schemes for the Employer and Employees - Article Surrey : Taxaccolega

Extension of Government COVID Schemes for the Employer and Employees

Covid- 19 has shaken the whole world in every way. It has influenced our way of living, our social life, education which in turn has affected the economy of the world. This has led to unemployment and severe global recession.

People have become conscious of their finances since the outbreak of pandemic Covid-19. The employers, employees, pensioners, savers everyone is affected by the Covid Crisis. The government is doing its best to save the economy and the recession and the redundancies that will follow covid-19

Recently, there have been extensions and changes in the Government Schemes and everyone wants to know how they will be affected.

The Government is planning to taper off of the furlough scheme in August means that the employers need to be prepared to pay their employees' wages. Government is planning to cut the furlough grant to 60 % from 80% while the employers are expected to pay the remaining 20% to make up to £2500. The employers will be responsible to pay national insurance and pension contributions for their employees which was previously paid by the government under its furlough Scheme. By extending the scheme the government wants to minimise unemployment, however this calls for some contributions from employers as well.

Employers on the other hand are struggling with the finances, the reduced income will make it hard for the employers to pay wages to the employees. The government has announced an extension ofbusiness interruption loan Scheme from 26 May 2020. The maximum amount available to the borrower and its group is increased from £50m to £200m.However, there will be a restriction on the dividend payment, senior pay and the share buy backs during the period of the loan.

Dividend Cuts or cancellations are already seen in April 2020. For example, BP, shell had to cut their dividends and recently FTSE 100 tobacco company Imperial Brands has also cut its dividend.

Cutting or cancellation of the dividend is always not a good news for the investors, especially in this time of crisis. The savers, pensioners will be suffering the most. However, the cut in the dividend will mean that He Company has planned to save some cash and either invest it somewhere else or use it in the running of the business. As the business are opening, and the furlough scheme being tapered off, the employers will have to pay wages to the employees as well as National Insurance and Pension Contribution and they need cash for that. `Even though our businesses are opening from June, we are not expecting same sales as before', the owner of a high street bakery chain said.

Mortgage Payment holiday Scheme has also been extended by 3 months which was due to expire by the end of June. The deadline for the extension has been shifted to 31 Oct. Mortgage payment holiday means that the borrowers can stop their monthly payments without their credit ratings being hit. The interest will continue to be accrued.

So if you are facing dividend cuts and you are worried about your mortgages make use of this scheme. And be confident that the cutting of dividend would mean the continuity of the business, this will help those borrowers who are struggling to pay their mortgages.

If you are an employee, self-employed, landlord and you want any financial advice related to furlough or any other government grant or scheme please do not hesitate to contact taxaccolega, chartered accountants who are based in Croydon and Southhall at 020 8127 0728 or email us at info@taxaccolega.co.uk

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