economy

Changes to the Finance Act 2020 and the potential impact on borrowers

You will no doubt be aware that as of 1st December 2020, HMRC has once again become a preferential creditor in company insolvency cases.

What does this mean in practical terms?

When a business enters into insolvency, HMRC will now rank ahead of floating charge holders and unsecured creditors and will be paid first for VAT, PAYE, employee NIC’s and Construction Industry Scheme deductions.

How has the furlough scheme changed for employers?

As of 1 September, employers who have put their staff on furlough now have to pay 10% of employee wages, while the government will pay the remaining 70%. This will then rise to 20% in October before it comes to an end on 31 October.