Government support: Round up of latest measures from Friday 20th March
These are the new announcements following the Chancellor's press conference last night and a summary of previous ones.
Coronavirus Job Retention Scheme
This will be available to all UK employers offering support for them to continue paying part of their salaries to employees who would otherwise have been laid off during this crisis. HMRC will reimburse 80% of furloughed workers' wage costs, up to a cap of £2,500 per month.
To access the scheme employers will need to firstly designate employees as 'furloughed workers' and notify them of this change (subject to existing employment law and their employment contract). Then they will have to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.
Existing systems are not set up to facilitate payments to employers and HMRC will set out further details on the information required in due course.
Deferred VAT and Income Tax payments
HMRC will defer VAT payments for 3 months and Income Tax payments for the self-employed for 6 months.
All UK businesses are eligible and the deferral will apply from 20th March 2020 until 30th June 2020. This is an automatic process that doesn't require an application, ensuring businesses will not need to make a VAT payment during this period. Taxpayers will be required to settle any accumulated liabilities by the end of the 2020/21 tax year so we strongly advise clients to set-aside funds in a ring-fenced account when and where possible. Refunds and reclaims of VAT will be paid by HMRC as normal.
Income Tax for self-employed
If you are self-employed you will be eligible to defer payments of income tax normally due on 31st July 2020 until 31st January 2021. No application is required for this deferral; it is automatic. No penalties or interest for late payment will be charged.
Time to Pay arrangements
HMRC have scaled up their Time to Pay offer to all firms and individuals who are in financial distress. If you have outstanding tax liabilities, you may be eligible to receive support with your tax affairs through HMRC’s Time To Pay service however these arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business:
- pays tax to the UK government
- has outstanding tax liabilities
How to access the scheme
If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment, please call HMRC nearer the time.
In most cases HMRC will need to have the liability registered on their systems to discuss a T2P arrangement; in other words; your VAT return, Corporation Tax Return, P32 or Personal Tax Return needs to have been submitted already before contacting HMRC. Expect long waits on the phone and please be patient.
Statutory Sick Pay
HMRC will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. SSP is paid at a weekly rate of £94.25 rising to £95.85 from 6th April 2020.
The eligibility criteria for the scheme will be as follows:
- this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- UK employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28th February 2020
- employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
- eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
How to access the scheme
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has been passed.
Coronavirus Business Interruption Loan Scheme (CBILS)
A new temporary CBILS will be offered to UK businesses with turnover under £45m pa; guaranteeing up to £5m of loans and overdrafts with no interest due for the first 12 months. The government will cover the first twelve months of interest payments.
This is actually a replacement for the existing 'Enterprise Finance Guarantee' and will be distributed by the British Business Bank via approved lenders such as High Street Banks. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) without any charge.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched and the scheme will be available from early next week; commencing 23rd March 2020.
This still represents debt for small businesses and banks will undertake their usual credit and affordability checks with security or personal guarantees required required. One hopes the terms will be significantly more favourable than other traditional lending or alternative lending (such as Funding Circle). Business owners should seriously consider cash flow and business viability before taking on debt.
Larger firms will receive support through the COVID-19 Corporate Financing Facility. The Bank of England will buy short term debt from larger UK companies.
Sunak also extended the business rates holiday for all businesses in England in the retail, hospitality and/or leisure sector for 12 months; regardless of rateable value. This is an enhancement to the Budget announcement. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
Cash Grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme offers cash grants of up to £25,000 to retail, hospitality and/or leisure businesses in England.
Businesses in these sectors with a rateable value over £15,000 and below £51,000 will receive a grant of £25,000. For businesses in these sectors with smaller premises with a rateable value under £15,000 they will receive a grant of £10,000.
These will be delivered through Local Authorities who will write to you if you are eligible - you do not need to do anything. Guidance on the scheme has not yet been given to Local Authorities and you should direct enquiries to your local authority.
Here are a few local Hertfordshire authorities:
- St Albans Council Business Rates
- Welwyn Garden City Business Rates
- Hemel Hempstead Business Rates
- Watford Business Rates
Support for businesses that pay little or no rates
In another adjustment to this month's Budget, the Chancellor enhanced the small business rate relief grant of £3,000 to £10,000 available to small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This is a one-off grant and your Local Authority should contact you about this; you do not have to apply.
Unfortunately for those small businesses outside of the retail, hospitality and leisure sectors paying full rates above a rateable value of £15,000 there is no assistance currently on offer.
The Chancellor also confirmed that mortgage lenders have agreed to support struggling customers as a result of COVID-19 with a payment holiday of up to 3 months. There is no announcement yet of support for those in rented accomodation.
12-month delay to the IR35 off-payroll rules for private sector engagers until 1 April 2021. At this stage those affected have probably already taken mitigating action but it is one less legislatory change to deal with for now.
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics. You need to check the terms & conditions of your policy.
Further information on all of the above can be found on the government's website COVID-19 support for businesses.
Delivering for our clients in the event of a lockdown
We would like to assure all of our clients that we have been extremely busy building contingencies in the event of a complete government lockdown on day-to-day movement.
All of our staff have been given the hardware, software and technology to continue working remotely from home for as long as necessary.
We have also introduced an automated call-handling system for the phones which we hope will you will find helpful!
One final comment...
On a more personal note, if we need reminding of why this is all happening and our responsibility to take advice seriously, please listen to this podcast of an LBC interview with an NHS ICU consultant on the frontline... very powerful.