Information correct as of 23 March 2020
It is a worrying time for all businesses during the Coronavirus/COVID-19 pandemic, none more so for the Bed & Breakfast industry.
At present, there is little information in relation to support for the Bed & Breakfast industry or the self-employed. That being said there are measures that you should be aware of that may provide support for your business.
Coronavirus Job Retention Scheme
Should you have employees within your Bed & Breakfast business, the government is stepping in to help you continue to pay part of the salary for those who would have been laid off due to the pandemic. Available to all UK businesses it will initially be put in place for three months.
HMRC will reimburse 80% of the wages costs relating to ‘furloughed’ employees up to a maximum of £2,500 a month. The scheme will be backdated to 1 March 2020.
What does furloughed mean? A furlough is “a temporary layoff from work”. People who get furloughed usually get to return to their job after a furlough. In today’s situation this means anyone asked to stop working during the COVID-19 pandemic but not made redundant.
You should be aware that employees should not undertake work for their employer whilst on furloughed leave. Therefore, the option to work less hours is not available to furloughed employees, even though this may be your preference. Also, at present we do not know whether this will include pensions etc. and how the cap will work in practice (e.g. is the maximum £2,500 or 80% of £2,500?). We are assuming that the £2,500 is a gross cap.
In order to implement these payments, HMRC need to update their IT systems as existing systems are unable to make payments to employers. This will take until April to complete.
PAYE software also will require updating before employers can automatically add ‘furloughed’ employees to their payroll systems.
In order to access this scheme, an employer will need to do the following:
- Employees will need to be officially designated as ‘furloughed’ employees and those employees will need to be notified of this change. Don’t forget that changing the status of an employee is subject to existing employment law and any employment contracts in place.
- When available, employers will need to submit information in relation to their ‘furloughed’ employees through a new HMRC online portal. As soon as we have details of this portal we will let you know.
Support for the Self-employed
Self-assessment tax payments due on 31 July 2020 by self-employed individuals will be deferred until 31 January 2021. There will be no need to apply to claim this deferral, it will be automatically applied. In addition, no penalties or interest for late payment will be due in the deferral period.
Self-employed people can now also access full universal credit at a rate equivalent to statutory sick pay.
COVID-19 Government Statutory Sick Pay and How to Apply for it
The government will meet the cost of COVID-19 statutory sick pay (SSP) for small businesses with up to 250 employees (as at 28 February 2020) for 14 days.
SSP will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with government advice. SSP will also be payable from day one instead of day four for affected individuals.
A reminder to all those establishments with employees that the weekly allowance for SSP will increase from £94.25 to £95.85 on 6 April.
People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor. This can be used by employees where their employers require evidence.
COVID-19 statutory sick pay is expected to be in the form of a refund. Details of this are not yet available and the Treasury says that it is “working with employers over the coming months to set up a repayment mechanism as soon as possible for employers reclaiming statutory sick pay”.
More information can be found here on the GOV.UK website.
If your Bed & Breakfast business is registered for VAT, you will be eligible for this deferral which will take effect from 20 March 2020 until 30 June 2020.
If eligible you will not need to make a VAT payment during this period and will have until the end of the 2020/21 tax year to settle any VAT liabilities which have arisen during the deferral period.
No applications are required as this scheme is automatic. VAT repayments will be paid by the Government as normal.
Business Rates Holidays and Cash Grants – Retail, Hospitality and Leisure Sectors
As a Bed & Breakfast business, you are likely to pay council tax rather than business rates.
The eligibility criteria for this scheme are strictly for businesses that are subject to business rates. Therefore, you will unlikely to be in a position to access the cash grants, all be they available to your sector, based on the current guidance.
Business Interruption Loans (CBILS) – for SME’s
The Coronavirus Business Interruption Loan Scheme (CBILS) will be delivered by the British Business Bank, allowing SMEs to access bank lending and overdrafts, with interest rates similar to current bank lending.
The government will provide lenders with a guarantee of 80% on each loan.
CBILS is available to all UK-based business with a turnover up to £45 million and will support loans of up to £5m per business. No interest will be charged for the first 12 months as government will cover the first 12 months of interest payments.
It should be noted that the business borrower will always remain 100% liable for the debt.
More details can be found on the British Business Bank website.
Mortgage Payment Holiday
Mortgage borrowers can apply for a three-month payment holiday from their lender. This applies to residential and buy to let mortgages. It is worth getting confirmation from your lender that this will not impact on your credit score.
Whilst the position remains fluid, the government continue to provide daily updates and it is likely that there will be further measures announced in due course. If you have any queries in connection with this, please do not hesitate to get in touch.
HMRC and Scottish Government Helplines
HMRC has a set up a phone helpline providing practical help and advice to support businesses and self-employed people concerned about not being able to pay their tax as a result of COVID-19.
For those who are unable to pay due to COVID-19, HMRC will discuss your specific circumstances to explore:
- agreeing an instalment arrangement
- suspending debt collection proceedings
- cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately
The helpline number is 0800 0159 559.
Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.
The helpline will not be available on Bank Holidays.
The Scottish business helpline specific to COVID-19 is based at the existing Scottish Enterprise call centre in Clydebank. The helpline will also help the Scottish government identify the current challenges facing business over COVID-19.
The business helpline number is 0300 303 0660.
Opening hours are Monday to Friday 8.30am to 5.30pm.