Last week our Monday update summarised all the measures the UK and Scottish governments have introduced to date. The subsequent daily updates focussed on any additional measures or details announced as the week progressed.
This format received positive feedback from clients and we have decided to repeat the same arrangement for this week’s communications. If you need to refer back to any previous information, you will find all of our updates in the News section of the GWA website.
Unless the current circumstances continue longer than initially anticipated, we are not expecting any major new measures. Should the restrictions on home and work life be prolonged we would likely see extensions to the existing measures.
Unfortunately, we are still waiting for further clarification in connection with the Self-Employed Income Support Scheme (SEISS). There are still several unknowns in connection with this scheme, primarily whether it relates to pre or post capital allowance profits.
COVID-19 Job Retention Scheme
The government has stepped in to help employers continue to pay part of the salaries of those employees who have been laid off due to the COVID-19 pandemic.
Open to all UK businesses the scheme will initially be in place for three months from 1 March 2020. HMRC will reimburse 80% of the wages costs relating to ‘furloughed’ employees up to a maximum of £2,500 a month.
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.
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 an employers’ preference.
To implement these payments, HMRC need to update their IT systems as existing systems are unable to make payments to employers. This is expected to be resolved sometime this month.
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.
It has been confirmed that IR35 contractors that work for public sector organisations will now also be eligible for the 80% furlough scheme.
Support for the Self-employed (SEISS)
Full details on the measures announced to support the self-employed can be found here on the GOV.UK website.
Self-assessment tax payments due on 31 July 2020 by self-employed individuals will be deferred until 31 January 2021. You do not 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. This deferral has now been extended to include all self-assessment tax returns, not just the self-employed.
Self-employed people can also access full universal credit at a rate equivalent to statutory sick pay.
The planned changes to the IR35 off-payroll working rules have been deferred by a year to April 2021. Existing off-payroll working rules will continue for a further year.
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.
The weekly allowance for SSP will increase from £94.25 to £95.85 on 6 April.
COVID-19 statutory sick pay is expected to be in the form of a refund.
Last Friday HMRC published new online guidance which includes information about who can use the scheme and the records employers must keep. These details can be found here on the GOV.UK website.
Individuals displaying symptoms of coronavirus or living with someone symptomatic of COVID-19 can get an isolation note from the NHS website. These can be used by employees where their employers require evidence.
Carrying over annual leave
Employees who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry up to a maximum of four weeks into the next two leave years. More details can be found on here on the GOV.UK website.
Emergency Volunteer Leave
Employees will be entitled to take emergency volunteer leave to help support essential health and social care services.
An outline of the conditions for emergency volunteer leave include:
- it will only be available to workers who have been certified by their local authority, the NHS Commissioning Board or Department of Health to act as an emergency volunteer
- emergency volunteer leave can be in blocks of two, three or four weeks. Workers can take only one period of leave in each “volunteering period”, which is, at present, a 16-week volunteering period
- employees will need to give three working days’ notice and provide their employer with a certificate confirming their approval as an emergency volunteer
- there is no provision for employers to refuse leave with the following exemptions: workers employed or engaged by businesses with fewer than ten staff, Crown employees, parliamentary staff and employees in police service
- any volunteer leave will be unpaid but a compensation fund may offset volunteers for loss of earnings, travel and subsistence (details of this are still to be announced)
- employees will remain bound by their existing terms of employment (other than those relating to pay) and will have a statutory right to return to the same job on the same terms.
Business Rates Holidays and Cash Grants
Any business within the retail, hospitality and leisure sectors will not have to pay business rates for the 2020/21 tax year.
In addition, for all businesses in England and Scotland in receipt of small business rate relief or rural rate relief, a one-off small business grant of £10,000 is available.
Within the retail, hospitality and leisure sectors in England, grant funding of up to £25,000 per property for businesses with a rateable value of less than £51,000 will be eligible for the following cash grants per property.
Eligible businesses in these sectors with a property that has a rateable value
of up to and including £15,000 will receive a grant of £10,000. Eligible businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.
In Scotland businesses with a rateable value between £18,000 and up to and including £51,000 will be able to apply for a one-off grant of £25,000.
You need to apply to your local authority for the cash grants. The links you need are:
Initially this benefit excluded self-catering accommodation and caravans in Scotland. Following lobbying by the Association of Scotland’s Self-Caterers (ASSC) these businesses will now be eligible for both the small business grant and the retail, hospitality and leisure sector grant.
There will be a restriction of one grant per ratepayer and applicants will have to provide evidence that:
- the property is each ratepayer’s primary source of earnings eg. one third or more; and
- the property is let for 140 days or more in the financial year 2019-20
Again the applications are being managed by local authorities and each authority is being given the flexibility to decide how the income criteria can be evidenced.
Further details of this appeal can be found on the ASSC website.
Business Rates Holidays – Nurseries (England only)
Nurseries in England will not have to pay business rates for the 2020/21 tax year. Properties that will benefit from the relief will be those that are:
- occupied by providers on Ofsted’s Early Years Register
- wholly or mainly used for the provision of the Early Years Foundation Stage.
No applications are required and the rate holiday will be automatic and administered by your local authority.
Coronavirus support for seafood fishing industry – (Scotland only)
The Scottish seafood sector is to receive a package of more than £5 million in financial support during the COVID-19 outbreak.
An initial payment of 50% of two months’ average earnings will be made to owners of all full time Scottish registered fishing vessels of 12 metres length and under. Support is also being developed for the onshore processing industry and others in the shellfish growing sector.
Marine Scotland will be writing to all vessels and relevant representative Associations with more details. If you have any immediate queries you can email firstname.lastname@example.org.
Further clarification of the scheme is as follows:
- full time is defined as where a vessel has recorded landings of £20,000 or more. This is the same limit that has been applied in previous schemesvessels that are under 12 metres in length and were registered in Scotland on the 18 March 2020
- earnings are defined as recorded landing income from sales notes from 2019. This data is submitted to Marine Scotland by buyers
- monthly payments are based on monthly average 2019 sales income
- wrasse catching vessels will not be included in this initial scheme.
1.6% Non-Domestic rates relief – (Scotland only)
From 1 April 2020, a 1.6% non-domestic rates relief will apply for all properties across Scotland (this effectively reverses the planned inflationary increase for the year). This will automatically be applied on your council tax bill.
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 through more than 40 accredited lenders across the UK, 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.
Following intervention by the Chancellor last week, approved lenders have been instructed to change their approach and advised that all other sources of lending do not need to be explored before a business can now access this scheme. In addition, the need for a personal guarantee has also been removed on loans under £250K. Therefore, if you have already applied for CBILS and been turned down, our advice would be to contact your bank again.
The expanded scheme will be operational with lenders from Monday 6 April 2020.
It should be noted that the business borrower will always remain 100% liable for the debt.
There is a new scheme being worked on for larger companies with turnover between £45m and £500m and as soon as we are made aware of further details we will let you know.
More details can be found on the British Business Bank website.
Business Interruption Loans (CCFF)
The Covid Corporate Financing Facility (CCFF), which is co-ordinated by HM Treasury and Bank of England, will provide funding to all UK businesses by purchasing commercial paper of up to one-year maturity, issued by firms that make a material contribution to the UK economy. Commercial paper, also called CP, is an instrument used for obtaining short-term funding.
This should help businesses across a range of sectors pay wages and suppliers, whilst they are experiencing disruption to their cash flows.
This will be administered by the Bank of England and further details can be found on the Bank of England website.
There will be an automatic deferral of VAT payments due in the period from 20 March 2020 until 30 June 2020. The deferral is available to all VAT registered UK businesses. The deferral will be automatic – you do not need to apply for it.
IMPORTANT: if you pay your VAT by Direct Debit you must contact your bank to cancel that Direct Debit to avoid the payments being taken. This needs to be done before the Direct Debit is due to be collected.
The following conditions apply:
- VAT returns must still be submitted as normal
- VAT repayments and refunds will be made as normal
- the VAT deferred must be paid by the end of the 20/21 tax year, which will be 31 March 2021, 30 April 2021, or 31 May 2021 depending on the VAT periods used by your business.
Business Insolvency Changes
Changes are being made to the UK insolvency regime to assist businesses avoid having to file for bankruptcy if they are unable to meet their debts due to the impact of COVID-19.
These include a temporary suspension of the rules that usually make it an offence for a company director to continue to trade if they know their business is unable to avoid liquidation. This will allow directors to continue to pay staff and suppliers in order to keep the business going without being personally liable.
Any business that is undergoing a rescue or restructuring process will also be protected from creditors putting them into administration and will be able to continue buying essential supplies, such as energy, raw materials or broadband.
These changes are backdated to 1 March 2020.
Renters and Landlords Protection
Under new laws, landlords will not be able to start new possession proceedings to evict tenants for at least three months.
In addition, mortgage borrowers can apply for a three-month payment holiday from their lender. This applies to both residential and buy to let mortgages, providing relief to landlords whose tenants are experiencing difficulties due to the ongoing COVID-19 situation.
It will be expected that landlords and tenants will work together to establish affordable repayment plans, taking into consideration tenants’ individual circumstances, at the end of the period.
Protection from Eviction for Commercial Tenants
Within England, there are also measures that apply to commercial tenants. No business will automatically forfeit their lease and be forced out of their premises if they miss a rental payment up until 30 June 2020. As such, commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. The government have indicated that they may extend this period if needed.
It is important to highlight that this measure is not the same as a rental holiday. Commercial tenants are being protected from eviction if they are unable to pay rent but will still be liable for their rent.
The Coronavirus (Scotland) Bill, which is expected to come into force this week, will require landlords within Scotland to give at least 14 weeks’ written notice to tenants before terminating a commercial lease for non-payment of rent, rather than 14 days. The 14 week period applies irrespective of whether the tenant was already in breach of its payment obligations. As a result, landlords will effectively be prohibited from evicting tenants for non-payment of rent until July, at the earliest.
If you have not already done so, you should check your business insurance policies to see if business interruption cover for pandemics is in place.
Confirmation has been provided that government advice to avoid pubs, clubs and theatres etc. is sufficient for businesses to claim on their insurance should they have appropriate business interruption cover for pandemics. Full details can be found in our previous update.
The Third Sector Resilience Fund (TSRF) – (Scotland only)
The Scottish Government has announced a £20m Third Sector Resilience Fund (TSRF) for charities, community groups, social enterprises and voluntary organisations.
The Fund will be delivered by Firstport, Social Investment Scotland and the Corra Foundation and will provide grants between £5,000-£100,000. In addition, there will be up to a further £5m available in fully flexible, 0% interest loans starting at £50,000.
There will also be additional specialist business advice from Just Enterprise to help grant recipients maximise the impact of the financial support.
To be eligible, interested organisations must be:
- a charity, social enterprise or voluntary organisation based in Scotland and/or primarily delivering services/activities in Scottish communities
- already delivering those products or services prior to March 2020
- and needing funding to stabilise cashflows directly as a result of the impact of COVID-19, as opposed to pre-existing financial difficulties.
The scheme is open and details can be found here on the Scottish Council for Voluntary Organisations (SCVO) website.
Arts Council England (England only)
The Arts Council England will be making £90 million available to National Portfolio Organisations (NPOs) to help alleviate the financial pressures for these organisations. The full list of NPOs can be found on the Arts Council England website.
For those organisations in the cultural sector who are not NPOs, the Arts Council England are making £50 million available, accepting applications for up to a maximum of £35,000.
In addition, the Arts Council England are making £20 million available to individuals working in the cultural sector, including artists, creative practitioners and freelancers.
More information on all of the funding can be found here on the Arts Council England website.
Provision of food takeaway service
To support the food industry and help provide meals for people who need to self-isolate, the government has relaxed planning regulations to allow pubs and restaurants to start providing takeaways without a planning application.
School Closures/Key Workers
Schools are only open to vulnerable children and those with a parent identified as being critical to the Covid-19 response ie. a key worker.
If your work or an employee’s work is critical to the COVID-19 response, and the child or children cannot be kept at home then they will be prioritised for education provision. Guidance outlining the definition of a ‘Key Worker’ can be found on the Department of Education’s webpage.
It is worth noting that your employees may not fall into the key worker category, but they may have partners who do. Therefore, your employees may still be able to access schools or nurseries which could enable them to continue to work until further guidance is provided.
HMRC and Scottish Government Helplines
HMRC has a set up helplines 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.
The main 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.
To increase capacity there is now an additional dedicated phone number 0800 024 1222.
Opening hours for the helpline will be 8am to 4pm Monday to Friday only.
The Scottish business helpline specific to COVID-19 is based at the existing Scottish Enterprise call centre in Clydebank.
The business helpline number is 0300 303 0660.
Opening hours are Monday to Friday 8.30am to 5.30pm.
Guidance for employees, employers and businesses
Government guidance on healthcare advice for employers and support for businesses can be found here on the GOV.UK website.
The range and breadth of the financial measures on offer is confusing. We continue to encourage you to contact us if you need support or would like a query or question answered. Our phone numbers and email addresses remain as they were. We are happy to help.
Information correct as of 06 April 2020