As the Coronavirus/COVID-19 pandemic increasingly affects day to day life in the UK, last week ended with the Chancellor’s statement on 20 March in which he announced additional measures to allow businesses to support their employees along with further financial assistance.
In addition to informing you of financial measures, we also would like to highlight that in these chaotic times you need to remain vigilant of fraudulent activities including scams. The National Fraud Intelligence Bureau and HMRC have issued warnings to watch out for COVID-19 related scams and also emails purportedly from HMRC offering tax refunds.
The key COVID-19 business support measures, that have been announced to date, are summarised below. We know have mentioned some of these before, but feel that reminding clients of all of the assistance available may be helpful.
If you would like to read our previous updates, they can be found in the News section of our website.
Coronavirus Job Retention Scheme
The government is stepping in to help employers continue to pay part of their employees’ salary for those who would have been laid off due to the pandemic.
Initially in place for three months, this scheme is open to all UK businesses.
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 an employers’ preference.
At present we do not know whether this will include pensions etc. and how the cap will work in practice (eg. 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
Although more support for the self-employed is anticipated, these are the measures that have been announced so far.
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.
Self-employed people can now 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.
All UK businesses are eligible for the VAT deferral which will take effect from 20 March 2020 until 30 June 2020.
Businesses do not need to make a VAT payment during this period. They will have until the end of the 2020/21 tax year to settle any VAT liabilities which may have arisen during the deferral period.
Again, 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
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, there is also grant funding of up to £25,000 per property for businesses with a rateable value between £15,000 and £51,000.
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 do not need to apply for this relief or contact your local authority as plans are to deliver these automatically.
Business Rates Holidays – Nurseries (England only)
Nurseries in England will also 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.
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.
Business Interruption Loans
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 here on their website.
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.
The weekly allowance for SSP will increase from £94.25 to £95.85 on 6 April.
SSP will also be payable from day one instead of day four for affected individuals.
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. 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 the GOV.UK website.
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.
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.
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
From today, schools will only be 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’ has now been provided and 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 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.
Up to 2,000 experienced call handlers are available to support businesses and individuals.
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.
Guidance for Employees, Employers and Businesses
Guidance the Information on healthcare advice for employers and support for businesses can be found here on the GOV.UK website.
We appreciate this a fast moving situation and there are still many changes and challenges yet to come. If you would like further guidance please get in touch and one of our partners will be happy to help.
Information correct as of 23 March 2020