The Chancellor, Rishi Sunak, has unveiled a set of financial measures to support businesses through this period of disruption caused by COVID-19, which includes the latest rescue packages for employed and self-employed workers.
A summary of the measures to support business include:Coronavirus Job Retention Scheme
On 20 March 2020, the Chancellor announced a rescue package for businesses and workers, by introducing a Coronavirus Job Retention Scheme (CJRS).
Under the new scheme, employers can contact HM Revenue & Customs (HMRC) to apply for a grant (not a loan) to cover up to 80% of furloughed workers’ salaries, up to £2,500 per month. Employers can choose to top up the salary of retained workers if they so choose.
Furloughed workers are workers that are to be retained but have been asked to take a temporary leave of absence. The employee should not undertake work whilst they are furloughed.
If you are to treat employees as furloughed workers, you will need to notify them of the change. Changing the employment status remains subject to existing employment law, depending on the employment contract, and may be subject to negotiation.
The grant will be backdated to 1 March 2020 and will initially be available up to a period of three months, however, this period may be extended by the government if required.
The first grants will be available in the coming weeks and by the end of April 2020 for all businesses. Eligibility criteria:
- All UK businesses are eligible
- Available for employees on the payroll at 28 February 2020Application process:
- Designate affected employees as ‘furloughed workers’ and notify your employees of this change
- The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal that is currently being developed by HMRC
Further information on how the scheme operates, calculating the grant amount and what you need to do to make a claim can be found here
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan (CBIL) - see below.Self-Employment Income Support Scheme
On 26 March 2020, the Chancellor announced the new Self-Employment Income Support Scheme (SEISS). The scheme will support self-employed individuals, including members of partnerships, who have lost income due to COVID-19.
Eligible recipients will be able to claim a taxable grant worth 80% of their trading profits, up to a maximum of £2,500 per month, available for 3 months in one lump-sum payment. This may be extended if needed.
Further information on the scheme eligibility and application process can be found here
It was also announced that VAT liabilities due for the period 20 March 2020 to 30 June 2020 will be deferred until the end of the 2020/21 tax year.
VAT refunds and reclaims will be paid by the government as normal.
More information can be found here Eligibility criteria:
- All UK businesses are eligibleApplication process:
- This is automatic with no applications required.
- Customers who normally pay by direct debit may need to cancel their direct debit with their bank, if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.Self-Assessment Income Tax Deferral
Self-assessment payments, normally due 31 July 2020, will be deferred until 31 January 2021.
The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.
No penalties or interest for late payment will be charged if you defer payment until January 2021.Eligibility criteria:
- You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.Application process:
- This is automatic with no applications required.Self-Employed – Universal Credit and Rental Costs
Self-employed individuals will also be able to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay (SSP) for employees and a further £1bn to cover 30% of house rental costs.Government Backed Loans
From 23 March 2020, the government’s Coronavirus Business Interruption Loan Scheme (CBILS) went live, making available loans for small and medium sized businesses up to £5 million in value. The government will cover interest charges for the first twelve months, as well as any lender-levied fees.
The scheme provides the lender with a government backed guarantee against the outstanding facility balance, however, the borrower remains liable for the debt.
We have already been in contact with our local bank contacts and can assist in an application where appropriate.
The CBILS will be provided by the British Business Bank through participating providers
, and will offer attractive terms for both businesses applying for new facilities and lenders.
Finance terms are available up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
For further information, the British Business Bank have put together the following FAQ
Further details regarding the CBILS, can be found here. Eligibility criteria:
- Be UK based, with turnover of no more than £45 million per annum
- Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
- Are not an excluded trade or organisation (eg banks, building societies, insurers and reinsurers - but not insurance brokers)Application process:
- The scheme is now open for applications. All major banks are offering this scheme. To apply, you should talk to your bank or one of the other participating providers. We can assist in an application where appropriate.Business Rate Holiday
For the 2020/21 tax year, business rates will be abolished for all retailers, leisure outlets and those in the hospitality sector. It was also announced that estate agents, lettings agencies and bingo halls will receive the business rate relief for 2020/21, along with qualifying nursery businesses.Eligibility criteria:
- Your business is based in England
- Your business is in the retail, hospitality and/or leisure sector
- Your business is an estates agent, lettings agency or bingo hall
- Your business is a qualifying nursery
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 & boarding premises and self-catering accommodation
- as an estate agent, lettings agency or bingo hall
- as a qualifying nursery Application process:
- Your local authority should apply the relief automatically to your 2020/21 business rates bill. This may have to be rebilled if you have already received it.Grants
For businesses in retail, leisure and hospitality sector operating from smaller premises, with a rateable value of between £15,000 and £51,000, you will be eligible for a grant of £25,000.
A grant of £10,000 is available for businesses with rateable value up to £15,000.
You can check your rateable value here
Eligible recipients will receive one grant per property (hereditament).
If you are eligible for Small Business Rate Relief (SBRR) or Rural Rate Relief (RRR) then there is a one off grant of £10,000 available.Eligibility criteria:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector with a rateable value less than £51,000; or
- your business is eligible for Small Business Rate Relief (SBRR) or Rural Rate Relief (RRR)Application process:
- The grants will be available through your local authority, who will write to you if you are eligible for this grant. Details of the grant publication can be found here.
Businesses with a rateable value of £51,000 or over, or are not ratepayers in the business rate system, are not eligible for the grants. Statutory Sick Pay (SSP)
Small and medium sized businesses will be able to reclaim SSP up to two weeks per employee where their sickness has been because of COVID-19.Eligibility criteria:
- You businesses is UK based
- Your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020Application process:
- The mechanism of how businesses can claim this back will be published in the next couple of months, which we understand will be through a rebate scheme that is currently being developed.
SSP is due to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self-isolate, in line with official government guidance. The measure applies retrospectively from 13 March 2020.HM Revenue & Customs -Time to Pay Arrangements
HMRC have set up a telephone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus (COVID-19).
On a case by case basis, HMRC have always looked at agreeing time to pay arrangements for Self-Assessment, Corporation Tax, PAYE and VAT liabilities. We have found them to be very amenable in the past and HMRC have increased the staff availability to meet demand.
For those who are unable to pay due to coronavirus, 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 immediatelyEligibility criteria:
- Pays tax to the UK government
- Have outstanding tax liabilitiesApplication process:
- Call the HMRC dedicated helpline number: 0800 0159 559
The above measures being implemented by the government are correct as at 26 March 2020, however, we understand more measures could be implemented dependant on the progress of the pandemic and the economic impact this has in the UK.
The following government website is a useful source of information and is being updated daily click here for updates
Our HR team have also put together some COVID-19 FAQs for employers here
If you would like further information, please do contact us