Government support available to businesses through COVID-19 disruption – update

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Following on from my update last week, the Government has set out further measures to support businesses through the period of disruption caused by COVID-19:

  1. The Coronavirus Job Retention Scheme

  • Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off
  • All UK business are eligible
  • To access the scheme, businesses are required to:
    • designate affected employees as ‘furloughed workers,’ and notify their employees of this change. Note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
    • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
  • HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers
  1. Deferring VAT and Income Tax payments

  • The government is deferring VAT payments for 3 months. For the self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. For VAT, the deferral will apply from 20 March 2020 until 30 June 2020
  • This will apply automatically. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal
  • All UK businesses and self-employed are eligible
  • For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021
  • No penalties or interest for late payment will be charged in the deferral period
  • HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities
  1. Support for businesses who are paying sick pay to employees

The Government 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. 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
  • 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 28 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
  • This scheme is for small or medium-sized businesses which employs fewer than 250 employees as of 28 February 2020 and is UK based
  • A rebate scheme is being developed to access this support. Further details will be provided in due course once the legalisation has passed
  1. Support for retail, hospitality and leisure businesses that pay business rates

    • Business rates holiday for retail, hospitality and leisure businesses
  • A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year will be introduced
  • 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 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
  • This will automatically apply to the business’ next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible
  • Cash grants for retail, hospitality and leisure businesses
  • The Retail and Hospitality Grant Scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property
  • Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000
  • Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000
  • The local authority will write to businesses if they are eligible for this grant and queries should be directed to local authorities
  1. Support for nursery businesses that pay business rates

  • The Government will introduce a business rates holiday for nurseries in England for the 2020 to 2021 tax year
  • Properties that will benefit from the relief will be hereditaments:
    • occupied by providers on Ofsted’s Early Years Register
    • wholly or mainly used for the provision of the Early Years Foundation Stage
  • There is no action to access this scheme. It will apply to the business’ next council tax bill in April 2020. However, local authorities may have to reissue the bill to exclude the business rate charge. They will do this as soon as possible
  1. Support for businesses that pay little or no business rates – Small Business Grant Scheme

  • The government will provide additional Small Business Grant Scheme funding for local authorities to support 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 will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs
  • Businesses are eligible if:
    • it is based in England
    • it is a small business and already receive SBBR and/or RRR
    • it is a business that occupies property
  • Businesses do not need to do anything to access the scheme. The relevant local authority will write to business if they are eligible for this grant and any enquiries should be directed to them
  1. Support for businesses through the Coronavirus Business Interruption Loan Scheme

  • The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years
  • The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments
  • The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank
  • There are 40 accredited lenders able to offer the scheme, including all the major banks
  • Businesses are eligible for the scheme if:
    • the business is UK based, with turnover of no more than £45 million per year
    • the business meets the other British Business Bank eligibility criteria
  • The scheme is now open for applications. All major banks are offering this scheme
  • To apply, the business should talk to its bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss its business plan
  • The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website
  1. Support for larger firms through the COVID-19 Corporate Financing Facility

  • Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies
  • This will support companies if they have been affected by a short-term funding squeeze, and allow it to finance its short-term liabilities
  • It will also support corporate finance markets overall and ease the supply of credit to all firms
  • All non-financial companies that meet the criteria set out on the Bank of England’s website are eligible
  • More information is available from the Bank of England
  1. Support for businesses paying tax: Time to Pay service

  • All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service
  • These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities
  • If a business has missed a tax payment or might miss its next payment due to COVID-19, they should call HMRC’s dedicated helpline: 0800 0159 559