25th March 2020
The UK government has responded to COVID-19 with measures aimed at delaying its spread and mitigating damage to the economy with a substantial stimulus package.
In our latest coronavirus business update, we summarise all of the support measures that have been announced by the government to assist businesses and workers through the COVID-19 crisis.
GOVERNMENT SUPPORT FOR BUSINESSES
On Friday 20th, the Chancellor set out a package of measures to support public services, people and businesses through the period of disruption caused by COVID-19.
The package of measures to support businesses includes:
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 during this crisis. All UK businesses are eligible.
You will need to:
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.
DEFERRING VAT AND INCOME TAX PAYMENTS
The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you are 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.
All UK businesses are eligible.
How to access the scheme
This is an automatic offer with no applications required. 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. Find out more.
VAT payments – PLEASE NOTE
HMRC ARE SAYING THAT CLIENTS SHOULD CANCEL THEIR DIRECT DEBITS WITH THEIR BANKS FOR VAT IF THEIR LIABILITY IS GOING TO BE TAKEN BETWEEN NOW AND THE 30th JUNE 2020. HMRC ARE SAYING THAT IF THE DIRECT DEBIT IS STILL SET UP THEY WILL TAKE A PAYMENT.
For Income Tax Self-Assessment, payments due on the 31st July 2020 will be deferred until the 31 January 2021.
This is currently only available to those who are self-employed’ and then keep the sentence in about it being automatic.
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. Find out more.
SUPPORT FOR BUSINESSES WHO ARE PAYING SICK PAY TO EMPLOYEES
The Government will make 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:
You are eligible for the scheme if your business is UK based and your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.
SUPPORT FOR BUSINESSES THAT PAY BUSINESS RATES
Business rates holiday for retail, hospitality and leisure businesses
The Government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
You are eligible for the business rates holiday if:
How to access the scheme:
There is no action for you. This will apply to your 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.
See: https://www.gov.uk/calculate-your-business-rates where you can estimate the business rate charge you will no longer have to pay and further guidance can be found at: https://www.gov.uk/government/publications/business-rates-retail-discount-guidance
Business Rates – Retail, hospitality update from East Devon Council
Having contacted East Devon Council (EDC) this is our current understanding of the support, although we would stress that this is information is still to be confirmed.
The link below suggests cash grants of £25,000 may be received per each individual property held with a rateable value between £15K-£51K. The council also said this was their current interpretation of this matter for businesses in these sectors.
The £10,000 grant (for properties with a rateable value under £15k in this sector) is per a property or per business. The EDC contact said that their interpretation is that the grant is based per each individual premises (providing the eligibility criteria per the above link is met and the premises is not available for private use).
The council strongly emphasised that they have still not received the official guidance on this matter they were promised (now expected to receive this by Friday). The advice we were given was not ‘official’ just their current interpretation of the rules. We will update you as soon as we hear anything.
It is worth noting that local authorities will be contacting businesses directly in relation to these grants (by email or by letter). This should start to be rolled out once they have received official instructions from the government.
Business rates holiday extended to estate agents and bingo halls
The government has just announced that estate agents, lettings agencies and bingo halls that have closed as a result of covid-19 measures to restrict the spread of the virus will be now be exempted from business rates in 2020-21. More details will follow.
CASH GRANTS FOR RETAIL, HOSPITALITY AND LEISURE BUSINESSES
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
You are eligible for the grant if:
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
Accessing the scheme:
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
To find your local authority: https://www.gov.uk/find-local-council
Business rates holiday for nurseries in England for the 2020 to 2021 tax year. Find our more.
SUPPORT FOR BUSINESSES THAT PAY LITTLE OR NO BUSINESS RATES
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 (SBRR), 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.
You are eligible if:
How to access the scheme
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority. Find out more.
To find your local authority: https://www.gov.uk/find-local-council
SUPPORT FOR BUSINESSES THROUGH THE CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch this week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
You are eligible for the scheme if:
How to access the scheme
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The scheme is available from this week. We will keep you informed on how to apply as the details emerge.
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 your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible. The scheme will be available early in week beginning 23 March 2020. We will provide information on how to access the scheme here shortly. More information is available from the Bank of England: https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020
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.
It covers the following taxes: PAYE, Income tax, VAT and Corporation Tax.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.
If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you are worried about a future payment, please call them nearer the time. Find out more.
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17th March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
It is also worth reading the government’s Frequently Asked Questions that will be regularly updated according to the latest advice and guidance.
Deadline for filing pushed back
The deadline for filing accounts can be pushed back three months as of today 25th March.
This is not an automatic enrolment; companies will still have to apply for the three-month extension to be granted. However, companies citing issues around CV-19 will be automatically and immediately granted an extension. This application roughly takes 15 minutes.
Note companies that have already extended their deadline or shortened their accounting period may not be eligible for the extension.
HMRC delays introduction of off-payroll rules to private sector
HMRC has delayed the introduction of off-payroll rules to the private sector as part of its measures to support businesses through the coronavirus (COVID-19) pandemic.
The reforms will shift the responsibility for assessing employment status to the organisations employing individuals. The rules would have applied to contractors working for medium and large organisations in the private sector, and were due to come into effect on 6 April. Steve Barclay, Chief Secretary to the Treasury, stressed that the introduction of the rules has simply been delayed, rather than cancelled. Originally to be introduced on the 6 April 2020,the rules will now take effect on 6 April 2021.
Coronavirus: Statutory Residence Test
When determining your status for UK tax residency purposes, a key factor is the number of days you spend in the UK in any given tax year.
Given the current crisis, many individuals will find themselves unintentionally spending more time in the UK than they originally intended to and thus increasing their UK day count for tax purposes.
See our article at: https://www.thompson-jenner.co.uk/coronavirus-statutory-residence-test/
We hope you find the above helpful as you plan your way through this extremely difficult period. Please remember we are here to help as much as possible through these challenging times. We will continue to keep you updated as further announcements are made over the coming days.
Links to our other articles.