The outbreak of Coronavirus (COVID-19) has seen the UK Government launch a series of unprecedented announcements in the Government’s support of businesses, employees and individuals. Below are further details.
SUPPORT FOR LARGER FIRMS
Under the 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 Coronavirus Large Business Interruption Loan Scheme will be made available to enable banks to make loans of up to £25m (the present limit for the smaller scheme is £5m). This will allow firms with an annual turnover of between £45m and £500m access to the 80% government guarantee.
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. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.
DEFERRING VAT PAYMENTS
VAT registered businesses can defer any VAT payments due between 20 March 2020 and 30 June 2020. There is no application process required to defer the relevant payment. However, businesses can still choose to pay any VAT due as normal.
It is important to note that this is only a deferral and whilst no interest or penalties will be due on deferred payments, the full amount of VAT due will still need to be paid. If you choose to defer your VAT payment as a result of Coronavirus then you must pay the VAT due to HMRC on or before 31 March 2021.
If you are planning to make use of the deferral offer, and you pay by direct debit, then you should cancel your direct debit. You can cancel your direct debit online using online banking or contact your bank if necessary. Please make sure that you do this as soon as possible to ensure that HMRC do not automatically collect the VAT due. You should also keep a note to re-establish the direct debit when your next VAT payment is due (if no further deferrals are announced).
HMRC has said that they will continue to process VAT reclaims and refunds as normal during this time.
BUSINESS RATES SUPPORT
The Business Rates retail discount in England will be increased to 100% in 2020-21 and expanded to the leisure and hospitality sectors. The rates discount for qualifying pubs will be increased to £5,000. Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21:
Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible.
Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.
The government is also providing an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £10,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent.
CASH GRANTS FOR RETAIL, LEISURE AND HOSPITALITY 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: your business is based in England and your business is in the retail, hospitality and/or leisure sector.
Properties that will benefit from the relief will be occupied premises 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 and boarding premises and self-catering accommodation.
There is no action you need to take. Your local authority will write to you if you are eligible for this grant.
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 (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of up to £10,000 to eligible businesses to help meet their ongoing business costs.
You are eligible if: your business is based in England; you are a small business and already receive SBBR and/or RRR and you are a business that occupies property.
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
The business rates in Scotland, Wales and Northern Ireland are set by the devolved administrations. We have set out below the main regional variations.
To help owners of non-domestic properties, including businesses, deal with the impact of COVID-19, the Scottish Government has made changes to non-domestic rates (business rates) for 2020-21.
All non-domestic properties in Scotland will get a 1.6% rates relief. This relief effectively reverses the change in poundage for 2020-21. You do not need to apply for this relief, and it will be applied to your bill by your local council.
Retail, hospitality and leisure businesses will get 100% rates relief. To get this relief, a property has to be occupied. Retail, hospitality and leisure 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.
A one-off grant of £10,000 will also be available to small businesses who get Small Business Bonus Scheme relief or Rural Relief. The Scottish Government is working with Scotland’s 32 Councils and other stakeholders to agree a common approach to the application process for the grants and 100% rates relief.
Retail, leisure and hospitality businesses will receive 100% business rates relief for 2020-21. For retail, leisure and hospitality businesses with a rateable value of between £12,001 and £51,000, a grant of £25,000 will be offered.
The new reliefs also provide a £10,000 grant to all businesses eligible for Small Business Rates Relief and with a rateable value of £12,000 or less.
Businesses that qualify for this support will not need to do anything to apply for this scheme. This will be administered through the Business Rates system. You do not need to contact your Local Authority about this, you will receive information in due course.
Businesses in Northern Ireland can access the following schemes:
COVID Small Business Grant – Small business grant of £10,000 to be issued immediately with a cost of £267m providing support to 27,000 businesses in NI. This is for all businesses with a NAV up to £15,000
Hospitality, Tourism and Retail Sectors Grant Scheme – An immediate grant of £25,000 will be provided to companies in these sectors with a rateable value up to £51,000.
Further information on these schemes will be made available at NI Business Info.
All NI businesses will pay zero rates for the next three months (April, May, June). This automatically reduces rates by 25%, in addition to any existing rate reliefs. This applies to all businesses and does not need to be repaid.
TAX PAYMENT HELPLINE
The tax payment helpline fields questions and concerns from any business or self-employed individual worried about paying their tax due to Coronavirus disruption and offers practical help and advice. The phone number for HMRC’s COVID-19 helpline is 0800 024 1222.
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 immediately
The helpline opening hours are Monday to Friday 8am to 4pm. The helpline will not be available on Bank Holidays. HMRC say that these reduced opening hours are due to fewer staff being available due to the Coronavirus epidemic and to be prepared for a long wait.
RELAXATION OF INSOLVENCY RULES
New insolvency measures will see the temporary suspension of the wrongful trading law during the pandemic. The new rules will apply retrospectively, from 1 March 2020, for three months. This means that company directors can continue to trade without the threat of personal liability. This will allow directors of companies to pay staff and suppliers even if there are fears that the company could become insolvent due to the current, exceptional trading circumstances.
Other changes include a temporary moratorium for businesses undergoing a rescue or restructuring process. During this period, they cannot be placed in administration by creditors and be able to continue buying important supplies – such as energy costs and raw materials. There will also be a new restructuring plan binding on creditors.
The government are postponing the roll-out of draconian IR35 measures to the private sector that would have affected the tax status of many incorporated contractors across the UK. This a welcome change as it will defer much disruption in this sector until the worst aspects of the COVID-19 outbreak have passed. The new rules are now slated to come into effect from 6 April 2021, a year later than planned.
COMMERCIAL TENANTS PROTECTED FROM EVICTIONS
There is an eviction freeze for commercial tenants who miss rent payments as a result of the coronavirus crisis until 30 June 2020. This can be extended if necessary. The protection applies to commercial leases for commercial tenants in England, Wales and Northern Ireland. There are similar measures in place in Scotland extending the notice period from 14 days to 14 weeks. It is important to note that commercial tenants will still be liable for the rent due.
STATUTORY SICK PAY MEASURES
You are entitled to receive £94.25 per week Statutory Sick Pay (SSP) if you’re too ill to work. It’s paid by your employer for up to 28 weeks. The payment of SSP will be from Day 1 (not Day 4) if you are absent from work due to sickness or need to stay at home due to COVID-19.
If you have COVID-19 or have been advised to stay at home, you can get an ‘isolation note’ by visiting NHS 111 online. This replaces the need for a ‘fit note’, sometimes called a ‘sick note’ after 7 days of sickness absence. Isolation notes will also be accepted by Jobcentre Plus as evidence of your inability to attend.
If you cannot claim SSP, for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week you will have easier access to Universal Credits or the new style Employment and Support Allowance.
If you are eligible the Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8. This applies if you have COVID-19 or are advised to stay at home.
Small-and medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
The eligibility criteria to reclaim SSP is 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.
The 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
You are eligible for the scheme if your business is UK based, small or medium-sized and employs fewer than 250 employees as of 28 February 2020.
SELF-EMPLOYED SUPPORT INCOME SCHEME
A list of the scheme features as announced, and published, are as follows:
Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period.
To be eligible, the following conditions will be taken into account:
Applicants must be self-employed or a member of a trading partnership,
Have lost trading profits due to COVID-19,
Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
Have trading profits of less than £50,000 and more than half of total income from self-employment. This can be with reference to at least one of the following conditions:
Your trading profits and total income in 2018-19,
Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
There is no need to apply to HMRC as they will contact you if you are eligible. HMRC will use existing data to make this judgement. The initial three-month grant will be paid directly to a nominated bank account in a single lump sum. The grants are expected to be paid out at the beginning of June. The reason for this delay is likely down to three main factors: the 4 weeks additional filing time for late filers, the requirement to set up a complex new system at the same time as the Coronavirus Job Retention Scheme and to reduce the risk of fraud.
It is assumed that those self-employed who have experienced a significant drop in income due to COVID-19 disruption will need to apply for Universal Credits or Business Continuity Loans to tide them over until June. This will be a challenging time for those affected as the demand for help will place significant challenges on the institutions charged with providing this support.
The Chancellor has said that the scheme will benefit some 95% of people whose main income source is derived from self-employment.
WORKING TAX CREDIT / UNIVERSAL CREDIT
As part of the package of measures to tackle the Coronavirus outbreak, the government has announced that the basic element Working Tax Credit payments will be increased from an expected £1,995 to £3,040 for the 2020-21 tax year starting on 6 April 2020.
This annual increase of £1,045 is equivalent to £86.67 per month for one year from 6 April 2020. The actual amount that Working Tax Credits recipients will receive depends on their circumstances, including their level of household income.
If you claim Working Tax Credits, you don’t have to take any action or contact HMRC – the increase in your payments will start from 6 April 2020.
There have also been increases in of up to £20 per week in Universal Credit available to many employed and self-employed workers on low incomes or who have become unemployed. This includes an increase in the basic element and the removal of the minimum income floor in a move to benefit the self-employed. The minimum income floor won’t apply to anyone after 6 April 2020. This will last until the Coronavirus outbreak is over.
CONTACTLESS PAYMENT LIMIT
The spending limit for contactless card payments increased to £45 (from £30) on 1 April 2020. The change in the limit had been under consideration and has now been expedited as part of the industry’s response to the Covid-19 outbreak.
The change will allow more contactless payments to be made reducing the need to enter pin numbers and handling of cash. Mobile payments such as Apple Pay and Google Pay, do not have an upper limit once they’ve been authenticated using biometric technologies such as a fingerprint or face scan.
The updated limit will take some time to be introduced at all retailers as many retailers are facing staff shortages and other pressures as a result of COVID-19.
The launch of a new £500 million Hardship Fund in England was announced at Spring Budget 2020 by the Chancellor. The money will go to local authorities in England to enable them to reduce the 2020-21 council tax bills of working age people receiving Local Council Tax Support.
Councils can also use the funding to provide further discretionary support to vulnerable people through other support arrangements such as Local Welfare Schemes. This guidance helps provide clarity to councils on how they can quickly provide support to those households which require support.
Councils have also been told they will receive an additional £1.6 billion in funding to enable them to respond to other COVID-19 pressures across the services they deliver, including stepping up support for the adult social care workforce and for services helping the most vulnerable, including homeless people.
The funding for the Hardship Fund may need to be increased during the coming months as the full impact of COVID-19 become apparent.
BANK SUPPORT FROM MORTGAGE LENDERS
A number of banks and other mortgage lenders are offering a moratorium on mortgage repayments to those directly affected by the Coronavirus. This is welcome support for individuals whose income may be diminished by absence from work. Banks will also consider increasing credit card limits and cash withdrawal limits.