The coronavirus (COVID-19) pandemic that has spread rapidly around the globe has caused major disruption to businesses and economies worldwide. 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.
Chancellor Rishi Sunak has set out a package of temporary, targeted measures to support public services, people and businesses through the period of disruption caused by COVID-19. This is a fast-moving area and the government will publish the details of further measures on: https://bit.ly/33vU1cD.
Here we consider the measures announced to support businesses including the significant package of measures announced on 17 March 2020 and 20 March 2020:
- Support for businesses through the Coronavirus Job Retention Scheme
- grant funding of £10,000 for small firms in receipt of Small Business Rate Relief (SBRR) and Rural Rates Relief
- grant funding of £25,000 for certain businesses in the retail, hospitality and leisure sectors
- a 12-month business rates holiday for businesses in the retail, hospitality and leisure sectors
- a temporary Coronavirus Business Interruption Loan Scheme to support businesses in accessing bank lending and overdrafts
- extended access to Statutory Sick Pay (SSP), with reliefs available to SMEs
- expanded access to HMRC's Time to Pay scheme
- delay to introduction of off-payroll rules to private sector.
In addition, the Scottish Government have announced a support package for businesses during the 2020/21 financial year which include the following measures:
- 100% non-domestic rates relief for retail, hospitality and tourism businesses with a rateable value of less than £69,000 from 1 April 2020.
- £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
- £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
- 6% rates relief for all properties across Scotland, effectively reversing the planned below inflation uplift in the poundage from 1 April 2020
- An £80m fund to provide grants of at least £3,000 to small businesses operating in the sectors suffering the worst impact of COVID-19
- A fixed rates relief of up to £5,000 for all pubs with a rateable value of less than £100,000 from 1 April 2020
Coronavirus Job Retention Scheme
On 20 March 2020 the Government announced the Coronavirus Job Retention Scheme which all UK employers will be able to access support to continue paying part of their employees' salary for those employees who otherwise would have been made redundant during this crisis.
In order to access the scheme you will need to:
- designate affected employees as 'furloughed workers,' and notify your employees of this change - 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.
A furloughed employee should not undertake any work for their employer in order for the employer to claim the grant. The employee will also not be able accept any other form of paid employment while furloughed as they are still employed.
The scheme is available from 1 March 2020 and the Government have confirmed that it will run for at least 3 months but may be extended if necessary.
We are still waiting on full details on how the scheme will operate and clarification over a number of matters.
VAT deferral and Income Tax Payments
HMRC will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you're 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 business are eligible and access to the scheme is automatic. 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.
VAT returns will still need to be submitted during this period. It is recommended that those businesses with a direct debit in place cancel this for now as HMRC will assume payment is still to be taken if the direct debit is still in place when the normal payment deadline is reached.
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. This only applies to those individuals who are self-employed and access to the scheme is 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.
Increases and extensions to business rates reliefs
Scotland
The Scottish Government has confirmed: a full year's 100% non-domestic rates relief for retail, hospitality and tourism businesses with a rateable value of less than £69,000 from 1 April 2020.
In addition, £10,000 grants will be available for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief, and £25,000 grants will be available for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000.
Internet link: www.gov.scot/news/gbp-2-2-billion-for-business/
England
The UK government had previously announced business rates discounts of 50% for retailers, cinemas and music venues with a rateable value below £51,000, and a £5,000 discount for pubs. On 17 March the Chancellor Rishi Sunak announced that the business rates discount will be increased to 100% and expanded further to include all hospitality, retail and leisure businesses, no matter what their rateable value, for the 2020/21 tax year.
Many small businesses pay little or no business rates because of Small Business Rates Relief (SBRR). The UK Government will supply funding for local authorities in England, which will provide one-off £10,000 grants to businesses currently eligible for SBRR or Rural Rate Relief. In addition, one-off grants of £25,000 will be available to retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000.
Northern Ireland
The Northern Ireland Executive has committed to providing a three month rates holiday to all businesses from April to June.
In addition, the Northern Ireland Executive is making grants of £10,000 available to all small businesses who are eligible for the Small Business Rate Relief Scheme and a grant of £25,000 will be to be provided to companies in the hospitality, tourism and retail sectors with a rateable value from £15,000 up to £51,000.
Internet link: www.economy-ni.gov.uk/news/covid-19-business-support-grant-schemes
Wales
In Wales retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% non-domestic rates relief. Pubs with a rateable value of between £51,000 and £100,000 will receive a £5,000 reduction on their bill.
The Welsh Government has announced that £850 million will be available for a new grant scheme for businesses.
All businesses currently eligible for Small Business Rates Relief (those with a rateable value up to £12,000) will receive a grant of £10,000. Retail, leisure and hospitality businesses with a rateable value between £12,001 and £51,000 will receive a grant of £25,000.
The Welsh Government is also establishing a hardship fund to provide targeted support for certain other businesses.
Internet link: gov.wales/coronavirus-covid-19-support-businesses
The Coronavirus Business Interruption Loan Scheme
In the Budget the Chancellor announced the implementation of the Coronavirus Business Interruption Loan Scheme, which will support the continued provision of finance to UK businesses during the COVID-19 outbreak. Delivered by the British Business Bank, the scheme will temporarily replace the Bank's Enterprise Finance Guarantee scheme, with an additional £1 billion made available on top of existing support supplied via the programme.
The government will increase the scope of the Business Interruption Loan Scheme announced in the Budget from £1.2 million to £5 million. The government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
To qualify for this scheme your business must be based in the UK with a turnover of no more than £45m per annum and your business meets the other British Bank eligibility criteria.
Access the this scheme can be found at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
Extended access to Statutory Sick Pay (SSP)
As part of a package to widen the scope of SSP and make it more accessible, SSP entitlement will begin from the first day of sickness absence, rather than the fourth, for those who have COVID-19, or self-isolate in accordance with government guidance.
SSP relief for SMEs
Small and medium-sized businesses will be allowed to reclaim SSP paid for absence due to COVID-19. The refund will cover up to two weeks' SSP per eligible employee who has been off work because of COVID-19. Employers with fewer than 250 employees will be eligible, with the size of an employer being 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 as a result of COVID-19. Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
The eligible period for the scheme commenced the day after the regulations on the extension of SSP to self-isolators came into force on 13 March 2020. The government intends to work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. It stated that existing systems are not designed to facilitate employer refunds for SSP.
Expanded access to Time to Pay
The government will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs.
HMRC has set up a dedicated COVID-19 helpline, on 0800 0159 559, for those in need, and they may be able to agree a bespoke Time to Pay arrangement. Time to Pay gives businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
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. The rules will now take effect on 6 April 2021.
In a statement, HMRC said: 'This is part of additional support for businesses and individuals to deal with the economic impacts of COVID-19.
'This means that the different rules that exist for inside and outside the public sector will continue to apply until 6 April 2021.'
The introduction of the off-payroll rules to the private sector, which are known as IR35 and have applied to the public sector since 2017, was reviewed earlier this year. The changes were due to go ahead alongside the implementation of measures to support affected businesses and individuals.
This information is provided by our business consultants – Geoghegans Chartered Accounts Ltd