Following our first COVID-19 Helpsheet (released 18 March 2020), the Chancellor has set out a package of further measures to support businesses through this period of disruption. This update will summarise the support options that the government will make available in the coming days/weeks. We should highlight that more information and guidance is to be released by the government that sets out how to apply for and/or access the various support options, and we will of course update these as soon as they are available.
CORONAVIRUS JOB RETENTION SCHEME
Under this scheme the government have confirmed that they will offer grants that will cover 80% of the salary of PAYE employees who would otherwise have been laid off. The scheme is open to all UK employers and will cover the cost of wages backdated to 1st March 2020. It is anticipated that the grants will be made available before the end of April and will include workers who were in employment on 28th February 2020. The scheme will be open for a minimum period of 3 months.
HOW TO CLAIM UNDER THE SCHEME
• Employers must designate affected employees as furloughed workers and notify employees of this change. It should be noted that changing the status of an employee remains subject to existing employment law, and depending on the employment contract may be subject to negotiation.
• Employers must submit information to HMRC about the employees who have been furloughed and their earnings through a new online portal. HMRC have confirmed that they will provide further guidance on what information is required and how this is to be reported in due course.
• HMRC will then reimburse 80% of the furloughed workers wage costs up to a cap of £2,500pm per employee. It should be noted that whilst HMRC are working urgently to set up a system to facilitate the above, we understand that existing infrastructure is not yet set up to facilitate payments to employers. Therefore, businesses may wish to consider applying for the new Coronavirus Business Interruption loan and/or benefit from the VAT deferral announcement. These points are discussed in more detail below.
DEFERRING VAT PAYMENTS
The Chancellor has announced that he will defer VAT payments for 3 months. This means that businesses will not be required to make any VAT payments until the end of June 2020. Businesses will then have until 5th April 2021 to settle any liabilities they have accumulated during the deferral period.
HOW TO APPLY FOR THE VAT DEFERRAL
The VAT deferral applies automatically and businesses do not need to apply for it.
DEFERRING INCOME TAX
• If you have an income tax payment due on 31st July 2020 under the self-assessment system, this will be deferred to 31st January 2021.
• Again, this is an automatic offer. No application is required. No penalties or interest will be charged during deferral period.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
This new scheme will be delivered by lenders that partner with The British Business Bank, which generally includes all major banks. The lender will receive a guarantee of 80% of the loan amount from the government.
• It is anticipated that these loans will be available from week commencing Monday 23rd March 2020.
• The loans are available to UK based businesses with a turnover of no more than £45m.
• Loan facilities of up to £5m can be provided for but it is important to note, the borrower remains liable for 100% of the debt.
• No interest will be charged on the loans for the first 12 months.
HOW TO APPLY FOR A LOAN
It is important that you speak to your bank as soon as possible and potentially discuss your business plan with them. This will ensure that they are able to act quickly. If you have any existing finance facilities with your bank, you may wish to discuss payment holidays to assist with cashflow.
SICK PAY SUPPORT
The government have announced that employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay (SSP) for absences due to COVID-19. The following points should be considered:
• The refund will cover up to 2 weeks SSP per eligible employee off work due to 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 can get an isolation note from NHS 111 online. Those who live with someone who has symptoms can get a note from the NHS website. The repayment mechanism between employers and HMRC has not yet been set up. It is hoped that this will be in place shortly.
BUSINESS RATES HOLIDAY FOR RETAIL, HOSPITALITY AND LEISURE BUSINESSES
Your business will be eligible for a business rates holiday for the 2020/21 tax year if you are based in England and your business is in the retail, hospitality or leisure sector. How to access this scheme: It is automatic and there is no action required. The holiday will be applied to your next council tax bill in April 2020. If you have already received a bill, this will be reissued in due course.
SUPPORT FOR BUSINESSES PAYING TAX – TIME TO PAY SERVICE
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of COVID-19 to delay payment of outstanding tax liabilities. Those in need of support should use HMRC’s dedicated COVID-19 helpline which provides practical help and advice on 0800 0159 559.
We are monitoring all government announcements on a daily basis and we will endeavour to provide relevant updates as soon as they are made available. In the meantime, should you wish to discuss any of the above in more detail, please do not to hesitate to contact us on 01270 623731 or our Wilmslow office on 01625 416380.