Businesses are facing unprecedented challenges during the Coronavirus outbreak, and the government has been quick to acknowledge this and introduce a number of measures to bring relief through the tax system to large and small employers alike. Further details can be found on HMRC’s website.
VAT registered businesses will be able to defer payment of VAT liabilities due between 20 March 2020 until 30 June 2020 until the end of the 2020/21 tax year. The deferral will apply automatically and businesses need not notify HMRC that they wish to take advantage of a delay in making VAT payments. All businesses operating in the UK are eligible for deferral. There is no change to the deadline for submitting VAT returns, and these should be filed as normal during the deferral period. VAT refunds and claims will be processed as usual during this period.
Income Tax Payments on Account due 31 July 2020
Payments on account of income tax due on 31 July 2020 will be deferred until 31 January 2021. The deferral applies to all self-employed taxpayers due to make payments on account on 31 July 2020. Deferral will apply automatically, and no interest or penalties will be charged during the deferral period.
Time to Pay
HM Revenue & Customs may allow those who are struggling to pay their tax bills on time more time in which to settle their liabilities. ‘Time to Pay’ arrangements allow taxpayers to agree a payment plan with HMRC over a specified period, usually 12 months. Negotiating Time to Pay arrangements with HMRC can sometimes be difficult, but in the light of the disruption caused by Covid-19, the Chancellor has indicated that HMRC will be sympathetic. There is a dedicated helpline (0800 024 1222), and further information can be found on HMRC’s website.
Job Retention Scheme
UK employers will be able to access government funding in order to enable them to carry on paying employees who are not currently required within the business rather than laying them off. The scheme will cover the cost of wages backdated to 1 March 2020 and include workers who were in employment on 28 February 2020. It is currently anticipated that the Job Retention Scheme will operate for at least three months, and will be operational by the end of April 2020.
To claim under the scheme, the employer will need to designate affected employees as ‘furloughed workers’ and notify them of this change. Guidance should be sought from an employment lawyer as contractual terms vary. Information will then need to be submitted to HMRC via a new online portal (not yet operational) to enable a refund of 80% of furloughed workers’ wage costs to be made to the employer, up to a cap of £2,500 per month.
Statutory Sick Pay (SSP)
Employers paying SSP to employees who are off sick owing to Covid-19 will be eligible for a rebate covering two weeks’ SSP per eligible employee. The scheme is available to businesses in the UK in any sector with 250 or fewer employees on 28 February 2020. Confirmation is awaited as to whether the 250 employee threshold is to be calculated on the basis of full-time equivalent employees. The rebate will be available in respect of SSP paid to an employee eligible under the new criteria (see below) where the absence is related to Covid-19.
There is no requirement for employees absent owing to Covid-19 to provide a sick note under the rebate scheme, but employers may still request that one is provided by the employee. Employers should keep records of staff absences and payments of SSP. The scheme will run from the date regulations are passed relating to Covid-19 related absences is passed.
The SSP rebate scheme is still in development and further details on how to claim are awaited.
SSP Eligibility Criteria
Eligible employees are entitled to SSP at £94.25 per week for up to 28 weeks, from the first day they are off sick or self-isolating owing to Covid-19. To be eligible for SSP, employees must:
- Be classed as an employee and have done work for an employer;
- Have been ill for at least 4 days in a row (including non-working days);
- Earn an average of at least £118 per week;
- Notify their employer of their sickness within 7 days, or the period specified by their employer if different.
Employees do not need to be sick with coronavirus in order to claim SSP, as (from 13 March 2020) SSP applies to those who are self-isolating in accordance with medical advice. The employee is not required to obtain a sick note from their employee, and can instead visit NHS 111 online and complete an online form to obtain an ‘isolation note’.
We recommend guidance is sought from an employment lawyer if there is any uncertainty over an employee’s entitlement to SSP, or contractual sick pay.
The self-employed are not eligible for SSP. Instead, the eligibility criteria for universal credit have been relaxed for those sick or self-isolating owing to Covid-19. Further information can be found on the Gov.UK website.
Business Rates for nurseries and the retail, hospitality and leisure sectors
Businesses in the retail, hospitality and leisure will benefit from a 12-month holiday from business rates from April 2020. Nursery care providers on Ofsted’s Early Years Register or premises used wholly or mainly for the provision of the Early Years Foundation Stage are also eligible for relief from business rates for 12 months. If your business is eligible for the 12 month payment holiday, your business rates bill will automatically be recalculated by the local authority in the coming weeks. There is no need to make a claim.
A £25,000 grant will also be made to businesses operating from smaller premises in these sectors, where the rateable value is between £15,000 and £51,000. The grant applies only to businesses in England, and covers properties occupied as shops, restaurants, cafes, bars, pubs, cinemas, live music venues as well as hotels and guesthouses. Other properties used as a place of assembly or leisure may also qualify. Local authorities are writing to businesses eligible for the £25,000 grant.
Small Business Rate Relief
Many small businesses are able to benefit from small business rate relief (SBRR). The relief applies where your business property’s rateable value is below £15,000, and provides 100% relief for properties with a rateable value below £12,000, and tapered relief where the rateable value falls between £15,000 and £12,000. Businesses eligible for SBRR will be able to obtain a one-off grant of £10,000 from their local authorities. There is no need to make a claim; the local authority will get in touch with all businesses eligible for the grant.
Two new government lending schemes are also being put in place, providing access to £330bn of finance. Under the Coronavirus Business Interruption Loan scheme (CBIL), the British Business Bank will support bank lending and overdrafts to SMEs by high street banks by guaranteeing 80% of loans up to £5m. Businesses accessing finance under this scheme will also benefit from a six-month interest payment holiday at the start of the loan. Over 40 lenders are accredited providers, including all the major banks, and the scheme is open to businesses throughout the UK where annual turnover does not exceed £45m and which meet the British Business Bank criteria. The CBIL scheme will be available from Monday 23 March 2020. Any business wishing to take advantage of the CBIL scheme should speak to their lender in the first instance.
A separate scheme agreed with the Bank of England will offer new lending facilities to larger businesses. The Covid-19 Corporate Financing Facility will purchase debt issued by larger businesses who make ‘a material contribution to the UK economy’. The scheme will be available from Monday 23 March 2020. Further details on how to access the scheme are currently awaited.
Businesses are advised to check the precise wording of their insurance policies, as cover will vary significantly.
Where the policy includes cover for both pandemics and government-ordered closures, advice to avoid pubs, restaurants, bars, gyms and other leisure facilities is sufficient to enable the business to make a claim, provided all other conditions are met. This was confirmed by the government and insurance industry on 17 March 2020.
Where the policy is for standard business interruption, this is likely to be dependent on damage to property and pandemics may not be covered.
Implementation of the controversial off-payroll working rules for the private sector (‘IR35’) rules which were due to be introduced from 6 April 2020 will be delayed for a year until 2021. The new rules had caused widespread concern amongst businesses and there had been intensive lobbying from professional bodies and stakeholders for them to be scrapped or delayed.
For further information, please call our Leicester branch on 0116 254 9262 or our Loughborough branch on 01509 263500.