Coronavirus – Help for business (Updated 28 April 2020)
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.
Interest and penalties will not be charged on deferred VAT payments.
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. Initial guidance suggested deferral applied only to the self-employed, however, it has now been confirmed that deferral applies to all taxpayers due to make payments on account on 31 July 2020, whether the liability relates to tax on self-employment or partnership income, rental income, or income on savings and investments. Deferral will apply automatically, and no interest or penalties will be charged during the deferral period. Taxpayers with direct debits in place should ensure these are cancelled in good time if they wish to take advantage of the 31 July 2020 payment on account deferral.
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 0159 559), and further information can be found on HMRC’s website.
Job Retention Scheme
The Job Retentions Scheme enables UK employers 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. Further details on the JRS can be found on our website here.
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-Employment Income Support Scheme (SEISS) enables the self-employed to claim a grant of 80% of profits, up to a cap of £2,500 per month. Further information on the SEISS is on our website.
In addition, eligibility criteria for universal credit have been relaxed for those affected by Covid-19. Further information can be found on Gov.UK.
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 is also available to businesses operating from smaller premises in the retail, hospitality and leisure 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 inviting them to app.
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. Local authorities have now started to get in touch with eligible businesses inviting applications for this grant.
There are a number of separate government lending schemes in place.
‘Bounce Back’ Loan Scheme
A new loan scheme focused on small and medium-sized firms was announced by the Chancellor on 27 April 2020, in response to concerns that the Coronavirus Business Interruption Loan Scheme (see below) was not working sufficiently well for the smaller business sector. Under the Bounce Back loan scheme, loans of between £2,000 and £50,000 will be available interest-free for the first 12 months with a ‘low’ rate of interest being charged thereafter. The amount of borrowing businesses are able to access under the scheme will be 25% of turnover, up to a maximum of £50,000. The loans will be 100% guaranteed by the Government and be repayable over a period of up to six years.
The Bounce Back loan scheme will open for applications from 4 May 2020. The application process is designed to be straightforward, with cash being released within a few days of a loan being approved. This addresses two of the principal criticisms of the CBIL scheme, where many businesses ae reported to have been subject to lengthy application processes and delays in receiving funds.
To be eligible, the business must be based in the UK and have been adversely affected by the Covid-19 pandemic. The business must not be an ‘undertaking in difficulty’ at 31 December 2019, meaning broadly a company over three years old where more than half of subscribed share capital has disappeared as a result of accumulated losses.
Certain businesses in the insurance and financial sector are not eligible for the scheme, although insurance brokers may apply. Loans under the Bounce Back scheme are also not available to publicly funded businesses, schools etc. It is not possible for a business to have loans under both the Bounce Back and CBIL schemes, but those who have already received CBIL funding of up to £50,000 have the opportunity to switch to the Bounce Back scheme before 4 November 2020.
Coronavirus Business Interruption Loan Scheme
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. These criteria have been amended from 3 April to improve access to the scheme following reports that banks were refusing loans to viable businesses. Under the revised scheme, the requirement for a business to have been turned down for a commercial loan from their bank has been removed. Lenders have also been banned from asking for personal guarantees where the loan is less than £250,000.
Businesses wishing to take advantage of the CBIL scheme should speak to their lender in the first instance.
Larger firms with an annual turnover up to £500m will be able to access loans up to £25m
Covid-19 Corporate Financing Facility
A separate scheme agreed with the Bank of England offers new lending facilities to the largest businesses. The Covid-19 Corporate Financing Facility will purchase debt issued by businesses who make ‘a material contribution to the UK economy’. Applications under the scheme are now open, and further information is available from the Bank of England.
In partnership with the British Business Bank, the Chancellor announced the launch of a £500m ‘Future Fund’ on 20 April 2020 targeting innovative business. The scheme is open to UK unlisted companies and will provide government-backed loans of between £125,000 and £5m. Firms will be required to raise finance from private investors of an equal amount to the grant funding provided by the Future Fund, and also must have raised a minimum of £250,000 in equity investment from third party investors in the last five years. Loans provided under the scheme will automatically convert to equity if not repaid.
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.
A temporary electronic stamp duty system has been put in place to enable stock transfer forms to continue to be stamped. Further details can be found here. Payments of stamp duty must be made electronically.
Applications for stamp duty reliefs and exemptions should be emailed to firstname.lastname@example.org.
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.