Chancellor Rishi Sunak has set out a number of measures to support and help businesses through the disruption caused by the coronavirus pandemic.
Many of the details are still being formulated with others being added and evolving on a daily basis. However, the current measures include:
Coronavirus Job Retention Scheme that
Deferral of VAT payments
Deferral of income tax payments on account
Statutory Sick Pay relief for small and medium sized businesses (SMEs)
Retail, hospitality, leisure and nursery businesses in England will receive a 12-month business rates holiday
£10,000 small business grant funding for businesses that currently receive small business rate relief or rural rate relief
Retail, hospitality and leisure businesses with properties with a rateable value between £15,000 and £51,000 can apply for £25,000 grant funding
Loans of up to £5 million are being offered to SMEs through The Coronavirus Business Interruption Loan Scheme and the British Business Bank
The Bank of England has introduced a new lending facility to help support liquidity among larger firms and help them bridge coronavirus disruption to their cash flows
A new HMRC Time To Pay Scheme
Coronavirus Job Retention Scheme
HMRC are offering to reimburse 80% of salaries up to £2,500 per month to those employees who have been asked to stop working but have not been laid off. The scheme is to safeguard workers from being made redundant and it is hoped it will enable businesses to resume services promptly when the crisis has passed.
Open to all UK employers with a PAYE scheme, the scheme aims to enable them to continue paying the majority of their employees’ salary. The employee will need to be furloughed for their salary cost to qualify and relief will be backdated to cover salary, including NIC and basic pension contributions, for relevant employees from 1 March. Employees made redundant before this date can agree to be brought back and “furloughed’ so they will be considered a relevant employee under this scheme. The scheme will be in place for initially 3 months, but will be extended if necessary.
If a business needs short term cash flow support, it may also be eligible for a Coronavirus Business Interruption Loan as described later in this article.
Deferring VAT payments
Valued Added Tax (VAT) payments are being deferred for 3 months and will apply from 20 March 2020 until 30 June 2020. It is not necessary to apply for the delay, though it is recommended that any direct debit is cancelled. VAT reclaims and refunds will be paid as normal.
Income Tax payments that come under the Self-Assessment system and are due in July 2020 can also be delayed until 31 January 2021. Late payments will not incur penalties and you do not need to apply as the deferment is automatic. The delay is however optional and the tax should be paid on time if you are able to do so.
Support for businesses who are paying sick pay to employees
Small or medium-sized UK based businesses that have less than 250 employees as of 28 February 2020, are able to reclaim the Statutory Sick Pay (SSP) paid for absence due to COVID-19.
Legislation on this is still to be passed and further details will be provided by HMRC when available. However, there are a number of terms associated with rebate including:
SSP may be claimed for up to 2 weeks for each eligible employee who has been off work as a result of COVID-19.
Details of all SSP payments and all staff absence records should be maintained, but GP fit notes are not required. In cases where an employee requires a leave of absence note, isolation notes may be obtained from NHS 111 online. For those in quarantine due to living with symptoms of coronavirus, an isolation note can be requested from the NHS website
Repayments to employers will be managed as soon as possible by the government.
Business rates holiday and cash grants for retail, hospitality and leisure businesses
A business rates holiday is being introduced for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year, should now receive a new bill from their local authority that excludes the business rate charge.
A cash grant of £25,000 is also being offered to businesses in this sector. The Retail and Hospitality Grant Scheme works on two levels and:
Businesses property with a rateable value of up to £15,000 will receive a grant of £10,000
Businesses property with a rateable value of between £15,000 and less than £51,000 will receive a grant of £25,000
To be eligible for either of these schemes the following criteria must be met:
The business must be based in England
The business must be categorized as being in the retail, hospitality and/or leisure sector
The premises that will benefit from the relief will be occupied buildings that are predominately used for:
Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
For assembly and leisure
As hotels, guest & boarding premises and self-catering accommodation
Support for nursery businesses that pay business rates
A business rates holiday is being introduced for nurseries in England for the 2020 to 2021 tax year and will be applied to the April 2020 council tax bill. Nurseries are eligible for the business rates holiday if:
The nursery is based in England
The property is occupied by providers on Ofsted’s Early Years Register
The property is predominately utilised for the provision of the Early Years Foundation Stage
Support for businesses that pay little or no business rates
A one-off grant of £10,000 is being provided as part of the Small Business Grant Scheme to enable local authorities support small businesses that claim small business rate relief (SBRR), rural rate relief (RRR) or tapered relief. Set up to help businesses meet their ongoing costs, qualifying criteria includes:
The business is based in England
The small business already receives small business rate relief or rural rate relief
The business must occupy a property
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme provides small and medium sized businesses with access to loans up to £5 million over 6 years, to help cover overdrafts, invoice finance and asset finance.
A 12-month Business Interruption Payment scheme also covers the first 12 months of interest payments and any lender-levied fees, allowing SME’s to take advantage of no upfront costs and lower initial repayments.
A guarantee of 80% on each loan (subject to pre-lender cap on claims) will be provided in a letter from the government, and the scheme is being provided by commercial lenders, including all the major banks and is backed by the government-owned British Business Bank.
Businesses may now apply for the scheme and are eligible for the scheme if:
The business is UK based, with turnover of no more than £45 million per year
The company meets the other British Business Bank eligibility criteria
Support for larger firms through the COVID-19 Corporate Financing Facility
To help support companies affected by short term cash flow problems, the Bank of England will buy short term debt from larger companies under the new Covid-19 Corporate Financing Facility.
Enabling companies to finance short-term liabilities, it is also supporting the corporate finance markets in general and easing the supply of credit to all businesses.
Businesses need to apply for the scheme and meet the criteria set out on the Bank of England’s website.
Support for businesses paying tax: Time to Pay service
The HMRC’s Time To Pay Service is providing support for any business or individual in financial difficulties that are unable to settle their outstanding tax affairs.
Arrangements are agreed on a case-by-case basis and are suited to individual circumstances and liabilities.
If you would like any further information on any of the new or existing schemes, we are able to assist with practical advice. Please contact our dedicated team on 01932 320800 or email email@example.com and we will be happy to help.