Measures Announced By HMRC To Assist Businesses and Individuals With COVID-19 Disruptions

During these turbulent times it is always best to seek advice and assistance as soon as possible and not delay until matters becomes critical.

Below we have summarised the latest position (as at 31 March) on a number of measures to assist businesses in financial difficulties due to the disruption resulting from COVID-19.

Further details can be obtained from the BEIS website at: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/

Should you wish to discuss matters further, please contact your engagement/relationship partner or email us mail@sgllp.co.uk

The package of measures to support businesses includes:

  • a Statutory Sick Pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the HMRC Time To Pay Scheme
  • Coronavirus Job Retention Scheme
  • deferring VAT and Income Tax payments
  • Protection from eviction
  • Support for the Self-employed
  • Empty’ business rates relief
  • Employee expenses – general
  • Employee expenses – car
  • Insolvency rules
  • Workplace pensions

Support for businesses who are paying sick pay to employees

Legislation is to be introduced to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. To be eligible the business must be UK based, small or medium-sized and employ fewer than 250 employees as of 28 February 2020. The guidance isn’t yet clear on how the employee number will be calculated for Groups.

The scheme will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19 and employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.

In order to claim 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 of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website

Details of how to claim will be provided once the legalisation has passed.

 

Support for businesses that pay business rates

Business rates holiday for retail, hospitality and leisure businesses

A business rates holiday is to be 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 will be rebilled by their local authority as soon as possible.

This includes properties wholly or mainly being used shops, restaurants, cafes, drinking establishments, cinemas, estate agents, lettings agencies, bingo halls and live music venues; for assembly and leisure; and as hotels, guest & boarding premises and self-catering accommodation.

The relief should be automatic and will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge.

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

Further guidance for local authorities is available in the expanded retail discount guidance.

Cash grants for retail, hospitality and leisure businesses

Cash grants will be provided to retail, hospitality and leisure businesses operating from smaller premises, of £10,000 (for businesses with a rateable value of under £15,000) and £25,000 (for businesses with a rateable value between £15,000 and £51,000).

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority. Find your local authority.

Rateable values can be checked at https://www.tax.service.gov.uk/business-rates-find/

Support for nursery businesses that pay business rates

A business rates holiday will apply for nurseries in England for the 2020 to 2021 tax year. To be eligible, occupiers must be providers on Ofsted’s Early Years Register or the premises wholly or mainly used for the provision of the Early Years Foundation Stage. This is automatic and will apply to your next council tax bill in April 2020. Further guidance for local authorities is available in the nursery discount guidance.

Support for businesses that pay little or no business rates

The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs. If your business is eligible for SBRR or rural rate relief, you should be contacted by your local authority and do not need to apply.

 

Support for businesses through the Coronavirus Business Interruption Loan Scheme

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

To be eligible, businesses will still require a sound borrowing proposal and business plan which Simmons Gainsford can assist with.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

To be eligible, the business must be UK based, with turnover of no more than £45 million per annum and meet the British Business Bank eligibility criteria. These criteria and the list of accredited lenders is available on the British Business Bank website. All the major banks are expected to offer the Scheme once it has launched.

You should talk to you bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme should be available from early week commencing 23 March.

Support for larger firms through the COVID-19 Corporate Financing Facility

The Bank of England will buy short term debt from larger companies to allow them to finance your short-term liabilities.

The scheme should be available early in week beginning 23 March 2020 and information on how to access the scheme will be issued shortly. More information is available from the Bank of England.

Support for businesses paying tax

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, you should call HMRC’s dedicated helpline: 0800 024 1222.

Further details can be found at https://www.gov.uk/difficulties-paying-hmrc

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Coronavirus Job Retention Scheme

All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

In order to access the scheme, a business needs to:

  • designate affected employees as ‘furloughed workers,’ and notify the 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 have issued guidance which includes

  • The scheme covers all employees including part-time employees and employees on agency contracts (who are not working) and flexible or zero-hour contracts
  • For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included
  • For employees whose pay varies and has been employed for a full twelve months prior to the claim, claim is based on the higher of either:- the same month’s earning from the previous year
    – average monthly earnings from the 2019-20 tax year

    If the employee has been employed for less than a year, the claim is based on their monthly earnings since they started work.

  • The amount paid does not need to meet National Living Wage (NLW)/National Minimum Wage (NMW) as this only applies for the hours they are working.
  • Employers can also claim for the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on the wage.
  • The scheme is open to all UK organisations, including recruitment agencies paying agency workers through PAYE, which created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
  • The scheme can be applied to employees who were made redundant (if they are rehired by their employer) or placed on unpaid leave since 28 February 2020
  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this
  • Employees who are shielding in line with public health guidance can be placed on furlough
  • Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
  • An employee can not undertake work for or on behalf of the organisation which includes providing services or generating revenue. Reduced hours or pay does not make an employee eligible for this scheme
  • Employees can undertake training courses but they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised
  • While on furlough, the employee’s wage will be subject to usual income tax and other deductions
  • Employers need to write to their employee confirming that they have been furloughed and keep a record of this communication.
  • An employer has the option of only furloughing some of their employees. Decisions on who to furlough are still subject to equality and discrimination laws.
  • Any changes to employment contracts required should be made by agreement with the employee or after taking legal advice.

Further details, including procedures for Maternity Leave, contractual adoption pay, paternity pay or shared parental pay, can be found at

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

There is also additional guidance for employees which can be found at

https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

Deferring VAT and Income Tax payments

Valued Added Tax (VAT) payments can be deferred by all UK businesses for 3 months, applying from 20 March 2020 until 30 June 2020. There is no need to apply, there is simply no 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.

Income Tax payments from the self-employed due in July 2020 under the Self-Assessment system will be deferred to January 2021. This applies for all the self-employed and is automatic – no penalties or interest for late payment will be charged in the deferral period.

Protection from eviction

Under measures to be included in the Coronavirus Bill, no business (in England, Wales and Northern Ireland) will be forced out of their premises if they miss a payment in the period to 30 June. Tenants will still be liable for the rent after this period.

Support for the Self-employed 

Under the Self-employment Income Support Scheme (SEISS) the government will provide support to the self-employed (including members of partnerships) who have lost income due to COVID-19. The scheme applies for the 3 months to May but may be extended. Payments for the initial 3 months will be made as a single lump sum at the beginning of June.

The scheme goes not cover shareholders in receipt of dividends.

To be eligible you must:

  • be self-employed or a member of a partnership
  • have submitted Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 6 April 2019 to 5 April 2020
  • be trading when you apply, or would be except for COVID-19. There is no requirement to stop working in order to access the support
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19
  • have self-employed trading profits of less than £50,000
  • have more than half of your income come from self-employment

The last 2 points are determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

The payment will be a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month. Trading profits will be calculated as an average of the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019 (where applicable).

HMRC is working to identify those eligible and will contact them to apply online. Access will be through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

The grant is taxable and should also be included as income on any tax credits claim

Empty’ business rates relief

Property professionals have suggested that owners of premises (such as  restaurants, pubs, bars, nightclubs, theatres, cinemas and gyms) which have been ordered to shut for business as a result of coronavirus regulations are eligible to claim empty rates relief from the day they closed until 31 March, when the government’s support package takes effect, as the property could not be occupied.

As these rates would already have been paid, the advice is that such businesses should consider applying for refunds for these extra days until the end of the month.

With regard to other business sectors, property professionals believe that, given the advice regarding groups not assembling and people working from home, it would be possible for our firms to declare that their offices and work locations are ‘empty’ and so claim relief. However, there is a warning to check that this doesn’t impact any grants the government is offering.

Employee expenses – General

HMRC have published guidance for employers on what equipment, services and supplies are taxable if their employees are working from home due to COVID-19. The guidance applies to employees working from home due to either the workplace being closed or they are following advice to self-isolate. It does not apply to furloughed workers.

  • Mobile phone provided by the employer, limited to 1 per employee, is non-taxable.
  • Broadband – If the employee already pays for broadband then no expense can be claimed. If broadband was not already available then the reimbursement is non-taxable provided it is limited to that required for work purposes.
  • Reimbursing expenses for office equipment employee has purchased and will be retained at their home address is taxable and should be reported on PAYE Settlement Agreement
  • Payments of up to £4 a week (£6 from 6 April) for additional household expenses (such as electricity, heating and broadband) are non-taxable. To claim above this amount, the employee will need to keep receipts
  • Loans at a time of hardship with a value less than £10,000 in a tax year are non-taxable

Further guidance can be found at:

https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19

Employee expenses – Cars
With home working and furloughing of employees, businesses should review the provision of cars to staff.

Staff who are furloughed cannot provide any work to the business and staff working from home will no longer be travelling for work purposes. This does not however alter the taxable Benefit in Kind on the car.

In order to stop the BIK, the employee would need to return the car and hand in the keys for a minimum period of 30 days. We would also recommend that it is confirmed in writing or by email that the car will not be available to them for this period.

If the employee wishes to keep the car then the BIK can be reduced by the employee paying for their private mileage (which, with travel restrictions, is likely to be low).

Insolvency rules

The rules relating to Wrongful trading (under which Directors can be held personally liable for company debts) are being temporarily suspended from 1 March. However, laws relating to fraudulent trading and director disqualification will remain in force as a deterrent against director misconduct.

Further guidance can be found at (approximately two-thirds of the way down):

https://www.gov.uk/government/news/regulations-temporarily-suspended-to-fast-track-supplies-of-ppe-to-nhs-staff-and-protect-companies-hit-by-covid-19?utm_source=a14f0cfa-8e72-4d3c-a7d6-f3e9f1580b07&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Workplace pensions

The Pension Regulator has yet to make any announcements on the deferral of employer pension scheme contributions and it remains incumbent on employers to have a business continuity plan (BCP) which sets out what actions would be taken if events, including of course the current coronavirus issue, impact the running of their scheme.

We understand that pension providers have started dialogue about options to delay pension contributions but this is awaiting clarification and we are aiming to issue another update as soon as we have clear guidelines.

The Government has already announced that where employees have been furloughed under the Coronavirus Job Preservation Scheme then employers will be able to claim associated costs of those employees, including national insurance and pension contributions in addition to salary costs.

Regional assistance

Additionally, assistance is being provided by the devolved governments in Scotland and Wales.

Businesses in Scotland can access the business helpline number on 0300 303 0660 (open Monday to Friday 8.30am to 5.30pm). Further information is available at https://www.gov.scot/news/covid-19-helpline-for-scottish-businesses/

Details of assistance for businesses in Wales is available at https://gov.wales/ministers-announce-new-14bn-business-support-package

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