The Government is issuing a continuous flow of information and guidance for employers, employees and businesses on how to deal with the impact of Covid-19. Here, we summarise the most up to date, key information issued to help protect you and your business.
Essential updates for business
Government Recovery Loan Scheme
From 6 April 2021, a new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10m to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing Covid-19 guaranteed loan schemes.
This new scheme will replace the Coronavirus Business Loan Schemes (CBILs) and the Bounce Back Loan Scheme, ending 31 March 2021.
The Coronavirus Job Retention Scheme (CJRS)
Following an updated announcement by the Chancellor on 3 March 2021, it was confirmed that the Coronavirus Job Retention Scheme (CJRS) would be extended until 30 September 2021. This means it will have been in place for 19 months to help protect jobs and support businesses.
Employers can therefore continue to furlough employees on a flexible or full basis, provided they pay their employees at least 80% of their pay (or £2,500 per month if lower). In return, employers will receive the following funding:
- 80% of qualifying pay (capped at £2,500 per month) between 1 May – 30 June
- 70% of qualifying pay (capped at £2,187.50 per month) between 1 July – 31 July
- 60% of qualifying pay (capped at £1,875 per month) between 1 August – 30 September
Read more detail on the extension of furlough here.
Further information on the scheme can be found in our Coronavirus Job Retention Scheme FAQs and also on our Let’s Talk Tax page which has lots of content on both CJRS.
The Government has one eye on the future of work too, including training and apprenticeships. Read more here.
Deductible investment costs
Beginning April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment meaning they can reduce their taxable profits by 130% of the cost. This is worth £25bn to companies over the two-year period the super-deduction will be in full effect.
Find out more on the business tax landscape here.
Corporation tax will rise to 25% from April 2023 for companies with annual profits of over £250,000.
Smaller companies with annual profits of less than £50,000 will continue to benefit from a 19% rate. Marginal relief provisions will also be introduced for companies with profits falling between the lower and upper limits providing a gradual increase in the Corporation Tax rate.
Retail, hospitality, and leisure businesses in England will pay no business rates for a further three months. Rates will then be discounted for the remaining nine months of the year by two-thirds. Scotland and Wales will have 100% rates relief until March 2022.
Find out more here
- The Government will be providing additional funding for Local Authorities (LAs) to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by restrictions. The amount of funding that LAs will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.
- LAs will receive a funding amount that will be the equivalent of:
- This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month).
- LAs will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
- It will be up to LAs to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide.
- Businesses in Tier 3 / Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter, case support is being provided through business support packages provided to LAs as they move into the alert level. The Government is working with local leaders to ensure the Alert Level very high packages are fair and transparent.
- Grants of £934 per month for properties with a rateable value of £15,000 or under
- Grants of £1,400 per month for properties with a rateable value of between £15,000-£51,000
- Grants of £2,100 per month for properties with a rateable value of £51,000
VAT deferral ‘new payment scheme’
The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.
The scheme allows businesses to opt to repay the deferred VAT by up to 11 interest free installments. In addition, a penalty of 5% will apply to businesses that have not either paid in full, opted into the New Payment Scheme or made alternative arrangements with HMRC by 30 June 2021.
Statutory Sick Pay (SSP) concerning Covid-19
Statutory Sick Pay concerning Covid–19 will be refunded by businesses with less than 250 employees, for up to two weeks per employee. Sick pay has also been extended for those who have to self-isolate, even if not ill, and sick notes will be available from NHS number 111.
Employment Allowance will increase from £3,000 to £4,000 from April 2020. Please note this will only be available to businesses that have a Class 1 Secondary NICs bill of £100,000 or less in the previous tax year.
There will also be increases in the flat-rate deduction for homeworking from April 2020, to cover additional household expenses from £4 per week to £6 per week. This is typically paid to help employees with the additional costs of heating the home, water usage etc.
Companies House –3 month extension to file accounts
Businesses will be given an additional 3 months to file accounts with Companies House to help organisations avoid penalties as they deal with the impact of Covid-19. Companies still have to apply for the 3-month extension to be approved. Those with clear issues around Covid-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
Full guidance can be found here on how to apply for an extension and more detail from the Government on the deferral can be read here.
Support for Hospitality, Leisure and Retail sector
A £5bn Restart Grant has been announced by the Chancellor to support English businesses. This grant, which local councils will administer, provides up to £6,000 per premises for non-essential retail businesses and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.
Support has also been given to the hospitality and leisure sector in the form of a temporary VAT rate of 5% on certain supplies (including hospitality, hotel and holiday accommodation and admission to certain attractions) has been extended until 30 September 2021. This will be followed by an interim VAT rate of 12.5% from 1 October 2021 to 31 March 2022. Although this measure does not apply to alcoholic beverages, there has been a freeze on alcohol duty.
Retail, hospitality and leisure businesses will welcome the decision to extend 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2m per business for properties required to be closed on 5 January 2021, or £105,000 per business for other eligible properties. Nurseries will also qualify for relief in the same way as other eligible properties.
750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.
Support for Arts, Culture and Sport sectors
The Chancellor has announced £90m of funding to support government-sponsored national museums in England due to the financial impact of Covid-19.
The Government have also pledged £300m for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadiums.
Self-Employed Income Support Scheme
More help for the self-employed has been announced in the Budget, with grants available until the end of September.
These will be the first payments available to an estimated 600,000 people who missed out on earlier support as they were unable to demonstrate their self-employed status on their tax return.
Two further payments will be available for self-employed people struggling to work because of coronavirus.
These represent the fourth and fifth grants paid out by the Coronavirus Self Employed Income Support Scheme (SEISS).
The fourth covers the three-month period from February until the end of April. As with previous SEISS grants, it is worth up to 80% of trading profits, averaged over three months, up to £7,500 in total.
The fifth grant covers May to the end of September, but the amount available depends on loss of income.
Workers whose turnover has fallen by at least 30% can still apply for a grant for up to 80% of profits, up to a value of £7,500 in total.
Those whose income has fallen by less than that can apply for up to 30% of trading profits capped at £2,850.
Claims can be made from next month for the fourth grant. Claims for the fifth grant will open in July.
The SEISS Grant Extension will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to Covid-19.
- This will only be open to people with trading profits of up to £50,000.
- The majority of income must be from self-employment.
- Those who completed tax returns for the 2019-2020 financial year and 2018-19 will qualify for these new payments, provided they filed their return by midnight on 2 March 2021.
Additional Eligibility includes those who:
- Declare that they are currently actively trading and intend to continue to trade
- Declare that they are impacted by reduced demand due to Covid-19 in the qualifying period. The qualifying period for the first grant is between 1 November and the date of claim.
Self-assessment payment of tax for individuals
Self-assessment payments on account due on 31 July 2020 were deferred until 31 January 2021.
In addition to this, the Government will give the self-employed and other taxpayers more time to pay taxes due in January 2021. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
An increase of £1,000 a year to the Universal Credit standard allowance will also be made for the next 12 months.
The Working Tax Credit basic element is also increasing by the same amount.
Self-employed people will be able to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
Bank of England rates
Before the 2020 UK Budget, the Bank of England announced:
- An interest rate cut from 0.75% to 0.25%. This has now been cut to 0.1%.
- A four-year loan scheme of up to £100bn at this rate for small businesses; and
- A loosening of the capital rules for banks to encourage lending.
These measures are an attempt to calm the financial and economic markets. These followed similar rate cuts around the world and have been welcomed. This rate cut announcement is the first outside the regular monthly announcements and illustrates the severity of the situation in the UK and wider global economy finds itself in.
Scottish Government updates
The latest Scottish Government business updates can be found here.
We also summarise the Scottish Budget updates here.
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