Government Support & Advice
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.
- Coronavirus Job Retention Scheme
- CJRS for Public Sector Organisations
- Self-Employed Income Support Scheme
- Company House Filing
- VAT Payment Deferral Plan
- HMRC Time to Pay
- Small Business & Retail, Hospitality & Leisure Grants
- Government Funding Schemes
- Bank of England Rate updates
- Dedicated Phone Support
- Covid-19 Guidance for Employers, Businesses and Employees
- SSP concerning Covid-19
- Scottish Government Updates
Essential Updates for Individuals:
This is an entirely new support mechanism administered by HMRC, with the intention of paying up to 80% of employees’ salaries who might otherwise be laid off, up to £2,500 a month.
Unlike some previous interventions, all businesses are eligible. It is not restricted to the size of the employer or to any sector. There is no requirement to demonstrate that the employees are not working directly as a result of the COVID 19 pandemic, although we expect this will be taken up by businesses that are being impacted. There are no limits to availability.
The relief can apply to any associated salary costs arising from 1 March 2020. It is designed to run initially for three months but may be extended if necessary.
Employers will be able to contact HMRC for a grant, with the first payments expected within weeks. It will be fully up and running before the end of April.
For the relief to apply to an employee, that person must be designated as a “furloughed worker”. Becoming a “furloughed worker” means that you are kept on your employer’s payroll, rather than being laid off.
The government expects that the scheme will not be utilised by many public sector organisations, as most public sector employees must continue to deliver essential public services or assist in mitigating the coronavirus effects.
If an employer receives public funding for staff costs, and that funding is maintained, it is expected that the employer uses this money to carry on paying staff in the same way as usual – and not furlough them. Additionally, this applies to non-public sector organisations who receive public money for employee costs.
Organisations which are providing necessary services to respond to the impacts of COVID-19 and receiving government support, are not expected to furlough staff.
In a few cases, for example if organisations are mainly funded by the government and whose staff cannot be redeployed to help with the coronavirus effects, the scheme may be appropriate to cover staff costs.
We have broken out the most frequently asked questions with answers on the Job Retention Scheme here and provided further detail on the CJRS grant payments, employees eligible, furlough conditions and employment law in our article here.
More information from the Government can be found here.
The Chancellor has announced the much anticipated financial support for the self-employed: the Self-employed Income Support Scheme, which will pay a taxable grant of 80% of average monthly profits over the last 3 years (based on the tax returns filed for the 3 years to 5 April 2019) up to a maximum of £2,500.
This scheme will run for 3 months but can be extended if necessary. This level of grant and time period has been designed to be in line with the Coronavirus Job Retention Scheme (CJRS), the scheme to support the employed that was announced last week.
There are some conditions for the Scheme:
- This will only be open to people with trading profits of up to £50,000.
- The majority of income must be from self-employment.
- It is only available to those who have submitted tax returns with self-employment income for 2019. The Chancellor has given those who have not filed 2019 tax returns four weeks to submit these in order to qualify.
HMRC will administer the scheme and will contact all eligible individuals directly to ask them to apply and payments will be made in one lump sum. This is expected to be up and running by June. Those who have not been self-employed for three years, the grant will be based on the one or two returns filed. Those who started self-employment after 6 April 2019 will not qualify for the scheme.
Due to the delay between the loss of income and the grants through this scheme, the Chancellor has recommended that those with cash flow issues should utilise Universal Credit and the Business Interruption Loan Scheme.
A future change?
The Chancellor made ‘an observation’ that it does not seem right that the self-employed are subject to a different tax regime when they are being supported in the same way as the employed. This suggests there are changes on the horizon for the taxation of the self-employed in the future.
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.
HMRC has announced further support for businesses by deferring Valued Added Tax (VAT) payments for 3 months for all UK businesses.
The deferral will apply to VAT payments due in the period from 20 March 2020 until 30 June 2020.
How to access the scheme
This is an automatic offer with no applications required. Businesses will not need to pay VAT that falls due for payment during this period and are advised to cancel their direct debits to ensure HMRC do not collect the payment automatically. VAT returns must be submitted as usual during this time. Taxpayers will be given until 31 March 2021 to pay the VAT that has been deferred. VAT refunds and reclaims will be paid by HMRC as normal.
MTD digital link extension
HMRC has also granted an extension to all MTD businesses to form digital links between all parts of their functional compatible software. Therefore, all organisations now have until their first VAT return period starting on or after 1 April 2021 to implement digital links.
- Self-assessment payments on account due on 31 July 2020 will be deferred until 31 January 2021.
- An increase to the Universal Credit standard allowance by £1,000 a year for the next 12 months, by £1,000 a year.
- 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.
HMRC’s “Time to Pay” scheme is designed to support businesses and individuals struggling to make tax payments.
These allow viable business and individuals to make payment(s) over a period that they can afford. Arrangements are tailored to the ability of the customer to pay and are typically for a few months although they can be longer.
To be eligible for “Time to Pay” you must pay tax to the UK Government and have outstanding tax liabilities.
More information can be found here .
For any business in the retail, hospitality and leisure sector there will be no business rates payable for the tax year 2020/21. Businesses can also receive:
- In England, the Small Business Grant Fund (SBGF) of £10,000 if receiving Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) and are in line with the eligibility criteria. If you already receive small business rates relief (including the sectors above) you will receive a cash grant of £10,000. This grant was mentioned in the budget at a rate of £3,000 – this has now been increased to £10,000.
- In England, under the Retail, Hospitality and Leisure Grant (RHLG) if businesses receive the Expanded Retail Discount (which covers retail, hospitality, and leisure) and have a rateable value below £51,000, you will be eligible for the following cash grants per property.
- £10,000 grant, if an eligible business in these sectors with a property that has a rateable value of up to £15,000 and in line with the eligibility criteria.
- £25,000 grant, if an eligible business in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 and in line with the eligibility criteria.
Businesses with a rateable value of £51,000 or over are not included in this scheme and non-rate paying organisations in the business rates system are not eligible for this scheme.
The rates holiday and cash grants will be dealt with through local authorities. There will be no requirement to claim these. You should receive them automatically.
More information can be found here .
The government has introduced two schemes to help business funding.
- The first, the Covid Corporate Financing Facility , is intended to support larger businesses with the Bank of England stating it will buy Commercial Paper issued by investment grade companies at the prices that existed on 1 March 2020. This will help prevent businesses which rely on Commercial Paper from running out of liquidity but is only for investment grade businesses which tend to be large entities and typically listed companies, or government backed with low levels of gearing.
- The second, the Business Interruption Loan scheme , is intended to provide banks and funds with an 80% government guarantee on loans up to £5m to businesses they otherwise would not have lent to because of a lack of security.
There have been daily communications between the government, the British Business Bank and the 40 participating providers to outline the operational and practical considerations of providing this, which is still to be communicated with the relationship and lending teams.
The process and documentation is likely to follow the previous Enterprise Finance Guarantee scheme that this scheme replaced, which will help streamline implementation; however, the scheme may not cover as many situations as the government and borrowers currently anticipate.
We explore the current debt landscape and comparison between the two loan schemes here .
As well as loans, there are many other types of finance supported by the programme, depending on the provider.
This support will be provided by the British Business Bank through participating providers and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
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 which 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.
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.
HMRC has made 2000 staff available to help if:
- You cannot pay your tax bill due to the coronavirus
- You cannot pay your self-assessment tax bill and want to pay in instalments online (only if you owe less than £10,000). If you have already set up a payment plan online, you do not need to contact HMRC. If you’ve missed a payment date or are unable to use the online service contact the self-assessment payment helpline here.
- You are unable to pay other taxes and have received a payment demand such as a tax bill or legal action letter (call the HMRC office which sent you the letter or the Payment support services ).
- You are a nominated partner in a business partnership you can also agree time to pay with HMRC for the partnership or individual.
- Encourage employees to work at home, wherever possible.
- Ensure that if someone becomes unwell in the workplace with a new, continuous cough or a high temperature, they are sent home and stay at home for two weeks.
- Remind employees to wash their hands for 20 seconds or more, frequently and use tissues for coughs and sneezes.
- Continually, clean and disinfect objects and surfaces that are touched regularly.
- Support employees to adhere to the advice to stay at home to reduce the spread of coronavirus (COVID-19) to others.
- Be aware that those who stay at home will be eligible for statutory sick pay (SSP) from the first day of their absence from work.
- Use your discretion with the requirement for medical certification for employees who are unwell. This alleviate pressure on GPs so they can focus on their patients.
- If evidence is of illness is required, 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
- Encourage employees from defined vulnerable groups to stay at home and work from there if possible.
Please see here for more detailed government advice. This guidance will be updated as the situation changes.
Fiona Hyslop, Cabinet Secretary for Culture, Tourism and External Affairs summarised the actions the Scottish Government is taking to aid businesses including measures worth £2.2 billion beginning the 1 April:
- a full year’s 100% non-domestic rates relief for retail, hospitality and tourism
- £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
- £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
- 1.6% relief for all properties, effectively freezing the poundage rate next year
- First Minister to convene an emergency meeting of the Financial Services Advisory Board
- urging local authorities to relax planning rules to allow pubs and restaurants to operate temporarily as takeaways
- extending the go live date for the deposit return scheme to July 2022
- halting the introduction of the Visitor Levy Bill
This £2.2 billion package of support for business supersedes the £320 million announced on 14 March after the Chancellor’s announcement on 17 March.
Please see the Scottish government website here for further information.
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