As a business we have been working on contingency plans to enable our staff and partners to work safely whilst ensuring there is minimal disruption so that we can provide valued support to our clients over the forthcoming months.
HMRC have announced several measures and while some are still in draft (and subject to change on a daily basis) we have provided some more in-depth commentary here to cover the frequently asked questions and provide some more clarity on several areas.
These also include the latest updates announced by the Chancellor of the Exchequer on 17th March 2020 during the daily update hosted by Boris Johnson.
The announcements include a package of £330 billion in support for businesses and further relations to business rates, including increased cash grants.
The measures introduced by the government to support businesses are:
Statutory Sick Pay (‘SSP’) – Employed Persons (Small and medium businesses)
The government will bring forward legislation to allow small and medium sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to Covid-19.
The eligibility criteria for the scheme will be as follows:
- This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28th February 2020
- 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
- Employers should maintain records of staff absences, but employees will not need to provide a GP fit note
- Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators comes into force which was 12th March 2020
- The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
Self-employed workers
People who are not eligible for sick pay as they are not employees, particularly the self-employed, will be able to claim Employment and Support Allowance (‘ESA’) from day one of their illness rather than day eight.
ESA is worth £73.10 a week, or £57.90 for the under-25s. Also, Councils will have access to a hardship fund to help vulnerable people in their area.
Business rates relief - Temporary reliefs to 2021
Hospitality and leisure sectors
The government will increase the Business Rates retail discount to 100% (from 50% under previously announced relaxations) for one year and expand it to the leisure and hospitality sectors.
This is regardless of the rateable value of the property, which is a significant change announced on 17th March 2020.
The types of businesses include:
- Shops (such as florists, bakers, butchers, grocers, greengrocers, jewellers, stationers, off licences, chemists, newsagents, hardware stores, supermarkets etc), charity shops and opticians
- Post offices
- Furnishing shops/display rooms (such as carpet shops, double glazing, garage doors)
- Car/caravan showrooms
- Second-hand car lots
- Markets
- Petrol stations
- Garden centres
- Art galleries (where art is for sale/hire)
- Hair and beauty services (such as hairdressers, nail bars, beauty salons, tanning shops etc)
- Shoe repairs/key cutting
- Travel agents
- Ticket offices e.g. for theatre
- Dry cleaners
- Launderettes
- PC/TV/domestic appliance repair
- Funeral directors
- Photo processing
- Tool hire
- Car hire
- Restaurants
- Takeaways
- Sandwich shops
- Coffee shops
- Pubs
- Bars
- Cinemas
- Certain live music venues
- Hotels
If you qualify, you will need to contact your local authority and also in certain circumstances sign a declaration that you have not received state aid as this could jeopardise your claim for relief.
Further Cash Grants
Properties that qualify for the 100% relief (above) with a rateable value of less than £51,000 will be entitled to receive a cash grant (non-repayable) of up to £25,000 to help bridge fixed costs. Further information will be published on how to access these grants in the coming days.
To find out your rateable value, please visit https://www.gov.uk/correct-your-business-rates
Small businesses (Small Business Rates Relief)
The government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (‘SBRR’).
SBRR applies if:
- Your property’s rateable value is less than £15,000
- Your business only uses one property (in most circumstances)
The additional funding will provide a one-off grant of £10,000 to around 700,000 businesses currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. This again is subject to state aid limits.
All reliefs are subject to State Aid limits, which limits the amount of support available to any business to €200,000 over a rolling three-year period (subject to leaving the EU).
Insurance claims
Businesses should check with their insurance provider if they are covered. Many businesses are unlikely to be covered as most business interruption insurance policies are dependent on damage to property, which will exclude pandemics. Some businesses may have purchased a specific add on relating to notifiable diseases, but some of these will still specify damage to the building or don’t have Covid-19 in their list of specified diseases, which unfortunately is largely the case. Some businesses may have purchased supply chain or denial of access cover, which may meet their needs in this case.
Small and large business grants
Short term loan finance
Large businesses – Covid Corporate Financing Facility (‘CCFF’)
Large businesses who make a substantial contribution to the UK company will be able to apply to the Bank of England. The CCFF will provide funding to businesses by purchasing commercial paper of up to one-year maturity. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.
More details are available at https://www.bankofengland.co.uk/news/2020/march/hmt-and-boe-launch-a-covid-corporate-financing-facility
Small/medium businesses
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch from the week commencing 23rd March 2020 for businesses to access bank lending and overdrafts.
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 (increased from £1.2 million) in value with no interest due for the first 6 months.
We expect that to obtain the finance all businesses will be required to produce cash flow statements to demonstrate the cash need of the business and the immediate requirements it has. We can assist in obtaining the funding or funding for any other purposes.
Applications can be made from the week coming 23rd March 2020. More information including how to apply can be found at https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/
Business payment support service for HMRC taxes
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. The number to call is 0300 200 3835 for business-related matters.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
These businesses can contact HMRC’s new dedicated Covid-19 helpline from 11th March 2020 for advice and support. To ensure ongoing support, HMRC has made a further 2,000 experienced call handlers available to support firms and individuals when needed.
It is expected under standard Time to Pay arrangements that if the arrangement has been correctly agreed, penalties and surcharges should be waived and this should also not affect Gross Status certificates for clients in the Construction Industry Scheme. This is not guaranteed and care must be taken as this could increase cash flow difficulties, so a business loan to pay taxes may be more suitable.
We are here to help clients through a difficult time and please pick up the phone to your local office partner.
There will be further announcements in the next few days and we will provide further communications to our clients and contacts in due course.
Share this article