Corona Information For Businesses as at 27th March 2020
Job Retention Scheme
- Employers can claim a grant of up to 80% of salaries of employees who would have been laid off during this crisis. This is subject to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
- Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change.
- To qualify for this scheme: workers should not undertake work while furloughed.
- Employers submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. The portal is not available yet.
- HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
- Employers can claim for:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
- Workers must have been on your payroll on 28 February 2020.
- The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
- 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.
- There is an updated information page here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Self-employment Income Support Scheme
- You can claim 80% of your trading profits up to £2,500 per month for three months
- It is a grant which means it is not repayable although will have to be accounted for in your next set of accounts
- You must be Self- employed or a member of a partnership
- Your 2019 tax return must have been submitted (although if it hasn’t you have four weeks to do so (23rd April 2020 deadline)
- You must be trading or would be if it were not for the Corona Virus
- You must intend to trade in the tax year 20/21
- You must have made losses due to Covid -19
- Your trading profits must be less than £50,000 (this is an average of last three years profits) and more than half of your total taxable income
- The grant will be paid directly into your bank account in one payment
- You cannot apply for this scheme HMRC will contact you if you are eligible
- You can read full government information here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
You do not need to make any VAT payments during the period 20 March 2020 to 30 June 2020.
- This is a deferral of tax and not an exemption.
- This is an automatic offer with no applications required.
- VAT deferred during this period will have to be paid by the end of 2020.
- It will still be necessary to submit all VAT returns as normal.
Anyone in the Self Assessment tax regime can defer payment of their July 2020 payment on account
- Payment will be deferred until the 31 January 2021.
- This is an automatic offer with no applications required.
- It will still be possible to have the payments on account reduced for the July payment if you expect profits to be reduced
IR35 & off-payroll working
- HM Treasury have said they intend to postpone the introduction of the Off-payroll working rules to the private sector.
- The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date is now be deferred to 6 April 2021.
- Existing small business rate relief continues to apply, this provides full relief for businesses using a single property with a rateable value of £12,000 or less.
- A business rate holiday applies to retail, hospitality and leisure businesses in England for the 2020/21 tax year.
- Pubs are given a rates discount of £5,000.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
Cash grants: via local authorities
- A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
- A one-off grant of £10,000 to around 700,000 businesses currently eligible for SBRR or Rural Rate Relief.
Funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme will be provided shortly.
The situation in Scotland is slightly different for Business rates and the local authority grants. I have summarised the situation in Scotland below:
The non-domestic rates reliefs and grant funding measures announced by the chancellor only apply only in England. They do not apply in Scotland.
- 1.6% rates relief for all non-domestic properties.
- 100% rates relief for retail, hospitality and leisure businesses
- Retail, hospitality and leisure businesses with a rateable value between £18,001 and up to and including £50,999 will be able to apply for a one-off grant of £25,000.
- If your business is in receipt of the Small Business Bonus Scheme Relief you can apply for a one off £10,000 grant.
- You can also get this grant if you applied for Nursery Relief, Business Growth Accelerator or Disabled Relief but are eligible for the Small Business Bonus Scheme.
- You can only apply for one grant – even if you own multiple properties.
- You will need to fill out an application for these grants which will be available on your local council website
SMEs: Coronavirus Business Interruption Loan Scheme
- A new Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank.
- This is aimed at small and medium-sized businesses to access bank lending and overdrafts.
- The scheme is covered by the government and 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.
- The scheme will be open for six months with loan terms of up to 3 years.
- Businesses can access the first twelve months of that finance interest-free, as the government will cover the first twelve months of interest payments.
- To be eligible businesses must:
- Be UK based with annual turnover of up to £45 million.
- Generate more than 50% of their turnover from trading activity.
- Have a borrowing proposal which would, were it not for COVID-19, be considered viable by the lender to enable your business to trade out of any short-to-medium term difficulties. The scheme became available from 23 March 2020. Details of the first set of lenders providing access to the scheme can be found here.
- More details will be announced in the coming days. Businesses are advised to approach their existing lender and to apply through the lender’s own website in the first instance. They can then try other lenders if their own lender cannot help.
Business taxes: Time to Pay
- 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.
- It is essential to contact HMRC and make a Time To Pay agreement before the tax debt becomes due.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Standard business interruption policies are unlikely to cover a pandemic. You need to check your policy wording and contact your insurer.
HMRC late payment interest rate cut
HMRC interest rates for late payments will be revised after the Bank of England interest rate reduction to 0.1%.
These changes will come into effect on:
- 30 March 2020 for quarterly instalment payments
- 7 April 2020 for non-quarterly instalments payments
Repayment interest rates remain unchanged.
The rate for underpayments of quarterly instalments is reduced to 1.25% from 23 March 2020. Added 24/03/2020.
Landlords & Tenants
New measures have been announced which apply to private or social accommodation. Added 21/03/2020.
- Landlords will not be able to start proceedings to evict tenants for at least a 3 month period.
- Landlords whose tenants are experiencing financial difficulties due to coronavirus will receive a 3 month mortgage payment holiday.
- At the end of this period, landlords and tenants are expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.