Covid-19 - Summary of Measures

UNITED KINGDOM

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is open to all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month per employee. The scheme was initially planned to run for at least 3 months, but has now been extended until the end of October. The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Any UK organisation with employees can apply. This includes charities, recruitment agencies and public authorities. The government does not expect many public sector employers to use the scheme as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the Coronavirus outbreak.

Furloughed employees must have been on the payroll on 28 February 2020 and can be on any type of contract. This includes full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts. With agency employees, the scheme is only available for agency employees who are not

Coronavirus Business Interruption Loan Scheme

The government has launched a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to support primarily small and mediumsized 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 in value.

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

You are eligible for the scheme if: your business is UK based, with turnover of no more than £45 million per year and your business meets the other British Business Bank eligibility criteria.

Support for larger firms

Under the COVID-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible.

The Coronavirus Large Business Interruption Loan Scheme will be made available to enable banks to make loans of up to £25m (the present limit for the smaller scheme is £5m). This will allow firms with an annual turnover of between £45m and £500m access to the 80% government guarantee.

Support for businesses paying tax: Time to Pay service

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.

You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.

Deferring VAT payments

VAT registered businesses can defer any VAT payments due between 20 March 2020 and 30 June 2020. There is no application process required to defer the relevant payment. However, businesses can still choose to pay any VAT due as normal.

It is important to note that this is only a deferral and whilst no interest or penalties will be due on deferred payments, the full amount of VAT due will still need to be paid. If you choose to defer your VAT payment as a result of Coronavirus then you must pay the VAT due to HMRC on or before 31 March 2021.

Business rates support

The Business Rates retail discount in England will be increased to 100% in 2020-21 and expanded to the leisure and hospitality sectors. The rates discount for qualifying pubs will be increased to £5,000. Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21:

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Support for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of up to £10,000 to eligible businesses to help meet their ongoing business costs.

Tax payment helpline

The tax payment helpline fields questions and concerns from any business or self-employed individual worried about paying their tax due to Coronavirus disruption and offers practical help and advice. The phone number for HMRC’s COVID-19 helpline is 0800 024 1222.

For those who are unable to pay due to Coronavirus, HMRC will discuss your specific circumstances to explore:

• agreeing an instalment arrangement
• suspending debt collection proceedings
• cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately

Relaxation of insolvency rules

New insolvency measures will see the temporary suspension of the wrongful trading law during the pandemic. The new rules will apply retrospectively, from 1 March 2020, for three months. This means that company directors can continue to trade without the threat of personal liability. This will allow directors of companies to pay staff and suppliers even if there are fears that the company could become insolvent due to the current, exceptional trading circumstances.

Other changes include a temporary moratorium for businesses undergoing a rescue or restructuring process. During this period, they cannot be placed in administration by creditors and be able to continue buying important supplies - such as energy costs and raw materials. There will also be a new restructuring plan binding on creditors.

Commercial tenants protected from evictions

There is an eviction freeze for commercial tenants who miss rent payments as a result of the coronavirus crisis until 30 June 2020. This can be extended if necessary. The protection applies to commercial leases for commercial tenants in England, Wales and Northern Ireland. There are similar measures in place in Scotland extending the notice period from 14 days to 14 weeks. It is important to note that commercial tenants will still be liable for the rent due.

Statutory Sick Pay measures

Small-and medium-sized businesses and employers can now Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

The eligibility criteria to reclaim SSP is 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 28 February 2020

Self-Employed Income Support Scheme

A list of the scheme features as announced, and published, are as follows:

• Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
• The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period.

To be eligible, the following conditions will be taken into account:

• Applicants must be self-employed or a member of a trading partnership,
• Have lost trading profits due to COVID-19,
• Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
• Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
• Have trading profits of less than £50,000 and more than half of total income from selfemployment. This can be with reference to at least one of the following conditions:
  • Your trading profits and total income in 2018-19,
  • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

Working Tax Credit / Universal Credit

As part of the package of measures to tackle the Coronavirus outbreak, the government has announced that the basic element Working Tax Credit payments will be increased from an expected £1,995 to £3,040 for the 2020-21 tax year starting on 6 April 2020.

There have also been increases in of up to £20 per week in Universal Credit available to many employed and self-employed workers on low incomes or who have become unemployed. This includes an increase in the basic element and the removal of the minimum income floor in a move to benefit the self-employed. The minimum income floor won’t apply to anyone after 6 April 2020. This will last until the Coronavirus outbreak is over.

Deferring Income Tax payments

Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. If you do not wish to take advantage of this deferral you can continue to pay as normal.

Contactless payment limit

The spending limit for contactless card payments increased to £45 (from £30) on 1 April 2020. The change in the limit had been under consideration and has now been expedited as part of the industry’s response to the Covid-19 outbreak.

Hardship Fund

The launch of a new £500 million Hardship Fund in England was announced at Spring Budget 2020 by the Chancellor. The money will go to local authorities in England to enable them to reduce the 2020- 21 council tax bills of working age people receiving Local Council Tax Support.

Councils have also been told they will receive an additional £1.6 billion in funding to enable them to respond to other COVID-19 pressures across the services they deliver, including stepping up support for the adult social care workforce and for services helping the most vulnerable, including homeless people.

Support from Banks and mortgage lenders

A number of banks and other mortgage lenders are offering a moratorium on mortgage repayments to those directly affected by the Coronavirus. This is welcome support for individuals whose income may be diminished by absence from work. Banks will also consider increasing credit card limits and cash withdrawal limits.

If you have any questions regarding this or any of the other initiatives offered to those affected by the current disruption, please contact Graham Speak at gs@clarksonhyde.com.