The Budget on 11 March 2020 announced a three point plan in response to COVID-19 designed to support public services, individuals and businesses. The Government is going to continue to monitor the situation and stands ready to provide further support, should it be needed. Further support was hinted at on 16th March.
Support for Businesses
Many businesses are expected to experience increased costs or disruptions to their cash flow as a result of COVID-19. The Budget announced a set of measures to provide support to businesses during this temporary period by either reducing their costs or bridging cashflow problems arising from the outbreak, and to protect people’s jobs.
This update summarises the main announcements that affect your business, and if you would like any further information please contact us on 0115 950 8887.
Time to Pay
The government announced that they will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs by potentially agreeing a bespoke Time to Pay arrangement. The aim of these tailored arrangements will give a business the time it needs to pay HMRC to support their recovery while operating through any temporary financial challenges that occur.
We have discussed the process with HMRC and they have advised that the Time to Pay arrangements in relation to COVID-19 are for all taxes including self-assessment, capital gains tax, VAT, PAYE and corporation tax.
If you are likely to suffer financial difficulties paying any of the above taxes please contact us as soon as possible on 0115 950 8887 as we can assist with time to pay arrangements. HMRC deal with arrangement on a case by case basis and we can make contact with HMRC on your behalf.
HMRC have also said they will waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19. Please let us know if you incur any such penalties and we can make the appropriate appeals.
Statutory Sick Pay
Statutory sick pay is generally a cost for the business and not reclaimed from HMRC. The government will support small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs. The government have set eligibility criteria for the scheme as follows:
- this refund will be limited to two weeks per employee
- 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
- 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 should not require employees to provide a GP fit note
- the eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force
- while existing systems are not designed to facilitate such employer refunds for SSP, the government will work with employers over the coming months to set up a repayment mechanism for employers as soon as possible
Eligibility for Statutory Sick Pay (SSP)
The Prime Minister has announced that the forthcoming COVID-19 Bill will temporarily allow SSP to be paid from the first day of sickness absence, rather than the fourth day, for people who have COVID-19 or have to self‑isolate, in accordance with government guidelines. The government will temporarily extend SSP to cover:
- individuals who are unable to work because they have been advised to self-isolate
- people caring for those within the same household who display COVID-19 symptoms and have been told to self-isolate
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 access bank lending and overdrafts. More detailed guidance and how to apply can be found at the following link https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/
The government has said it 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 £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.
Small business grant funding
To support businesses that qualify for Small Business Rates Relief, the government has said that it will provide £2.2 billion of funding for Local authorities in England. This will provide £3,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. The government have said that for a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent. Most properties that are eligible for SBRR will have a lower rateable value, and so this will represent an even greater proportion of their annual rent.
Guidance is due to be provided to local authorities to allow them to prepare, then those eligible can apply for the emergency funding.
Business Rates Reliefs
The government has announced the Business Rates retail discount will be increased to 50% in 2020-21. To support small businesses affected by COVID-19 the government is increasing it further to 100% for 2020-21. The relief will also be expanded to the leisure and hospitality sectors. These temporary measures, taken together with existing Small Business Rates Relief, mean that around 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21. The government has also already announced the introduction of a £1,000 Business Rates discount for pubs with a rateable value below £100,000 in England for one year from 1 April 2020. To support pubs in response to COVID-19 the discount will be increased to £5,000.
Support for Individuals:
The Budget announces measures to support people who are unable to work because of COVID-19.
Support for those ineligible for SSP
The government recognises that self-employed people and employees below the Lower Earnings Limit are not entitled to SSP. The best system of financial support for these people is the welfare system and, in particular, ‘new style’ Employment and Support Allowance and Universal Credit. The government is committed to supporting these groups, and the Budget announces further support by making it quicker and easier to receive benefits:
- ‘New style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice for from the first day of sickness, rather than the eighth day
- people will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a jobcentre
- for the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating according to government advice for duration of the outbreak, ensuring self‑employed claimants will be compensated for losses in income
The government will provide Local Authorities in England with £500 million of new grant funding to support economically vulnerable people and households in their local area. The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes, or through complementary reliefs.
If you would like to discuss any of the matters raised above please do not hesitate to contact us on 0115 950 8887.