COVID-19: UK Emergency Package for Businesses
To support businesses during the COVID-19 pandemic the British government has introduced an emergency package that includes the following financial measures.
Statutory Sick Pay (Sick Pay)
Employers now have to pay statutory sick pay (SSP) for employees that have been infected with the virus/or have been put in quarantine from the first day they’re self-isolating and cannot work. The British government has pledged that companies with fewer than 250 employees will be eligible to reclaim the SSP paid in the first two weeks.
Employers with up 250 employees are eligible (Effective date: 28.02.2020)
Action point: Contact us, so we can submit the reimbursement request to HMRC.
The British government has introduced a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. This exemption will apply to your next council tax bill in April 2020 (April 2020 – Council Tax bill).
Businesses in the retail, hospitality and leisure sectors, such as shops, restaurants, cafes, cinemas, hotels, etc.
Action point: Contact your local council for further information.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The British 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 6 months of that finance interest-free, as the government will cover the first 6 months of interest payments.
Your business is based in the UK, with a turnover of no more than £41 million per annum.
Your business meets the other British Business Bank eligibility criteria.
Action point: Talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow. The scheme is open now.
The chancellor announced that the UK scheme to pay wages of workers on leave because of coronavirus will be extended to October
The chancellor confirmed that employees will continue to receive 80% of their monthly wages up to £2,500.
But he said the government will ask companies to “start sharing” the cost of the scheme from August.
He also said that from August, the scheme would continue for all sectors and regions of the country but with greater flexibility to support the transition back to work.
Employers currently using the scheme will then be able to bring furloughed employees back part-time.
Any company seeking to cut more than 100 jobs must run a 45-day consultation, meaning 18 May was the last date employers could start this process before the furlough scheme ended in June.
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.
pays tax to the UK government
has outstanding tax liabilities
Action point: Contact us as soon as possible, so that we can contact HMRC in good time.
VAT payment holiday
On 20 March 2020, the Chancellor announced that no business will be required to make VAT payments for the next VAT quarter: this means that no VAT payments will be required from any business until the end of June 2020. The aim is to help the immediate cash flow of businesses.
It should be noted that this is just a deferral of the VAT due for the quarter and businesses will have to pay the appropriate amount of deferred VAT by the end of 2020/21 – although there should be no interest charges. VAT return for the quarters (or months) must be submitted as normal throughout the deferral period.
Action point: Contact us if your business wants to defer VAT payments.
Supporting the self-employed
Self-employed individuals who are normally required to make a self-assessment tax payment on account on 31 July 2020 will not now need to make this payment – it can be deferred until 31 January 2021.
Local Authorities will also operate a Hardship Fund for families and businesses in financial difficulties: support for individuals is expected to take the form of Council Tax relief.
On 17 March, the Chancellor also announced that mortgage lenders would offer an initial three-month mortgage payment holiday for those in financial need as a result of the Covid-19 crisis. This payment holiday can also be claimed by buy-to-let landlords.
In addition, the government has delayed the introduction of the off-payroll labour/IR35 reforms for private sector businesses until 6 April 2021.
Self-employed individuals will still need to consider their existing IR35 obligations when accepting work, but a delay in placing new obligations onto engagers will prevent further disruption to the contractor market for the 2020/21 tax year.
Action point: Contact us if you require assistance in making a claim.
Coronavirus Job Retention Scheme
The key aspect is that employers that find it necessary to lay employees off temporarily on furlough can apply to HMRC for a grant to help retain those staff. The grant will cover up to 80% of the employees’ salaries to a maximum of £2,500 per employee per calendar month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period which is backdated to 1st March 2020. The government is intending to make grants available to employers by the end of April. We are awaiting details from HMRC on how to apply and how the specifics of which employees will qualify.
It would appear the grant is targeted at supporting businesses that have had to or are thinking of asking employees to take a temporary furlough and does not appear to be intended to provide support for employees who remain at work as normal.
We are awaiting details from HMRC on how to apply for the grants and specific confirmation of which employees will qualify.
Action Point: Contact us if you anticipate having to lay off or furlough employees.
Tax – Improved Time To Pay arrangements
The government has announced extra resources to assist those struggling to pay their tax liabilities and in financial distress.
Support will include agreeing a bespoke Time To Pay arrangement with HMRC. This will help those struggling with cash flow and allow those who enter into arrangements to spread liabilities owed over a pre-agreed period. In addition, HMRC will waive late payment penalties and interest where businesses experience administrative difficulties contacting HMRC or paying taxes due to COVID-19.
It will be important to get upfront agreement from HMRC before a payment deadline. There is also a commitment to suspend debt collection proceedings.
Action point: Contact us if you need a time to pay arrangement.
HMRC and Companies House: online filing extension
It has been well publicised that, as of today, businesses will be able to apply to Companies House for a 3-month extension on filing their accounts. All companies who apply for an extension as a result of COVID-19 will automatically be granted the extension without needing to provide evidence.
Less well publicised is that the same extension will apply to submission of the corporation tax return. A company is not liable to a flat rate penalty for late submission of a tax return if the return is delivered no later than the last day for the delivery of those accounts to the registrar of companies.
Please note: this only protects the company from the fixed penalty. The tax-geared penalty will arise 18 months after the return period, if any tax remains unpaid at the 18-month date.
Action point: Contact us if you require an extension to file your accounts.
If you have any questions, please do not hesitate to contact our client support team on 020 3000 6776.