Chancellor Rishi Sunak has announced some major economic measures to help businesses and individuals deal with the Corona Virus crisis.
We have set out below the headlines of what was said including links to relevant articles, help sheets and support lines. Please note that some of the HMRC/Government portals have not yet been updated. We will update this page as soon as they are.
At a glance
Announcements cover the following topics:
- Coronavirus Job Retention Scheme
- Deferring VAT and Income Tax payments
- Statutory Sick Pay (SSP)
- IR35: off-payroll working & SSP
- Self-employed and low earners
- Business rates
- Cash grants
- SMEs: Coronavirus Business Interruption Loan Scheme
- Larger business: COVID-19 Corporate Financing Facility
- Business taxes: Time to Pay
- Insurance
- Statutory Residence Test (SRT)
- HMRC late payment interest rate cut
Overview of the measures
Coronavirus Job Retention Scheme
- HMRC will reimburse 80% of salaries of employees who would have been laid off during this crisis. This is subject to a cap of £25,000.
- Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change.
- Employers submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.
- HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. We will update this page as and when the portal is available
VAT
A payment deferral applies from 20 March 2020 to 30 June 2020.
This is a deferral of tax and not an exemption: effectively, this is a fast way to provide business with emergency funding.
- This is an automatic offer with no applications required.
- Businesses will not need to make a VAT payment during this period.
- Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.
- VAT refunds and reclaims will be paid by the government as normal.
Income Tax
The self-employed may defer payment of their self-assessment payments on account due on the 31 July 2020.
- Payment will be deferred until the 31 January 2021.
- This is an automatic offer with no applications required.
- No penalties or interest for late payment will be charged in the deferral period.
We note that businesses may still make claims to reduce payments on account: if you know that your profits for the current or next tax year are down,
Statutory Sick Pay (SSP)
- SSP is paid to eligible employees by their employers.
- SSP is not available to those earning below the Lower Earnings Limit of £118 per week, see Sick Pay (below).
The government said that it will bring forward legislation to allow small and medium-sized businesses and employers to reclaim SSP paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- SSP will be payable from day one instead of day
four for affected individuals.
- HMRC’s SSP calculator does not appear to have been yet updated.
- SMEs may reclaim up to two weeks’ SSP expenditure per eligible employee who has been off work because of COVID-19.
- The rate of SSP, for working a five-day week is currently £95.85 per week.
Key essentials for employers
- An SME is an employer with fewer than 250 employees, the size of an employer will be determined by the number of people they employed as of 28 February 2020.
- Employers should maintain records of staff absences and payments of SSP.
- Employees will not need to provide
a GP fit note.
- People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor.
- This can be used by employees where their employers require evidence.
- Further details will be confirmed shortly.
- The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home/self-isolating comes into force.
- How to access the scheme
- A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.
IR35: Off-payroll working & SSP
- Following the government’s announcement to postpone the introduction of the off-payroll working rules to the private sector, all workers providing their labour via their own Personal Service Companies (PSCs) to private sector end clients, will be entitled, as they are currently in 2019-20 above to claim SSP under the current rules, via their own PSC.
- The extension of the off payroll working rules was due to commence on 6 April 2020. The start date will now be deferred to 6 April 2021.
Self-employed and low earners
Sick Pay
- Self-employed individuals and people earning below the Lower Earnings Limit of £118 per week are not eligible for SSP.
- These individuals can make a claim for Universal Credit or Contributory Employment and Support Allowance https://www.gov.uk/employment-support-allowance/how-to-claim
- Special measures apply for the duration of the
virus outbreak.
- The requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice. This is to ensure self-employed claimants will receive support.
- People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.
- A contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25. This may be claimed by eligible people affected by COVID-19 or self-isolating in line with advice from Day one of sickness, rather than Day eight.
Business Rates
- 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 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.
Eligibility
You are eligible for the grant if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
How to access the scheme
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
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 releif. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
Eligibility
You are eligible if:
- your business is based in England
- you are a small business and already receive SBBR and/or RRR
- you are a business that occupies property
How to access the scheme
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
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.
- Businesses can access the first six months of that finance interest-free, as the government will cover the first six months of interest payments.
Further details, including on the lenders providing access to this scheme will be announced in the coming days, and the scheme will be available from early week commencing 23 March 2020.
Larger business: COVID-19 Corporate Financing Facility
- The Bank of England has announced a new lending facility for larger businesses to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt.
- This will support companies which are ‘fundamentally strong’ (we assume more detail will be provided as to the criteria to be met) to enable them to continue financing their short-term liabilities.
- The Bank will also support corporate finance markets overall and ease the supply of credit to all firms.
Further details, including on how to access this funding will follow in the coming days, and the scheme will be available from the week commencing 23 March.
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.
Insurance
Standard business interruption policies are unlikely to cover a pandemic. You need to check your policy wording and contact your insurer.
Other immediate changes applicable for direct and indirect taxes
Statutory Residence Test (SRT)
- For the purposes of day counting for SRT. If you:
- are quarantined or advised by a health professional to self-isolate in the UK as a result of the virus
- find yourself in a ‘lockdown’ situation as a result of the virus
- are unable to leave the UK due to the closure of international borders
- are asked by your employer to return to the UK temporarily as a result of the virus
HMRC consider that the circumstances are ‘exceptional’.
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.
