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Coronavirus (COVID-19) supporting you and your business

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At 5pm on Friday 20 March the Chancellor set out a further package of temporary measures to support businesses and employees. In this document, these measures have been clearly summarised by the Mercer & Hole team to help you and your business.

The Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.  These employees are known as ‘furloughed workers’.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

In order to access the scheme employers will need to;

  • designate affected employees as ‘furloughed workers,’ and notify the employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

Deferring VAT and Income Tax payments

For VAT, the deferral will apply to all UK businesses from 20 March 2020 until 30 June 2020.

This is an automatic offer; businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 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.

For Income Tax Self-Assessment for self-employed individuals, payments due on the 31 July 2020 will be deferred until the 31 January 2021. No penalties or interest for late payment will be charged in the deferral period.

See later regarding the HMRC Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

This is an automatic offer with no applications required.

Support for businesses to reclaim the cost of sick pay for employees

Where a business is UK based and is small or medium-sized and employs fewer than 250 employees as of 28 February 2020 a rebate scheme is being developed. Further details will be provided in due course once the legislation has been passed. Eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks Statutory Sick Pay (SSP) per eligible employee who has been off work because of COVID-19
  • 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 and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone who has symptoms can get a note from the NHS website
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

Support for businesses that pay business rates

Business rates holiday for retail, hospitality and leisure businesses

A business rates holiday will be introduced for retail, hospitality and leisure businesses in England for the 2020/21 tax year.  Businesses that received the retail discount in the 2019/20 tax year will be rebilled by their local authority as soon as possible.

Properties that will benefit from the relief will be occupied hereditaments (any kind of property or right relating to property that can be inherited) 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 & boarding premises and self-catering accommodation.

No action is required to access the relief and this will apply to the next council tax bill in April 2020.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses based in England in the retail, hospitality and leisure sectors with a cash grant.

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

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

Properties that will benefit from the relief will be occupied properties 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.

Local authorities will contact those eligible for this grant.  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 based in England that already pay little or no business rates because of Small Business Rate Relief, Rural Rate Relief and Tapered Relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Local authorities will write to businesses eligible for this grant.  Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch week commencing 23 March to support primarily small and medium-sized businesses to access bank lending and overdrafts.  The scheme will be available for UK based businesses with turnover of no more than £45 million per year meeting the other British Business Bank eligibility criteria.

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.

The full rules of the scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

Support for larger firms through the COVID-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.  All UK businesses are eligible and the scheme will be available early in the week beginning 23 March 2020.  More information is available from the Bank of England.

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.  To discuss arrangements, businesses should call HMRC’s dedicated helpline: 0800 0159 559.

We will be providing daily updates for you on www.mercerhole.co.uk/insights/

Insurance

The government and insurance industry confirmed on 17 March 2020 advice to avoid pubs, theatres, cafes, etc. is sufficient to make a claim as long as all other terms and conditions are met and the businesses have cover for both pandemics and government-ordered closure.  Many businesses may not be covered, as standard business interruption insurance will exclude pandemics so checking terms and conditions is key.

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