COVID-19 Support Measures - Tailored for clients
UPDATED 16 NOVEMBER 2020
DISCLAIMER: YOU SHOULD CHECK THE ACCURACY OF ANY INFORMATION PROVIDED WITH YOUR ACCOUNTANT
If you would like to check up on the latest information, please visit the government’s website (here) which is being updated as further details/measures are announced.
Local county councils may be offering additional support and so it may be worth searching online, or contacting them directly, to see if your local council has have made any announcements. South Oxfordshire council have not yet announced any additional measures, but their website on the virus can be viewed here. The Government’s Business Support Helpline (0300 456 3565) is also available for businesses looking to speak directly to an advisor about the impact of Coronavirus.
Summary
Government backed business loans (first 12 months interest free)
Statutory sick pay relief
Coronavirus Job Retention Scheme (CJRS)
Job support scheme
Kickstart scheme (Encouraging new jobs for 16-24 year olds)
Self-employed
12 month business rate relief (retail, hospitality and leisure businesses)
Grants for businesses
Green homes grant
VAT payment deferral
Temporary VAT cuts (hospitality and leisure businesses)
Income tax payment deferral
Deferral of tax payments due
Off payroll working (IR35) changes due to come in April 2020 have been delayed until April 2021
Protection from eviction for commercial tenants
1 Government backed business loans (first 12 months interest free)
1.1 Coronavirus Business Interruption Loan Scheme
Banks are offering new loans to businesses to help them through the difficult trading period. The banks are still assessing businesses as to their eligibility, but with the government promising to pay to the banks 80% of any loans that are not repaid, it is hoped that a significant number of applications will be successful. Finance terms can be arranged from three months up to 10 years (previously 6 years). The government have also agreed to pay the first 12 months of interest on the loans, as well as any lender-levied fees.
Further details on the banks offering the loans can be found here.
1.2 Bounce back loans – Rebranded “Pay as You Grow” loans
The Coronavirus Business Interruption Loan Scheme was not as successful as the government initially hoped, with banks still refusing to lend to a significant number of businesses. A new loan scheme has therefore been introduced, with the following features: -
the government will back 100% of the loan’s value
the government will pay the first 12 months’ interest on the loans
the interest rate on the loan will be 2.5%
there will be no charges associated with setting up the loan
the loans can be repaid early without early repayment fees
the repayment term is 10 years (previously 6 years)
no repayments will be due within the first 12 months
the amount a business can borrow is up to 25% of its turnover, up to a maximum of £50k
the scheme will be open for applications until at least 30 November 2020 (previously 4 November 2020)
lenders are not permitted to require personal guarantees
Business who have taken bounce-back loans can move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments) without it affecting their credit rating.
Limited company’s, partnerships and sole trader businesses are all eligible for the loan, however, the loan can only be used “to provide economic benefit to the business”, and not for personal purposes. If the business was in financial difficulties at 31 December 2019, then it must confirm it does not breach de minimis state aid restrictions and will not be used to support export-related activities.
The loans are available now, and I understand that they are being processed quite quickly. The list of lenders can be found online here, and the government are requesting that the business’s own banking provider is used where possible. Also where possible, applications should be made online.
1.3 New loan scheme
A new loan scheme is being devised for January 2020.
2 Statutory sick pay relief
Statutory sick pay is currently £94.25 per week and is usually an employment cost that the employer is required to bear. From 13 March 2020, however, the government will reimburse this cost to businesses where the employee has been off as a result of Coronavirus, but only for the first two weeks of their absence.
To qualify for SSP, an employee must usually have been ill for at least 4 days and be earning at least £118 per work (on average). Since 13 March 2020, however, an employee can receive this from the first day they are off if they are self-isolating because of Coronavirus (even if they are not sick themselves). Employers should use their discretion and respect the medical need to self-isolate in making decisions about sick pay. Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.
Anyone not eligible to receive sick pay (eg zero hour contacts or not earning £118 per week on average) is able to claim Universal Credit and/or contributory Employment and Support Allowance.
Details on how to claim the repayment can be found online here.
More information for employers can be found online here.
3 Coronavirus Job Retention Scheme (CJRS)
UPDATE: The scheme has been extended to at least 31 January 2020, with the government paying 80% of wages up to a cap of £2,500 from 1 November 2020. Employers will pay any employer NIC and pension contributions arising.
General key points: -
Employees being claimed for will be unable to carry out any work for the business during the period that they are being claimed for (except for training)
Employers are required to write to each employee they are claiming for under the scheme to confirm to the employee that they have been put on a leave of absence.
For salaried employees, the amount claimable will be based on their salary as at 28 February 2020
For variably paid employees, the amount claimable will be the higher of: -
- their average earnings since 1 April 2019
- the amount in the same month of the previous year
Claims can be made up to 14 days in advance of payrolls being processed
The £1,000 Job Retention Bonus will no longer be paid in February 2021 and an alternative retention incentive will be put in place at the appropriate time.
Claims for October 2020 are required to be submitted by 30 November 2020
Claims for November 2020 and later months, will need to be submitted by 14th of the following month. For example, claims for November 2020 will be required to be submitted by 14th December 2020.
For claim period starting after 1 November 2020, you can claim for employees who were employed on 30 October 2020
Flexible furloughing key points: -
From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time, while still being able to claim CJRS grant for their normal hours not worked.
Employers can still claim the grant for the hours their employees are not working calculated by reference to their usual hours worked
Employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing
Employer contribution key points: -
March to July 2020 - The government will pay 80% of wages up to a cap of £2,500, including any employer NIC and pension contributions arising
August 2020 – The government will pay 80% of wages up to a cap of £2,500. Employers will pay any employer NIC and pension contributions arising
September 2020 – The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay 10% of wages to make up 80% total up to a cap of £2,500, as well as any employer NICs and pension contributions arising.
October 2020 - The government will pay 60% of wages up to a cap of £1,875. Employers will pay 20% of wages to make up 80% total up to a cap of £2,500, as well as any employer NICs and pension contributions arising.
November 2020 to January 2021 - The government will pay 80% of wages up to a cap of £2,500. Employers will pay any employer NIC and pension contributions arising.
February 2020 – To be reviewed in January 2021
Full details can be read online (here).
It has been confirmed that directors are able to claim under the scheme and still carry out statutory work (work required by law). Many small companies will also need to keep in touch with suppliers and customers throughout the period, however, and it is unclear whether HMRC will allow directors carrying out such work to claim under the scheme. Given that there is no other income support available to such directors, not allowing directors to do this does seem to be unreasonable. The ICAEW has stated that it is their view that in such times as we find ourselves, a pragmatic view should be taken.
Should a director wish to continue to do revenue generating work during this period, they will not be entitled to claim under the scheme for their salary. Directors will therefore need to make a decision as to whether to: -
Continue revenue generating activities and forego being able to claim for their salary under the scheme
Cease revenue generating work and just claim for 80% of their salary
4 Job support scheme (JSS)
The JSS will replace CJRS, however this has now been indefinitely postponed.
Main points: -
For the time worked, employees must be paid their contracted wage. This will be paid for by the company.
For time not worked, the employee will be paid up to two-thirds of their usual wage, subject to a cap of £1,666. This will be paid for by: -
- 92.5% by the government (61.67% of the total hours not worked)
- 7.5% by the company (5% of the total hours not worked)
The company will cover any employer NICs and auto enrolment pension contribution on the salary
Employers will be able to make a claim online through Gov.uk from 8 December 2020. They will be paid on a monthly basis.
Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Qualifying employees: -
Works at least 20% (previously one third) of their usual hours
On the payroll on 23 September 2020
It includes employees on zero hour contracts
The employee doesn’t necessarily need to have been previously furloughed
There has still been no firm guidance on whether the scheme will to company directors.
Full details can be read online here.
5 Kickstart scheme
Aimed at 16-24 year olds who are on Universal Credit and are deemed to be at risk of long-term unemployment. Businesses will be reimbursed 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
6 Self-employed
A further two taxable grants have been announced: -
The first to cover November 2020 to January 2021 will be based on on 80% (previously 55%, 40% and 20%) of average monthly trading profits, capped at £7,500 (previously £5,160, £3,750 and £1,875). Further details to be announced in due course.
The details of the second grant, covering February to April 2021 are to be announced in due course.
January 2021 Grant – Key points: -
To claim the grants you must: -
- have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although you do not have to have claimed the previous grants)
- declare that you intend to continue to trade
- Either: -
- currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus
Any amount you receive will be taxable as trading income in the tax relevant year
It does not apply to anyone who trades through a limited company
The grants will be subject to income tax and national insurance contributions
The grant should be available from 30 November 2020
The significant difference between the new grants and the earlier grants is that you must be experiencing reduced demand as a result of the virus. It is no longer sufficient to only have been impacted by the effects of the virus.
Full information of the details announced can be read online here.
Self-employment people may also be able to claim Universal Credit and/or contributory Employment and Support Allowance where they cannot work as a result of Coronavirus. My understanding is that this is means tested, but payments can be as much as £1,500 per month if a “housing payment” is also available. Please follow the links given for details on how to claim.
Please also see section 9, 10 and 13 below on deferring tax payments.
7 12 month business rate relief (retail, hospitality and leisure businesses)
Business’s in the retail, hospitality or leisure sectors who pay business rates will not be required to pay these rates from 1 April 2020 to 31 March 2021.
I have spoken with the South Oxfordshire County Council and some guidance has already been issued to them on this that can be read online here. They have said that county councils will have some flexibility on who will be eligible, and so if you feel that you may be eligible it would be worth pursing it with your local county council.
Any businesses who it will clearly apply to should have their 2020-21 bill from their local county council automatically reissued in the next few weeks.
8 Grants for businesses
8.1 Paying little or no business rates
Business’s that pay little or no business rates due to receiving “small business rate relief” will be entitled to a one off grant of £10,000. This money should be available to distribute in April, and if you are eligible your local authority should be in touch with you to arrange payment.
It has been confirmed that it will not apply to businesses who operate solely from a home office. It will, however, apply to holiday lets.
8.2 Business’s with a rateable value of between £15,000 and £51,000
Retail, hospitality and leisure businesses with a rateable value of between £15,000 and £51,000 will be entitled to a £25,000 grant. Again, this money should be available to distribute in April, and if you are eligible your local authority should be in touch with you to arrange payment.
8.3 Local business grant funds scheme
A discretionary fund of up to £617m has been set up to accommodate certain small businesses previously outside the scope of the business grant funds scheme. This additional fund is aimed at small businesses with ongoing fixed property-related costs, particularly businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates. Local authorities may, however, choose to make payments to other businesses based on local economic need. If you believe you may qualify you should contact your local county council. A good starting point for businesses in South Oxfordshire would be the South & Vale Business Support page here.
8.4 Hospitality, accommodation and leisure sector
Designed to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by the restrictions on socialising. Local authorities (LAs) will receive funding to grant to hospitality, hotel, B&B, and leisure businesses in their area.
LAs will receive a funding amount that will be the equivalent of:
For properties with a rateable value of £15,000 or under, grants of £934 per month.
For properties with a rateable value over £15,000 and below £51,000, grants of £1,400 per month.
For properties with a rateable value of exactly £51,000 and over, grants of £2,100 per month.
LAs will receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which may not be in the business rates system.
Local authorities have the freedom to determine the precise eligibility criteria for these grants in their local areas. The guiding principle for local authorities is to use the funding to support businesses which have not been legally required to close, but which are nonetheless severely impacted by reduced demand caused by Tier 2 restrictions on socialising.
Some areas have been subject to restrictions on socialising for several months, before the tiering system was introduced. Funding for these areas will be backdated until the point at which these restrictions began.
Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter case support is being provided through business support packages provided to Local Authorities as they move into the alert level. The government is working with local leaders to ensure the Alert Level very high packages are fair and transparent.
8.5 Local Restrictions Support Grant
Eligibility - Your business may be eligible if it:
is based in England
occupies property on which it pays business rates (and is the ratepayer)
has been required to close because of the national restrictions from 5 November to 2 December 2020
has been unable to provide its usual in-person customer service from its premises
For example, this could include non-essential retail, leisure, personal care, sports facilities and hospitality businesses. It could also include businesses that operate primarily as an in-person venue, but which have been forced to close those services and provide a takeaway-only service instead.
You cannot get funding if:
you can continue to operate during the period of restrictions because you do not depend on providing direct in-person services from your premises (for example solicitors)
you have chosen to close, but have not been required to close as part of national restrictions
you have exceeded the permitted state aid limit
You must notify your local council if your situation changes and you no longer meet the eligibility criteria.
Amount of grant: -
If your business has a property with a rateable value of £15,000 or less, you may be eligible for a cash grant of £1,334 for each 28-day qualifying restrictions period.
If your business has a property with a rateable value over £15,000 and less than £51,000, you may be eligible for a cash grant of £2,000 for each 28-day qualifying restrictions period.
If your business has a property with a rateable value of £51,000 or above, you may be eligible for a cash grant of £3,000 for each 28-day qualifying restrictions period.
How to apply: -
Visit your local council’s website to find out how to apply
9 Green homes grant
The government will pay a grant of at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household.
For lower income earners, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
10 VAT payment deferrals
VAT payments falling due between 20 March 2020 and 30 June 2020 will be deferred, and will instead be due on 31 March 2021. This is an automatic offer and no application is required. Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Businesses should continue to file their VAT returns by the due date.
Instead of paying the full amount by 31 March 2021, you can make smaller payments up to 31 March 2022. No interest will be charged on the late payments, however, you will need to opt-in to the scheme online.
11 Temporary VAT cuts (hospitality and leisure businesses)
From 15 July 2020 to 31 March 2021 (previously 12 January 2021) the rate of VAT will be reduced to 5% on the supplies of: -
food and non-alcoholic drinks for consumption on your premises (eg restaurants, pubs, bars, cafés and similar premises)
accommodation
admission to attractions
Full details can be read here.
12 Income tax payment deferral
Tax payers who make payments on account towards the following years tax liability will not be required to pay the second payment on account until 31 January 2021 (usually due on 31 July 2020). This is an automatic offer and no application is required. You do not need to be self-employed to be eligible for the deferment.
Taxes due by 31 January 2021 can now be deferred to be paid in 12 monthly instalments, provided that the amount outstanding does not exceed £30,000. This means the final payment would not be due until January 2022. The tax liabilities that can be deferred as part of this consist of: -
Second POA 2019/20 (originally due 31 July 2020)
Balancing payment 2019/20
Capital gains tax 2019/20 (if not paid under 30-day rule)
First POA 2020/21
Unlike the deferral in place on 31 July 2020, the taxpayer will have to apply. Apply by calling HMRC on 0300 200 3835, or online here.
13 Deferral of tax payments due
All businesses and self-employed people in financial distress may be eligible to defer the date that the tax is due.
If you have missed a tax payment or you might miss your next payment due to Coronavirus you should call HMRC on 0300 200 3835 to discuss a payment plan.
14 Off payroll working (IR35)
From April 2020, changes were due to come in that would move the risk of being caught by the IR35 legislation from the contractor on to the client in a lot of instances, however, these changes have now been delayed until April 2021. This change had meant that a lot of company’s were forcing their contractors to become employees of the company, however, the delay to the change being implemented may mean that contractors are able to get their clients to agree to them staying as contractors for another year.
15 Protection from eviction for commercial tenants
These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. This is not a rental holiday. All commercial tenants will still be liable for the rent.