COVID-19: The Government’s Help for Business
The government has announced a package of proposals aimed at supporting businesses and helping them to survive the current disruption caused by COVID-19 (coronavirus). The support offered is quite unprecedented in its scale and includes:
- Help with statutory sick pay (SSP)
- Support specifically for businesses in the retail, hospitality and leisure sectors
- Cash grants for businesses that pay little or no business rates
- A Job Retention Scheme
- Support through a Coronavirus Business Interruption Loan Scheme
- Deferral of tax payments
- Additional help for the self-employed
Statutory Sick Pay (SSP)
Several changes have been announced to the SSP scheme.
SSP is normally payable only to those employees who are absent from work due to incapacity. That has now been extended to cover absent individuals, and not working from home, because of self-isolation in accordance with guidance from the public health authorities. For clarity, if they are working from home, even though self-isolating, they are entitled to be paid their salaries in the normal way.
Usually, SSP is payable from the fourth day of absence. For those affected by coronavirus and self-isolating, the entitlement is paid SSP will start on day one.
Employers cannot normally reclaim any SSP that they pay to their staff.
The government will now refund up to two weeks’ SSP for any employee off work because of COVID-19. Any business with fewer than 250 employees (as at 28 February 2020) will be eligible for the refund.
Support for the retail, hospitality & leisure sectors
Businesses in the retail, hospitality and leisure sectors will benefit from a business rates holiday for 2020-21. Properties eligible are those used wholly or mainly as shops, restaurants, cafes, drinking establishments, cinemas, live music venues or premises used for assembly and leisure. As well as hotels, guest and boarding premises and self-catering accommodation. There will be no need for businesses to take any action to claim this relief; local authorities will issue revised rates bills in due course.
Businesses operating from smaller premises (those with a rateable value of between £15,000 and £50,000) will receive a cash grant 0f £25,000. This will be paid by local authorities.
Cash grants for businesses that pay little or no business rates
Businesses that currently benefit from Small Business Rates Relief or Rural Rate Relief will be eligible to receive a cash grant of £10,000. Again, there is no need for any application process; each eligible business should be contacted by their local authority.
Payments should start in April 2020.
Job Retention Scheme
The government is keen to ensure that people are not made redundant because of the crisis and that they retain jobs to which they can go back, once normality returns. It is, therefore, offering to meet up to 80% of the wages of employees who would otherwise have been laid off, up to a maximum of £2,500 per month.
Employees will need to be designated as “furloughed workers” and notify HMRC of their details through a new online portal. The employees will need to be notified of this change to their status. Employers will need to exercise some caution since any change is still subject to employment law and the terms of individual contracts of employment.
The reimbursement will be made by HMRC, which is urgently working to set up a system to do so, as existing systems are not geared to making payments to employers.
The Job Retention Scheme starts with effect from 1 March 2020.
Where redundancy is unavoidable but the employer is struggling to find the money to pay redundancy pay, the government has an existing financial difficulty scheme which enables an employer to obtain an interest-free loan.
To access this scheme an employer needs to show that the business will be able to survive and retain at least some jobs.
The Coronavirus Business Interruption Loan Scheme
The government has introduced a Coronavirus Business Interruption Loan Scheme to support small and medium-sized businesses. Under the scheme the government will give lenders a guarantee of 80% of each loan, to back loans of up to £5 million. This is expected to give lenders the confidence to lend.
There will be no charge for providing the guarantee. Additionally, the finance will effectively be interest-free for the first twelve months, as the interest will be paid by the government.
To be eligible businesses must be UK based, and with an annual turnover of no more than £41 million, and meet the eligibility laid down by the British Business Bank. There are initially 40 finance providers accredited to provide the scheme, including all the major banks.
The scheme is available on from23 March 2020.
Deferral of tax payments
HMRC’s time to pay schemes is available to all UK businesses suffering financial distress. The arrangements are agreed on an individual, case by case basis, and tailored to meet each business’s specific circumstances and their level of liabilities.
Any business which has missed a payment due to COVID-19 should contact the HMRC dedicated helpline on 0800 0159 559.
In his latest announcement, the Chancellor has said that the next quarter’s VAT payment will be deferred until 30 June. In short, no business will pay VAT until that date. Businesses will then be given until the end of the 2020/21 tax year to meet any liabilities that have accrued during that period. This scheme is automatic and there is no need to apply. VAT refunds will be paid as usual.
Of particular help to the self-employed, self-assessment instalments due on 31 July will be deferred until 31 January 2021, with no interest or penalties for late payment. Again, this is automatic and no application is necessary.
Further help for the self-employed
The welfare system has never been particularly helpful to self-employed people who fall on hard times. However, they will now be able to claim Universal Credit at a level equivalent to statutory sick pay.
How we can help
There’s no doubt that this is a worrying time for all businesses in all sectors, and one that is not likely to end soon. It is probable that a large number of businesses simply will not survive.
Others will survive but will need their own form of intensive care to achieve that survival.
At tri group, we have a group of experienced professionals, all with enviable track records, who are available to provide tailored advice for businesses large and small, covering assignments from the most straightforward to the most complex.
If your business is struggling, or if you need help in accessing the support described in this article, please get in touch with us on 0330 1000 371, or email us at contactus@trigroup.org.