Coronavirus (COVID-19) : Information for affected businesses

23 Mar 2020

The Chancellor has recently set out certain measures to support people and businesses through the period of disruption caused by COVID-19. Here’s a brief summary of what we know so far.

Coronavirus Job Retention Scheme

Government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during the crisis. The scheme is open to any employer in the country and will continue for at least three months. It will be open before the end of April and wage costs will be backdated to March 1, 2020. To claim employers will need to:

  • Designate impacted workers as ‘furloughed workers’ and notify the workers of this change. Furloughed workers are those members of the workforce that remain on the payroll but are temporarily not working because of the outbreak. Employers will need to consider if their employment contracts allow this, and may have to discuss and negotiate with employees depending on the contract wording.
  • Submit details on furloughed workers to HMRC via the new on-line portal. HMRC will set-out details on how this is to operate.
  • HMRC will refund 80% of the furloughed workers’ wage costs. This is capped at £2,500 per month and employers can choose whether to top up the unfunded 20% or reimburse amounts above the £2,500 for higher earners.

HMRC’s existing systems aren’t set up to facilitate payments to employers; however, they are working on this as a matter of urgency.

VAT Payments

The next quarter of VAT payments will be deferred, and business will not need to make VAT payments until the end of June 2020. Any liabilities accumulating in the deferral period will need to be settled by the end of the 2020/21 tax year. The deferral is automatic and no specific application needs to be made. Any VAT refunds due will be processed by HMRC in the normal way.

Income Tax Payments

Self-assessment payments due in July 2020 will be deferred until January 2021. This is an automatic offer and no applications are required; furthermore, no interest will be charged during the deferral period. 

Universal Credit

Self-employed people can access full universal credit at a rate that is equivalent to statutory sick pay. We await further announcements from the Chancellor in respect of self-employed individuals.

HMRC Time to Pay

If your business is facing cash flow difficulties, you may be able to defer payment of outstanding tax liabilities. HMRC deal with these applications on a case-by-case basis. Please call 0800 0159 559 for the HMRC helpline. 

Business Rates Holidays & Cash Grants

No business rates are payable for the 2020-21 tax year for any business in the retail, hospitality or leisure sectors. Businesses entitled to small business rates relief will receive a cash grant of £10,000. Businesses with rateable values from £15k – £51k will receive a £25,000 cash grant. This is all being administered at a local authority level and should be automatic, so no specific claims are required.

Coronavirus Business Interruption Loan Scheme

This scheme is being delivered by the British Business Bank and should allow small and medium sized businesses to access funding facilities, including: overdrafts, loans, asset finance and invoice finance.

The government will cover the fees and interest for the first 12 months and will also provide an 80% guarantee for each loan. The main UK high street banks will be involved in delivering this scheme, so please check with your bank for more details. There is more information available at www.british-business-bank.co.uk

Mortgage and Rent Holidays

Residential and buy-to-let borrowers can apply for a three month mortgage holiday from their lender, although interest will continue to be charged.

Tenants can apply for a three month rent holiday from landlords and no-one can be evicted or have their home repossessed over the next three months.

Statutory Sick Pay (SSP)

The government will refund SSP of up to two weeks for staff of business with fewer than 250 employees.

Directors of limited companies with fewer than 250 employees can pay themselves two weeks of SSP if they need to self-isolate, provided they meet the minimum payroll requirement (e.g. earn at least £118 per week on average – full details at www.gov.uk/statutory-sick-pay).

IR35 Changes 

The proposed changes for April 2020 have been postponed until April 2021.

Companies House Filings

Businesses affected by the pandemic can apply to Companies House to request an extension to file their accounts and confirmation statements. A Companies House spokesperson has stated that they will grant a two month extension if a company cannot file because a key person has been self-isolating, for example. Each case is assessed individually, based on the application and the maximum extension permitted by law is three months.