- What are the main measures?
- Government-guaranteed loans
- Business rates relief
- Grants of up to £25,000 to qualifying businesses
- Statutory Sick Pay relief for employers
- Grants to pay for furloughed staff
- More time to pay taxes
These are explained in more detail below.
1. Government guaranteed loans
The government has announced a Coronavirus Business Interruption Scheme that will guarantee loans of up to £5m made by banks to small businesses. Loan period will be up to 10 years. No interest will be payable for the first 12 months. Over 40 banks will participate in the scheme. These loans are aimed at businesses unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer term. Anecdotally, banks appear to be experiencing teething problems as the scheme is rolled, so may have to be patient.
While this is a valuable facility to see your business through the next few months, this remains a normal loan which you will have to repay. If you would like to find out more then you should speak to your bank. Please feel free to contact us and we can put you in touch with one of our partners who can help you find the best loan for your business.
These loans are available to sole-trader businesses
2. Business rates relief
Certain sectors: nurseries, retail, leisure and hospitality will receive full rates relief in 2020-21. If your rates are included in the rent paid to your landlord, then there will be no direct rate relief for you. In that case you should speak to your landlord to see if they will reduce your rent.
3. Grants to businesses
Small businesses operating from rateable premises, but that pay little or no rates will receive a £10,000 grant. A higher grant of £25,000 will be paid to retail, leisure and hospitality businesses occupying business premises with a rateable value over £15,000. When and how these grants can be claimed is not yet clear except that they will be paid by your local authority and no that formal application is required.
4. Sick pay for employers
Businesses with employees may now claim Statutory Sick Pay (“SSP”) from HMRC – up to 14 days per employee from the first day of sickness. The measure is worth up to £200 per employee.
Initially this was available to employees who were required to self-isolate. However, following the lock-down announcement on 23 March, we assume that the “self-isolation” status no longer exists. It is important that proper records are kept supporting a claim. The individual claiming sickness needs to provide an isolation note from the NHS 111 website: https://111.nhs.uk/. As this type of SSP cannot be claimed through the normal payroll route, HMRC are developing a separate claims system. This could take a month or two to become operational.
You will not be able to claim SSP if you are self-employed. You might be able to claim Employment and Support Allowance (ESA) if you’re ill, or elements of Universal Credit.
More information is available on this link: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees
5. Grants for furloughed staff
There is very little information available on this measure. It doesn’t help that the term “furlough” has no legal meaning in the UK. The grant is intended to pay employers 80% of the salary of staff who have been laid off – up to £2,500 per staff. Any employer will be eligible. The scheme is effective from 1 March 2020 and will last for 3 months. As there are employment law implications, we recommend that you take advice from HR specialists before taking action.
We strongly recommend that you take HR legal advice before laying off staff. Beans clients have free access to our HR helpline.
There is no mechanism in place for HMRC to make these payments to businesses. We have been told that such a system will not be ready before mid-April. We will send further updates as we receive more information.
In the absence of formal definition of “furlough” we have to assume that the definition of “lay-offs” applies. This means that a furloughed worker may not perform any employment duties of any sort. By extension it is unlikely that a company director could meet the furloughed status as they will continue to perform company duties.
6. More time to pay taxes
If you are struggling to make your HMRC payments you can contact HMRC to agree a “time to pay” payment plan. It is important to speak to HMRC as early as possible. Please see the link for more information: https://www.gov.uk/difficulties-paying-hmrc
In addition two specific Time to Pay measures were announced on Friday:
- Payments on account for self-assessments due by 31 July 2020 will be deferred to 31 January 2021. No application is required. There will be no penalties or interest charge.
- VAT payable in the quarter to the end of June 2020 can be deferred to 31 December 2020. No application is needed. The VAT return will still need to be filed by the normal deadline. VAT repayments are expected to be processed as normal.
If you think that you are at risk of missing a filing deadline, please tell as early as possible as it may be possible to apply for an extension and avoid a late filing fee.
Only modest support available for the self-employed
The government has been criticized for the limited support made available to the smallest businesses such as freelancers and sole-traders. Announcements are expected in the next few days which could address this.
Other points to note
- Changes to the IR35 off-payroll working rules in the private sector have been delayed by 12 months to April 2021.
- Universal Credit: The minimum income floor has been temporarily removed for sole traders, which means that Universal Credit Claimants could see increased payments.
- Home borrowers can request a 3-month deferral of their mortgage payments. Interest will be accrued during this period.
Please visit the HMRC website for further information:
For information on business support:
For information for employers, employees and self employed:
For information on universal credit for the self-employed: https://www.gov.uk/self-employment-and-universal-credit
While we make every effort to make sure this update is accurate, you should take professional advice before acting on the information provided here. If you contact us we will be happy to help. Beans cannot take any responsibility for actions taken and losses incurred as a result of actions taken or not taken on the basis of the information provided here.
Your Beans team