COVID-19 Client Business Support
The coronavirus (COVID-19) pandemic that began in China and spread rapidly around the globe has caused major disruption to businesses and economies worldwide. The UK government has responded to COVID-19 with measures aimed at delaying its spread and mitigating damage to the economy with a substantial stimulus package.
Chancellor Rishi Sunak has set out a package of temporary, targeted measures to support public services, people and businesses through the period of disruption caused by COVID-19. This is a fast-moving area and the government will publish the details of further measures on https://bit.ly/33vU1cD.
Here we consider the measures announced to support businesses including the significant package of measures announced on 17 March 2020:
- grant funding of £10,000 for small firms in receipt of Small Business Rate Relief (SBRR) and Rural Rates Relief
- grant funding of £25,000 for certain businesses in the retail, hospitality and leisure sectors
- a 12-month business rates holiday for businesses in the retail, hospitality and leisure sectors
- a temporary Coronavirus Business Interruption Loan Scheme to support businesses in accessing bank lending and overdrafts
- extended access to Statutory Sick Pay (SSP), with reliefs available to SMEs
- expanded access to HMRC’s Time to Pay scheme.
Increases and extensions to business rates reliefs
The government had previously announced business rates discounts of 50% for retailers, cinemas and music venues with a rateable value below £51,000, and a £5,000 discount for pubs. On 17 March the Chancellor announced that the business rates discount will be increased to 100% and expanded further to include all hospitality, retail, and leisure businesses, no matter what their rateable value, for the 2020/21 tax year.
Many small businesses pay little or no business rates because of SBRR. The government will supply funding for local authorities in England, which will provide one-off £10,000 grants to businesses currently eligible for SBRR or Rural Rate Relief. In addition, one-off grants of £25,000 will be available to retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000.
Business rates have been devolved to Scotland, Northern Ireland, and Wales, so the UK government has announced measures that affect business rates in England. We have not considered other parts of the UK in this summary.
The Coronavirus Business Interruption Loan Scheme
The government will provide an additional £2.2 billion in funding for local authorities to support small businesses that already pay little or no Business Rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £10,000 (previously announced at £3,000 in the budget) to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £15,000, this represents 2/3rdof their rateable value, or comparable to roughly 8 months of rent.
This grant only applies to businesses in England as business rates in Scotland, Wales and Northern Ireland are set by their devolved administrations.
In response to the Prime Minister’s previous announcement to limit social contact in pubs and restaurants, the Chancellor has extended 100% business rates relief for 12 months for all businesses within the retail, leisure and hospitality sectors (this includes hotels, restaurants and coffee bars), regardless of size.
In addition, companies with a rateable value of less than £51,000 will be eligible for a cash grant of up to £25,000. Further details are expected within a few days.
The discount that pubs receive on their business rates will increase from £1,000 to £5,000, as long as their rateable value is below £100,000 in England.
In Scotland, an £80 million fund to provide grants of at least £3,000 to small businesses in sectors facing the worst economic impact of COVID-19 has been announced by Scottish government.
Scottish Enterprise has launched a business helpline to provide businesses across Scotland with information and support on COVID-19. The business helpline number is 0300 303 0660 and will be open Monday to Friday, between 8.30 am to 5.30 pm.
- The £80m grant fund is part of a £320m package of measures announced to help small businesses weather the coronavirus crisis.
- 75% rates relief for retail, hospitality and leisure sectors with a rateable value of less than £69,000 from 1 April 2020
- an £80 million fund to provide grants of at least £3,000 to small businesses in sectors facing the worst economic impact of COVID-19
- 1.6% rates relief for all properties across Scotland, effectively reversing the planned below inflation uplift in the poundage from 1 April 2020
- Fixed rates relief of up to £5,000 for all pubs with a rateable value of less than £100,000 from 1 April 2020
Extended access to Statutory Sick Pay (SSP)
Small and medium-sized businesses will be allowed to reclaim SSP paid for absence due to COVID-19. The refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers with fewer than 250 employees will be eligible, with the size of an employer being determined by the number of people they employed as of 28 February 2020. Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19. Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
The eligible period for the scheme commenced the day after the regulations on the extension of SSP to self-isolators came into force on 13 March 2020. The government intends to work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. It stated that existing systems are not designed to facilitate employer refunds for SSP.
Those who are not eligible for SSP, for example, the self-employed or people earning below the
Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or
Contributory Employment and Support Allowance:
- For the duration of the outbreak, the requirements of the Universal Credit Minimum Income The floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, ensuring self-employed claimants will receive support.
- People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.
- Contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25, for eligible people affected by COVID-19 or self-isolating inline with advice from Day 1 of sickness, rather than Day 8.
The government plans to help small and medium-sized businesses and employers (fewer than 250 employees) cope with the extra costs of paying COVID-19 related SSP by refunding eligible SSP costs as follows:
- the refund will be covered up to two weeks per eligible employee who has been off work because of COVID-19
- the size of an employer will be determined by the number of people they employed as of 28 February 2020
- 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, but should not require employees to provide a GP fit note. An alternative fit note will be available shortly through NHS111
- the eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force
- while existing systems are not designed to facilitate such employer refunds for SSP, the government will work with employers over the coming months.
The government would be refunded directly to the employers once their system is all in place in the next few weeks/months. Temporarily, the employers (company) can pay the SSP to the director/directors from the day they have to go to self-isolate themselves.
SSP relief for SMEs
Small businesses facing late payment issues no longer have to suffer in silence.
They have a new SBC website at https://www.smallbusinesscommissioner.gov.uk/ and say that they are here to offer support and guidance to small businesses on any issues they have in getting paid by large business customers, including intervening on their behalf if appropriate and necessary.
Expanded access to Time to Pay
The government will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs.
HMRC has set up a dedicated COVID-19 helpline, on 0800 0159 559, for those in need, and they may be able to agree a bespoke Time to Pay arrangement. The helpline is open from Monday to Friday from 8 am to 8 pm, and Saturday 8 am to 4 pm (excluding bank holidays). Time to Pay gives businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:
- agreeing on an installment arrangement
- suspending debt collection proceedings
- canceling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately
Coronavirus Business Interruption Loan Scheme (British Business Bank)
A new temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, will launch in a matter of weeks to support businesses to access bank lending and overdrafts. 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 £5m (previously announced at £1.2m in the budget). This new guarantee will initially support up to £330 billion of lending on top of current support offered through the British Business Bank.
The new CBILS scheme will offer interest holidays of 6 months and is intended to be up and running in 5 weeks’ time. It will temporarily replace the Enterprise Finance Guarantee (EFG), and operate in a similar way to EFG and be provided by the British Business Bank, but will offer more attractive terms for both businesses and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
To be eligible for support via CBILS, the small business must:
- Be based in the UK based, with annual turnover not exceeding £41 million
- Operate within an eligible industrial sector
- Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
- Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
The Chancellor has further announced that in addition to the above support measures for businesses, individuals (households) facing financial difficulties due to Covid-19 will be supported by their lending institutions with at least a 3-month mortgage payments holiday.
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