The government’s response to the Covid-19 outbreak moves rapidly with new measures to ease the financial burden on businesses and workers appearing almost daily.
Joanne Stronach Director and Head of Employment & HR gives a round-up of some of the main developments so far:
Furlough Leave - Coronavirus Job Retention Scheme
Chancellor Rishi Sunak wants to use furlough leave as the basis of a Coronavirus Job Retention Scheme to enable employers to lay off some of their workforce during the Covid-19 crisis while still retaining them as employees.
To enable this to happen, the government has pledged to pay 80% of the wages of furloughed workers for up to three months, up to a cap of £2,500 per month. Employers are being urged to pay the other 20% but this is not obligatory.
The scheme is backdated to 1 March, so if you have already laid off some employees you can still retain them and get the grant covering 80% of their wages (including employers NI and pension costs).
Initial guidelines say that furloughs will be subject to all current employment legislation so need to be introduced properly in consultation with employees.
HMRC is currently developing an online portal to enable employers to apply.
Self-Employed Income Support Scheme
Self-employed people will not be eligible for the Job Retention Scheme but can receive help through the Self-Employed Income Support Scheme.
This will provide up to £2,500 per person per month in grants for at least 3 months.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of their income in these periods must come from self-employment.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme, which is being designed by HMRC from scratch, will cover the three months to May. Grants will be paid in a single lump sum instalment covering all 3 months and will start to be paid at the beginning of June.
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
People who cannot work due to coronavirus and are eligible for Statutory Sick Pay will get it from day one, rather than from the fourth day of their illness.
Sick pay will be payable to people who are staying at home on government advice, not just those who are infected. Employers are urged to use their discretion about what evidence, if any, they ask employees to provide.
If employees need to provide evidence to their employer that they need to stay at home due to coronavirus, they will be able to get it from the NHS 111 Online instead of having to get a fit note from their doctor.
Employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay for employees unable to work because of coronavirus. This refund will be for up to 2 weeks per employee.
Online isolation notes
The NHS is running an online service enabling people unable to work for more than seven days because of coronavirus (COVID-19) to obtain an isolation note.
Isolation notes will provide employees with evidence for their employers that they have been advised to self-isolate due to coronavirus, either because they have symptoms or they live with someone who has symptoms, and so cannot work.
As isolation notes can be obtained without contacting a doctor, this will reduce the pressure on GP surgeries and prevent people needing to leave their homes.
For the first seven days off work, employees can self-certify so they don’t need any evidence for their employer. After that, employers may ask for evidence of sickness absence. Where this is related to having symptoms of coronavirus or living with someone who has symptoms, the isolation note can be used to provide evidence of the advice to self-isolate.
Benefit reviews and reassessments suspended
Reviews and reassessments for disability benefits are suspended for three months from 24 March.
The move is to reassure vulnerable people about the continuity of their benefits during the coronavirus outbreak and to ensure the resources of the Department for Work and Pensions are focused on enabling access to financial support for new claimants.
Gender pay gap reporting suspended
The enforcement of the gender pay gap reporting deadlines has been suspended due to the Covid-19 outbreak.
The decision means there will be no expectation on employers to report their data this year.
In normal circumstances, the Equality and Human Rights Commission (EHRC) has the power to investigate employers that fail to report their gender pay gap data. Offenders could face an unlimited fine after court action.
VAT and Income Tax payments
Valued Added Tax (VAT) payments will be deferred for 3 months. The deferral applies from 20 March 2020 until 30 June 2020. All UK businesses are eligible.
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
Customers who normally pay by direct debit should cancel it with their bank if they are unable to pay. Do so as early as possible so that HMRC do not attempt to automatically collect on receipt of your VAT return.
For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.
Business rates holiday
There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Estate agents, lettings agencies and bingo halls that have closed as a result of Covid-19 measures to restrict the spread of the virus will also be exempted from business rates in 2020-21.
You are eligible for the business rates holiday if your business is based in England and is in the retail, hospitality and/or leisure sector.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
There is no action needed from you to access the scheme. It will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of between £15,000 and less than £51,000 will receive a grant of £25,000.
You are eligible for the grant if:
- your business is based in England
- your business is in the retail, hospitality and/or leisure sector
- your business has a rateable value of under £51,000.
You do not need to do anything to access the scheme. Your local authority will write to you if you are eligible for this grant.
Coronavirus Business Interruption Loan Scheme
The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
You are eligible for the scheme if:
- your business is UK based, with turnover of no more than £45 million per year
- your business meets the other British Business Bank eligibility criteria.
The scheme is now open for applications. All major banks are offering this scheme.
To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites.
Businesses protected against evictions
Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction under new legislation.
The emergency Coronavirus Bill will mean no business will be forced out of their premises if they miss a payment in the next 3 months.
Tenant evictions banned
The government is introducing emergency legislation to protect both renters and landlords during the Coronavirus outbreak.
The new regulations will ban new evictions from social or private rented accommodation while this national emergency is taking place and there will be no new possession proceedings through applications to the court to start during the crisis.
There will also be protection for landlords as they can apply for a three-month payment holiday for Buy to Let mortgages.
Mortgage holidays Help to Buy
The government has announced that it will offer payment holidays to homeowners who are struggling to pay interest fees on their Help to Buy equity loans.
It follows the decision by mortgage lenders to make the same offer to customers experiencing personal financial difficulties as a result of Coronavirus (Covid-19).
Help to Buy: Equity Loans are interest-free for the first five years. Therefore, the announcement applies to people who took out the loan before 31 March 2015.
Vehicle owners have been granted a 6-month exemption from MOT testing, enabling them to continue to travel to work where this absolutely cannot be done from home, or shop for necessities.
All cars, vans and motorcycles which usually would require an MOT test will be exempted from needing a test from 30 March 2020. Vehicles must be kept in a roadworthy condition, and garages will remain open for essential repair work. Drivers can be prosecuted if driving unsafe vehicles.
If you have any queries relating to the above information please do contact Joanne Stronach or Claire Davies who would be more than happy to discuss this further with you.