Covid-19: government support for individuals and businesses
On 17 March 2020, The Chancellor of the Exchequer announced an unprecedented package of temporary and targeted measures aimed at supporting and protecting UK businesses during this period of economic emergency in the face of the coronavirus (COVID-19) pandemic. These measures will no doubt evolve over time however we set out below the details of the current proposals.
We at Statura will continue to monitor any relevant development / announcement and will strive to keep our clients updated. In the meantime, please speak to your usual Statura contact should you wish to discuss the content of this document or indeed the way in which the COVID-19 outbreak is affecting your business in more detail.
Support for businesses who are paying Statutory Sick Pay to employees
New legislation will allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- employers with fewer than 250 employees will be eligible - 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 and payments of SSP, but employees will not need to provide a GP fit note
- eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
Support for businesses that pay Business Rates
A business rates retail holiday will be introduced for retail, hospitality and leisure businesses in England for the year from 1 April 2020 to 31 March 2021.
A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant Local Authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
The government will also provide additional 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 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support primarily small and medium sized 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 £5 million in value.
Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments. Further details, including on the lenders providing access to this scheme will be announced in the coming days, and the scheme will be available from early next week, commencing 23 March 2020.
Support for larger firms through the COVID-19 Corporate Financing Facility
To support larger firms, the Bank of England has announced a new lending facility to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt. This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. Further details, including on how to access this funding will follow in the coming days, and the scheme will be available from the week commencing 23 March.
Support for businesses and individuals paying tax
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
This will help those struggling with cash flow and allow those who enter into arrangements to spread liabilities owed over a pre-agreed period. In addition, HMRC will waive late payment penalties and interest where businesses experience administrative difficulties contacting HMRC or paying taxes due to COVID-19.
HMRC will be committing 2,000 experienced call handler and have set up a dedicated helpline on 0800 0159 559. The
business or individual concerned can contact the helpline directly, although it is recommended that it is their tax agents liaise with HMRC on their behalf.
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.