Coronavirus: UK government business help explained

London, UK: On Friday, the UK’s Chancellor of the Exchequer, Rishi Sunak, delivered the third UK Budget in nine days that contained more packages to help businesses deal with the consequences of the coronavirus.

Sunak’s first package announced to Parliament on 11 March set aside £12bn for dealing with the virus. As the scale of the economic hit has become apparent he has added to this spend.

Friday’s announcement was for a job subsidy scheme that will provide employers with 80% of a worker’s wage up to a limit of £2,500 a month, and a strengthening of the welfare system through more generous universal credit, higher working tax credits and an increase in child benefit.

The government’s package is big, and while the wage subsidies will initially last for three months Sunak said his scheme would run for as long as was needed. He has borrowed the idea from other European countries – such as Germany, Denmark and Sweden.

The FTA has welcomed the government’s announcements. Christopher Snelling, head of UK policy, FTA, said: “We and our members support these moves as a necessary one to keep all parts of the economy working. There will be many logistics people in working in non-key areas who will be worried about their jobs or businesses.  This will help give more confidence to everyone that the most dire economic consequences will be avoided.”

Transport lawyers Backhouse Jones has set up a Covid-19 resource hub with non-medical information needed to handle the effects of the virus on employees and businesses.  See: https://www.backhousejones.co.uk/covid-19-resource-hub/

The Cold Chain Federation has a advice on its website at: https://www.coldchainfederation.org.uk/news/coronavirus-your-questions-answered-by-citation/

The list of government financial help packages is long and detailed and requires application from one or more organisations. But help is available. A useful start point is the UK government website, see: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

The chancellor’s package of temporary measures to businesses through this period of disruption caused by Covid-19 includes:
• a Coronavirus Job Retention Scheme
• deferring VAT and Income Tax payments
• a Statutory Sick Pay relief package for small and medium businesses
• a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for small and medium businesses through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• the HMRC Time To Pay Scheme

Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

All UK businesses are eligible.To access the scheme you will need to:
• designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month. HMRC is working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short-term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

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 this 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 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

You are eligible for the scheme if your business is UK based, with turnover of no more than £45 million per year or your business meets the other British Business Bank eligibility criteria.

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from 23 March.

Support for larger firms through the Covid-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short-term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible.

The scheme will be available early in week beginning 23 March 2020. The government will provide information on how to access the scheme shortly. More information is available from the Bank of England.

Support for businesses paying tax: Time to Pay service

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.

You are eligible if your business pays tax to the UK government or has outstanding tax liabilities

If you have missed a tax payment or you might miss your next payment due to Covid-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment, please call HMRC nearer the time.

Insurance

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. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their provider/s. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Support for businesses through deferring VAT and Income Tax payments

Government will support businesses by deferring Valued Added Tax (VAT) payments for three months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. The VAT deferral will apply from 20 March 2020 until 30 June 2020. All UK businesses are eligible.

No action is required to access the scheme, 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.

Support for businesses that are paying sick pay to employees

Government will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay paid for sickness absence due to Covid-19.

The eligibility criteria for the scheme will be as follows:
• this refund will cover up to two weeks’ Statutory Sick Pay 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 it employed as of 28 February 2020
• employers will be able to reclaim expenditure for any employee who has claimed Statutory Sick Pay (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. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone with symptoms can get a note from the NHS website
• eligible period for the scheme will begin 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

You are eligible for the scheme if your business is UK based, your business is a small or medium-sized, and employs fewer than 250 employees as of 28 February 2020

Access to the scheme will open once the legalisation has passed.

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