Covid 19 Business updates
Support for Large Businesses – Coronavirus large business Interruption Loan Scheme
The Government has expanded its £330bn Coronavirus Loan Scheme allowing companies with a larger turnover to apply for up to £25 million of finance.
Businesses with a turnover of more than £45m can access funding through the new Coronavirus Large Business Interruption Loan Scheme (CLBILS), and Chancellor Rishi Sunak announced further details on April 21, resulting in the scheme being expanded to cover all viable firms, including those with annual turnovers of over £500m.
Businesses with turnovers of more than £500m were originally not eligible for the scheme. Now the full extent of the scheme means that all firms with a turnover of more than £45m will now be able to apply for up to £25m of finance, and up to £50m for firms with a turnover of more than £250m, including those that exceed £500m.
The Treasury started processing loan applications from large firms affected by COVID 19 as of Monday April 27, 2020. For full details on applying and approaching a lender, access the British Business Bank website.
The Government said the new loans would be 80% guaranteed by the state and added that banks must not request personal guarantees on any loans under £250,000.
This complements existing support including the Covid Corporate Financing Facility and the Coronavirus Business Interruption Loan Scheme.
Larger firms who do not qualify for the existing Coronavirus Business Interruption Loan Scheme for small and medium sized businesses and the Bank of England Covid Corporate Financing Facility for investment grade companies, can now apply for this.
The scheme will be available through a series of accredited lenders, listed on the British Business Bank website If a business has taken advantage of the COVID Corporate Finance Facility then it will be excluded from CLBILS, but participation in any of the other Government schemes will not affect eligibility for CLBILS.
Support for Small Medium Sized Firms – Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) gives businesses access to bank lending, overdrafts and other finance solutions to help them through the COVID 19 crisis.
The scheme provides financial support across the UK to firms that are losing revenue and seeing their cash flow disrupted. It is a part of a wider package of Government support for UK businesses and employees.
Support for SMEs includes invoice finance and asset finance of up to £5 million and for up to 6 years.
How it works and how smaller businesses can benefit
British Business Bank operates CBILS via its accredited lenders. There are over 40 of these lenders currently working to provide finance, and they include high street banks, challenger banks, asset based lenders and smaller specialist local lenders.
A lender can provide up to £5 million in the form of invoice finance, asset finance term loans and overdrafts.
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.
Your business must be UK based in its business activity, have an annual turnover of no more than £45 million, have a borrowing proposal which the lender would consider viable, were it not for the COVID 19 pandemic, and believes will enable you to trade out of any short term to medium term difficulty.
Government lender guarantee
The Government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. This is subject to pre lender cap on claims. The borrower always remains 100% liable for the debt.
The scheme, backed by the Government owned British Business Bank, will be delivered through commercial lenders.
Support for larger firms
Larger companies will have support under the new Covid 19 Corporate Financing Facility, whereby the Bank of England will buy short term debt. It will allow firms to finance short term liabilities along with the necessary support for those affected by a short term funding squeeze and ease the supply of credit to all firms.
Non financial companies that meet the criteria set out on the Bank of England’s website are eligible.
Job Retention Scheme
The Coronavirus Job Retention Scheme means that the Government will pay 80% of salary for staff who are temporarily not working due to the virus. All employers can obtain grants from HMRC, covering wages of up to £2,500 a month.
The scheme, announced Chancellor Rishi Sunak, started from March 1, 2020, and has been extended until the end of June to provide clarity amidst the lockdown extension.
The application system for the new scheme went live on April 20 and the first payments through the system were scheduled to be made by April 30. To claim for wages through the portal, click here.
For employers to submit a claim for furlough pay for an employee through the scheme, new starters who were on payroll for March 19, 2020 are now included, as opposed to the initial ruling of February 28.
Around 200,000 new starters are now eligible. Employers still need to have included any newly appointed employees on a Real Time Information (RTI) submission notifying a payment in respect of the employee made to HMRC on or before March 19.
Employers furloughing fewer than 100 employees will just need to enter relevant employee details directly into HMRC’s system, however, those with more than 100 furloughed staff will be required to upload a file with furlough claim information containing each employee’s details. This includes their full name, NI number, payroll number (optional), furlough start and end dates (if latter known) and full amount claimed. The HMRC system will accept files in . xls , .xlsx, .csv and ods formats and all employers must retain all records and calculations in respect of the claims they make.
Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change, who should not undertake work while furloughed.
Auto enrolment contributions and national insurance liabilities covered
Employer auto enrolment contributions and national insurance liabilities are covered under the Coronavirus Job Retention Scheme.
The Department for Work and Pensions has clarified this further to alleviate pressure on employers, stating that it can also be used to claim employer national insurance contributions and minimum auto enrolment employer pension contributions (3%) on that wage. This will alleviate any pressure to suspend auto enrolment contributions and will avoid affecting individuals & longer term finances.
For further resources, valuable support and HR information, you can also keep up to date with CIPD access their website here.
Small Business microloan Scheme
Small businesses hit by the impact of coronavirus measures can apply for a new ‘Bounce Back’ loan scheme and apply for up to £50,000, backed by a 100% Government guarantee.
Businesses can apply for a minimum of £2,000 up to a maximum of £50,000, or 25% of business turnover, and the Government will pay the interest for the first 12 months, with 100% backing.
The scheme is now open, with an online form to complete, and most loans will be paid within 24 hours of approval. There will be no forward looking eligibility test, the Chancellor also confirmed, while businesses will be able to access the loans through the existing network of accredited lenders.
Government lender guarantee
Chancellor Rishi Sunak revealed the scheme following concerns that access to existing coronavirus rescue schemes was taking too long.
Previous loans, such as the Coronavirus Business Interruption Loan Scheme, were offered with only an 80% Government guarantee; that still exposes banks to 20% of the risk and has led to complaints that banks are not lending. Sunak, however, has changed course on this one, describing them as ‘bounce back’ loans.
Sunak said the new scheme would help “bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.”
Start Up Investment
Future Fund investment for start ups
The UK Government has promised £1bn worth of support for startups struggling to cope amid the coronavirus pandemic, Chancellor Rishi Sunak announced on April 20.
The Government said that it was committing £250m towards a new £500m fund that would invest in high growth private companies that needed money. Launching in May, the Future Fund will provide UK based early stage
companies with convertible loans between £125,000 and £5 million.
The other half of the £500m Future Fund will be supplied by the private sector, with the startup investment dovetailing alongside private sector investment.
‘Innovation and entrepreneurship have powered growth in our country for centuries; and it is what will drive our growth as we recover from this crisis,’ said Sunak.
The Government backed investment in startups will come in the form of convertible loans. It is designed to provide liquidity in difficult times and promote private investment as if the loans are not repaid, they will convert into equity in the company.
SME R & D Grants
Innovate UK’s Grants and Loan Scheme
The Government has promised £750m worth of grants and loan funding to help innovative small and medium sized businesses focusing on research and development and will be available through Innovate UK’s grants and loan scheme.
• Innovate UK will accelerate up to £200m of grant and loan payments for its 2,500 existing customers on an opt in basis.
• Around 1,200 firms not currently in receipt of Innovate UK funding will be offered £175,000 of support.
• An extra £550m will also be made available to increase support for existing customers.
• The first payment will be made by mid May
This package builds on the Government’s existing support for innovative, high growth firms including:
• The £2.5 billion British Patient Capital fund
• The upcoming £200 million Life Sciences Investment Programme
• Internationally competitive R&D tax reliefs
• Major commitments to increase public R&D spending to £22 billion by 2024 25.
Business Rates Relief
To help high street businesses in England, all retail, leisure and hospitality business will pay no business rates in 2020-21.
The scheme applied to the next council tax bill that occurred in April 2020. However, local authorities may have to reissue bills automatically to exclude the business rate charge. They will do this as soon as possible.
All businesses with premises in England, who are eligible for small business rate relief or rural rate relief and have a tradeable value below £15,000 will be eligible for the grant. The Government stated that the various local authorities are responsible for writing to you regarding this.
A further grant of £25,000 will be available to those in retail, hospitality and leisure who operate from smaller premises, with a tradeable value over £15,000 and below £51,000. Again the local authorities are responsible for writing to you regarding this.
Shared Property Business Grant
The Government has made available grant funding for businesses that share working spaces, and which therefore miss out on existing coronavirus support schemes.
The local authority discretionary grant fund, announced on Saturday, May 2, is aimed at small businesses with ongoing fixed property related costs and is worth £617 million in total a 5% increase on the £12.33 billion already pledged.
The existing grants are delivered via English councils and provide payments of either £10,000 or £25,000 to companies paying business rates depending on the rateable value of their business property.
Businesses must have less than 50 employees, trading on or before March 11, 2020, and they must be able to demonstrate that they have suffered a significant drop of income because of the coronavirus restriction measures.
Market traders, street food pop-ups and those using co working office spaces don’t pay business rates which is why this additional scheme was considered necessary.
In addition, businesses claiming the new grant will be expected to demonstrate that they have ongoing fixed building related cos ts and have suffered a fall in income due to COVID 19.
Those already claiming via existing grant schemes or through the Self employment Income Support Scheme will not be able to access this additional funding.
Statutory Sick Pay
Statutory Sick Pay has been hitting the headlines recently because of its role in helping people deal with the financial effects of coronavirus (COVID 19).
But, even without that vital role, it continues to be an important entitlement for employees as it means they must be paid when they are too sick to work.
For employers, it’s important to understand what Statutory Sick Pay is, how it works and what it means for employees. These points and more are covered in this article.
What is Statutory Sick Pay?
UK employees are legally entitled to receive a payment called Statutory Sick Pay (SSP) from their employer if they are too ill t o work.
As an employer, you must pay SSP to all employees who are off work due to sickness and who qualify for sick pay. SSP applies only to employees and not to the self employed.
How much is Statutory Sick Pay?
SSP is £94.25 per week, rising to £95.85 in April 2020. You cannot pay employees who are not working due to confirmed illness less than this statutory amount. But you can pay more if you have a sick pay scheme.
There are different sick pay rules for workers in specific sectors such as those in agriculture.
How long does Statutory Sick Pay last?
SSP is paid for up to 28 weeks. It is only paid for qualifying days those for which employees are off sick when they would usu ally have worked.
Eligible employees will receive SSP for all qualifying days, except the first three, known as waiting days (although this has temporarily changed see Coronavirus and Statutory Sick Pay below).
Employees only get paid for waiting days if they have already received SSP within the last eight weeks, and that included a three day waiting period.
Coronavirus and Statutory Sick Pay
The UK Government brought forward emergency legislation for employees who are sick or self isolating because of coronavirus.
Since 13 March 2020, employees can get SSP from the first day they are off work due to the virus, if they meet other SSP eligibility criteria.
They still need to have been off work sick for four or more days in a row, including non working days, but the payment starts from day one.
HMRC is working with the payroll industry and employers to develop a mechanism for delivering coronavirus SSP, since the chancellor announced it in the budget.
Who pays Statutory Sick Pay?
Employers pay SSP in the same way they pay normal wages, for example weekly or monthly on payday. They must deduct tax and National Insurance.
The Government has announced that small and medium sized businesses can reclaim SSP that’s paid to employees who are sick due to coronavirus. With the exception of SSP relating to coronavirus, you cannot reclaim SSP for sick leave.
If an employee has more than one job, they may get SSP from each employer.
How Statutory Sick Pay works for different employee types
To qualify for SSP, the receiver must be classed as an employee and have done some work for you. They must have been ill for at least four days in a row, including non working days, and earn a minimum average salary of £118 per week.
Agency workers are entitled to SSP, as are part time staff, temporary staff, and those on fixed contracts, provided they meet the relevant criteria.
Statutory Sick Pay Qualification and Entitlement
Workers do not qualify if they:
• Have already received the maximum amount of SSP (28 weeks)
• Are receiving Statutory Maternity Pay
• Are off work for a pregnancy related illness in the four weeks before the week their baby is due
• Were in custody or on strike on the first day of sickness, including any linked periods
• Are working outside the European Union and not liable for their National Insurance contributions
• Received employment and support allowance within 12 weeks of starting or returning to work for you.
You can use the Government’s SSP calculator to check their eligibility.
There are different rules for entitlement for:
• Casual, agency and zero hours workers
• Agricultural workers
• Educational term time workers
• Educational workers
• Employees who have more than one job or contract with you
• Those working outside the UK on the first day of sickness
Calculating Statutory Sick Pay
Statutory Sick Pay calculator
Calculating SSP manually can be time consuming, so the Government has created a calculator that takes you through several steps as per the criteria above.
If there is more than one linked period of sickness, you will need to work out the SSP manually.
Some payroll software also calculates SSP automatically, or you can process it manually in the software if you need.
How can employees claim Statutory Sick Pay?
To claim SSP, employees need to tell you, the employer, they are sick by the deadline set by you or within seven days if you do not have one.
They only need a fit note (also known as a sick note) from their doctor if they are off sick for more than seven days, including non working days.
If an employee thinks a decision not to pay SSP is wrong, or they are getting the wrong amount, they can ask you for a reason
If this does not solve the problem, tell them to contact
HMRC statutory payment dispute team.
Offering a company sick pay scheme
Company schemes are also called ‘contractual’ or ‘occupational’ sick pay and must be included in an employment contract.
One main benefit of having a company scheme is that you can offer employees more than the statutory £94.25 a week for up to 28 weeks. This reduces financial hardship and helps promote a healthy and supportive workplace.
Laura Kearsley is the head of employment at Nelsons Solicitors. When it comes to setting up a company sick pay scheme, she says things to consider are: “Is it affordable; is it consistent with sick pay provision in your industry; and do you have the absence manag eme nt processes and tools alongside the scheme to make sure it is managed and not abused?”
Kristian Jones, principal at Ashburnham Solicitors, says: “If setting up a company sick pay scheme, the main considerations are how much you wish to pay over and above the SSP entitlement, how it will be paid and for how long.
“Employers also need to consider which employees it will cover and which ones it will not although the scheme must not discriminate against employees based on any protected characteristic under the Equality Act.
“Usually sick pay schemes give full pay for a period, then reduce the pay by a percentage.
“But an employer will also need to consider questions such as whether an employee will be entitled to company sick pay in their probationary period; and what if someone goes into hospital for an elective procedure?”
Managing Statutory Sick Pay with Software
For employers, manual SSP calculations can be time consuming, but up to date HR and payroll software can greatly reduce the administrative burden, making your SSP processes more efficient and reducing compliance risk.
Jones says cost, compatibility and user friendliness are the three biggest factors when purchasing such software.
Kearsley says another important consideration is the ability to make changes or adapt to changing legislation.
Good HR and payroll software keeps up to date with the latest legislation and simplifies processing of sick pay by automaticallycalculating SSP for you. It also allows you to record sick days on the individual employee’s diary and keep track of employee s’ sickness.
Conclusion on Statutory Sick Pay
SSP is an important entitlement to millions of employees, as it ensures they can continue to support themselves when they are too sick to work.
The SSP system is also now providing a vital mechanism for the Government to support people affected by coronavirus.
Manual SSP calculations can be time consuming but the latest software can ease that burden greatly, increase efficiencies in your HR and payroll function, and make sure you stay up to date with the latest legislation.
Business Rates Holiday
Businesses will be eligible for a business rates holiday for the 2020/21 tax year if they are based in England and in the retail , hospitality or leisure sector.
How to access this scheme
It is automatic and there is no action required. This payment holiday will be automatically applied to the next council tax bill in April2020. If your business has already received a bill, this will be reissued in due course.
There will be no rateable value limit on the relief.
Nurseries will also receive a business rates holiday for the 2020-2021 tax year. Eligible businesses will receive a bill showing no business rates charge for the 2020 2021 tax year.
Those who had already received bills for the 2020-2021 tax year will be re billed. As above, businesses should contact their local authority with any questions they may have about the scheme.
The Government has delayed extending the Off Payroll Working rules, to help businesses and individuals in response to the ongoing spread of the virus. They will now come into effect for private sector businesses from April 6, 2021.
Chief Secretary to the Treasury, Stephen Barclay, pointed out that it was a deferral and not a cancellation.
The reforms pass responsibility for determining a contractor’s status from the individual to the organisation which employs their services. The initial announcement of their extension to the private sector proved controversial with claims the rules were too complex and the online tool check employment status for tax (CEST) was flawed.
£30bn VAT payments suspended until June 30, 2020
Chancellor Rishi Sunak announced a VAT payments deferral on March 20 to support businesses with cash flow during the COVID 19 pandemic.
It will amount to a £30bn credit line for over two million businesses in total and means that all businesses with a UK VAT reg istration
have the option to defer VAT payments due between March 20 and June 30.
Businesses will have until March 31, 2021 to pay any VAT deferred as a result. VAT credits and refunds will be paid as normal during the period.
What you need to do
You don’t need to inform HMRC if you wish to defer payment and take advantage of the VAT holiday all you need to do is simply opt in to the deferral by not making VAT payments due in this period as HMRC will automatically withdraw the VAT declared in the VAT return and can’t stop this process. If you pay by Direct Debit you should contact your bank and cancel this immediately. It’s best to do this in good time so that HMRC does not attempt to automatically collect on receipt of their VAT return.
You can, of course, continue to make payments as normal during the deferral period should you wish, and HMRC will also continue topay repayment claims as normal. You must continue to submit VAT returns as normal.
Looking forward-what do we expect to happen next?
What we do know is that any VAT due will be payable by the end of the 2020/21 financial year, which is March 31, 2021 the date for monthly VAT payers. But for those VAT registered businesses on quarterly staggers, the position is slightly more complex. Although unconfirmed, it’s likely that, depending on return due dates, payment dates will be: March 31, 2021; April 30, 2021; or May 3 1, 2020.
It’s important to note that there’ll be no interest or default surcharges due on deferred VAT.
As we are receiving daily bulletins from the Government on the current situation and new tax updates, there’s always a chance that there may be an extension in July to the VAT deferment, meaning direct debit payers should pause before reinstating their payments, but anything further around this will be announced in the coming months.
Statutory Filing Extension
Around 4.3 million businesses in the UK can apply to Companies House for a three month extension to file their accounts.
The joint initiative between the Government and Companies House aims to give firms time to focus on negating the economic impacts of COVID 19.
Companies must submit their accounts and reports each year, with automatic penalties in place for non compliance.
Firms that apply and cite coronavirus related disruption will automatically be granted the three month extension.
Applications can be made online and should take around 15 minutes to complete.