Coronavirus/COVID-19 in brief
On 23rd March, Boris Johnson described COVID-19 as ‘the biggest threat this country has faced for decades’. He went on to describe how the devastating impact of this invisible killer was being seen all over the world.
COVID-19 is a new illness that can affect our lungs and airways. It's caused by a virus called coronavirus.
We are told by the NHS that symptoms of COVID-19 include:
- a high temperature – this means you feel hot to touch on your chest or back (you do not need to measure your temperature)
- a new, continuous cough – this means coughing a lot for more than an hour, or 3 or more coughing episodes in 24 hours (if you usually have a cough, it may be worse than usual)
And those presenting these symptoms are asked not to go to places like a GP surgery, pharmacy or hospital but instead Use the 111 online coronavirus service to find out what to do.
Landmark clients and COVID-19
We have heard many varying reports from you.
Some of you describe record trading levels, as your businesses catered for those of us preparing for self-isolation and working from home, and some of you describe desperate circumstances, as your retail businesses were instantly closed.
In between these extremes have been those of you talking to us about gambling on the UK’s future, as you consider spending now for business activity expected (hoped for) months from now and then there have been those of you talking to us about ‘hunkering down’, taking advantage of government support available and waiting for the COVID clouds to clear.
Among the varied stories, however, is one constant. You (and us too) are all concerned about the longer-term implications for the health of the UK, its people and its businesses.
It seems the word ‘unprecedented’ is being used to an unprecedented degree now, but these ARE truly unprecedented times. We are facing difficult decisions as we plan for our businesses and Landmark Accountants want to support our clients in any way we can.
Below is a summary of main government announcements. Many of you are already talking to us about how they affect you. For those of you that we haven’t yet spoken to, please do get in touch. We’re here to answer your questions and to help you navigate through these unprecedented (that word again) challenges.
Summary of Government Announcements
Between Spring Budget 2020 on 11 March and Friday 20 March the Government announced a series of measures designed to counter the threat posed to the UK economy by the outbreak of the coronavirus that causes the respiratory disease COVID-19.
Below is a summary of all measures so far announced.
Updates from 3rd April
The coronavirus business interruption loan scheme for struggling businesses has been revamped.
In addition to the previous offering, it will offer state-backed loans of up to £25 million for larger firms with turnover of between £45m and £500m.
UK Finance said more than 130,000 loan enquiries had been made since the scheme opened, but less than 1,000 had been approved by banks.
In response, the Government will underwrite 80% of these loans to nudge banks into speeding up the provision of these emergency funds.
Banks will also be banned from asking company owners to underwrite loans of up to £250,000 with their own assets, such as property or savings.
Updates from 2nd April
The coronavirus job retention scheme now applies to off-payroll contractors working for public-sector organisations.
Furlough can be offered to all public-sector workers, including those paid under PAYE, through an umbrella or their own personal service company.
Updates from 1st April
The second phase of Making Tax Digital for VAT, which introduces more complex technology and stringent rules, has been deferred for 12 months.
New rules around the way digital firms link their MTD software and how they upload their VAT returns will now kick in on 1 April 2021.
Updates from Friday 27th March
Full guidance has now been published setting out how businesses can claim through the coronavirus job retention scheme. Some key details are as follows:
- Only employers that created and started a PAYE payroll scheme on or before 28 February 2020 are eligible.
- The scheme covers full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
- Employees made redundant after 28 February 2020 but rehired by their employer can be furloughed.
- Employees hired after 28 February cannot be furloughed.
To make a claim, employers will need to provide:
- ePAYE reference number
- number of employees being furloughed
- the claim period
- amount claimed
- bank account number and sort code
- contact name and number
Updates from Thursday 26th March
Having been under pressure for the past week, Chancellor Rishi Sunak has announced measures to support self-employed people whose earnings have been affected by the coronavirus outbreak.
Self-employed income support scheme (SEISS)
- Those who have filed a 2018/19 tax return as self employed and are facing financial difficulties are invited to apply.
- The scheme will cover up to 80% of average profits over the past three years, up to £2,500 per month, for at least three months.
- Those with trading profits of more than £50,000 are not eligible.
- It is also a condition of the scheme that more than half of income must come from self-employment.
- Profit and income tests are determined with reference to either the 2018/19 tax year or an average of the three years 2016/17, 2017/18 and 2018/19.
- What next? Application will be to HMRC via an online platform, yet to launch. The grants probably won’t be available until June 2020, backdated to 1 March. In the meantime, self-employed people who can’t work are expected to claim universal credit, access to which was broadened in the Spring Budget.
Updates from Wednesday 25th March
Further to the news below that Companies House would automatically be giving those who need it a two-month extension on filing their accounts, the Government has now confirmed an automatic three-month extension for businesses that need it:
As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
A new note has been added to the guidance on deferral of VAT payments reminding businesses that pay by direct debit to cancel if they want to defer payment:
Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.
The Scottish Government has published guidance on its support for businesses in Scotland, with some specific differences:
- The threshold for £25,000 grants for small business is £18,000 rather than £15k, as in England.
- All non-domestic properties in Scotland will get 1.6% rates relief, applied automatically.
- Retail, hospitality and leisure businesses will get 100% rates relief, as in England, also applied automatically.
Guidance from the Welsh Government is also now available. One notable difference is that the threshold for the £25,000 grant payment for retail, leisure and hospitality businesses is £12,000 – lower than in England or Scotland.
Businesses in Wales can also access loan and equity funding via the Development Bank of Wales.
Updates from Tuesday 24th March
Fuller detail of the retail, hospitality and leisure grant (RHLG) fund has been published by the Department of Business, Energy and Industrial Strategy (BEIS). The guidance document, intended to help local authorities administer the scheme, is available on the Government website.
- Payments will be made to the person listed in local authority’s records as the ratepayer for the business premises on 11 March 2020.
- There is a strong warning against fraudulent claims with a promise of prosecution and clawback for any such payments.
- Certain premises are excluded on the grounds of private use, such as private stables and beach huts. Car parks and parking spaces are also ineligible.
- Businesses in liquidation or dissolved as of 11 March aren’t eligible either.
The Coronavirus Bill currently before Parliament now includes an amendment calling for support for the self-employed and freelancers in line with that being provided for employees under PAYE via the coronavirus job protection scheme. It was passed by the House of Commons last night and will now go to the House of Lords for scrutiny. The Chancellor is expected to announce provision for the self-employed tomorrow, 25 March.
Updates from Monday 23rd March
The scheduled 5pm press conference was cancelled and the Prime Minister instead addressed the nation at 8:30pm announcing, to all intents and purposes, a total lockdown of the UK. Movements are to be restricted and non-essential shops are to close.
This means expected clarifications on how businesses can access support are likely to be delayed until later in the week.
As scheduled, however, the British Business Bank has published comprehensive details of how the coronavirus business interruption loan scheme (CBILS) can be accessed:
- Eligibility: an SME must be UK-based with annual turnover of less than £45m and have a proposal which would be considered viable by the lender under normal circumstances.
- Types of finance available: Term loans, overdrafts, asset finance, invoice finance.
- How to apply: via one of the accredited lenders on this list. In the first instance, the British Business Bank is urging businesses to apply online and asking those who don’t need emergency finance to ‘consider the urgency of your need’. More detail is available here.
In other news Companies House has confirmed that, in line with its existing rules, firms that were unable to file accounts on time can apply for a deadline extension, with an automatic two-month extension for those in isolation.
Measures announced on 20th March
On the evening of 20th March the Prime Minister announced further restrictions on the compulsory closure of bars, cafes, pubs and restaurants.
Alongside these new measures, the Chancellor announced a further package of support for businesses facing the prospect of having to reduce staff numbers.
Coronavirus job retention scheme
- Grants of up to £2,500 per employee where those employees are unable to work (are ‘furloughed’) because of coronavirus, covering 80% of salary costs.
- Intended to run for three months in the first instance with the first payments expected in early April and the scheme fully up and running by the end of that month.
- The grants will be paid via HMRC.
- All UK employers will be eligible.
- There is as yet no official definition of ‘furloughed’, though it is generally understood to mean ‘stood down but still employed’.
- Employers must set out which of their employees are furlough workers and inform particular employees.
- What next? At present, little information has been provided on how to claim reimbursement of salary costs but we are told HMRC will set up a new online portal that employers will use.
Extension of the coronavirus business interruption loan scheme (CBIL)
- Maximum turnover for eligible businesses was previously set at £41 million per year; it has now been increased to £45m.
- The interest-free period has been increased from six months to twelve.
- The scheme is being managed by the British Business Bank but businesses will access them via one of 40 accredited lending providers, including most major banks.
- The maximum value of a facility provided under the scheme will be £5 million – higher than the £1.2m announced initially.
- What next? Discuss business plans with existing lending providers. Loans will be available from Monday 23 March 2020.
Deferral of tax and VAT payments currently due
- VAT payments from UK-based VAT registered businesses due between 20 March and 30 June 2020 won’t need to be paid to the usual deadlines, with payment deferred until the end of the tax year.
- Self-assessment income tax payments for the self-employed which were due on 31 July 2020 can now be deferred until 31 January 2021.
- What next? Both deferral schemes apply automatically with no application required.
Access to welfare for the self-employed
- The minimum income floor for access to universal credit has been suspended for self-employed people affected by the economic impact of coronavirus.
Measures announced on 17th March
At a press conference on 17 March, the Chancellor announced a package of support worth £350 billion – around 15% of the value of the entire UK economy.
It came upon the heels of a statement from the Prime Minister on 16 March which urged people to stop visiting cafes, pubs and restaurants.
It was intended to send a strong signal to British businesses not to act hastily in downsizing because support would be forthcoming.
Extension of business rate discount
- All hospitality, leisure and retail venues in England, regardless of rateable value, can now claim a 100% discount on business rates for 12 months from 1 April 2020 to 31 March 2021.
- Unoccupied properties that become vacant in the next 12 months will be charged 100% full rates from three months after they become empty.
- What next? The discount will be applied automatically to the next council tax bill, due in April 2020.
Cash grants for very small businesses
- Hospitality, leisure and retail businesses operating from units with rateable values between £15,000 and £51,000 will receive a grant of £25,000.
- Businesses in these sectors with a rateable value of less than £15,000 will receive a grant of £10,000.
- Those with a rateable value of more than £15,000 will receive £25,000.
- Your local authority will contact you if you are eligible for this grant.
- What next? Await notification from local authorities.
Measures announced in Spring Budget 2020
In what the Office for Budget Responsibility called the “largest Budget giveaway since 1992”, Rishi Sunak announced business support measures worth billions. Events have moved quickly, though, and many of the specific measures announced have now been superseded or further extended.
Grants for businesses receiving SBRR or RRR
- Businesses in England eligible for small business rate relief (SBRR) or rural rate relief (RRR) will receive a one-off cash grant of £10,000.
- What next? This will be processed automatically by local authorities.
Statutory sick pay reclaim scheme for SMEs
- Small-and medium-sized businesses and employers will be able to reclaim statutory sick pay (SSP) paid for sickness absence due to COVID-19.
- The refund will cover up to two weeks’ SSP for each member of staff off work because of COVID-19.
- It applies to all UK businesses that employed fewer than 250 employees as of 28 February 2020.
- What next? Legislation needs to pass before details of how to apply can be published.
- On 19 March 2020 the Bank of England cut interest rates to a historic low of 0.1%, having previously reduced them to 0.25% on the day of the Spring Budget.
- COVID-19: support for businesses | HM Government
- Coronavirus Business Interruption Loan Scheme (CBILS) | British Business Bank
- Coronavirus Job Retention Scheme | HM Government