The global impact of the COVID-19 crisis has been unprecedented. Declared a pandemic by the World Health Organisation, the outbreak of the virus tore through communities and sent shockwaves through the economy.
In the space of a week, working from home became the new normal as international governments ramped up measures to prevent the spread.
With the situation rapidly developing, organisations are facing novel challenges including crisis planning, supply chain management and critically, the impact on their workforce. While some continue to enact business as usual as best they can, others have been forced to make redundancies as demand has dropped dramatically.
Despite the ‘Keep Calm and Carry On’ mentality that permeates British culture, organisations spanning the sectors face inalienable uncertainty as the situation unfolds.
How is the government supporting businesses?
In order to provide businesses and individuals with the critical support they need, the Coronavirus Act 2020 was passed – a key piece of legislation that gives the government the powers to respond to the pandemic with the appropriate course of action. As per the information from the UK Parliament website, the Coronavirus Act will enable the government to mitigate the impact of the outbreak on people and the economy by:
- increasing the available health and social care workforce
- easing the burden on frontline staff
- containing and slowing the virus
- managing the deceased with respect and dignity
Chancellor Rishi Sunak says he will do whatever it takes to protect jobs and incomes, including providing £330bn of loans to businesses in an “unprecedented” package of financial support to prop up the British economy.
As of March 23rd, businesses can access government support across a number of areas.
Coronavirus Job Retention Scheme
As part of targeted measures to protect workers, all UK employers with a PAYE scheme will be able to access support to continue paying a portion of their employees’ salaries for those who the company would have made redundant as a result of the crisis.
HMRC has said it will reimburse 80% of these employees’ wages, up to £2,500 per month.
To access the Job Retention Scheme, employers must designate affected employees as ‘furloughed workers’ and inform the employees of this change. A new employer portal has been set up for this purpose, and HMRC are currently working to introduce a system for reimbursements.
The Coronavirus Job Retention Scheme will backdate reimbursements to March 1st and is initially open for 3 months.
Deferring VAT and Income Tax payments
As part of the COVID-19 bill, VAT payments will be deferred by 3 months until June 30th, 2020. This is a deferral, not an exemption, but allows all UK businesses to access the emergency funding they may need to stay afloat during these difficult times.
Under the new measures, taxpayers will now have until the end of the 2021 tax year to pay any liabilities they accumulated before the deferral period. Meanwhile, VAT refunds and reclaims will be paid by the government as normal.
Though the government has come under fire for not acting fast enough to support the self-employed, income tax payable by the self-employed due in July under the Self-Assessment system has been pushed back until January 2021, giving welcome reprieve to the growing swathe of the population.
Of course, claims can still be made should individuals wish to reduce payments on account if they know in advance profits will be down for either the current or coming tax year.
IR35 & Off-Payroll Working
Prior to the escalation of the Covid-19 crisis, the date for enforcement of the IR35 legislation that extended off-payroll working rules to the private sector was fast approaching.
In response to the crisis, however, HM Treasury have announced an extension of the IR35 deadline until 6th April 2021.
At this late stage, many organisations have already taken actions to ensure compliance with IR35, with the effects of this being felt throughout the contractor market.
Statutory Sick Pay (SSP)
For small to medium sized UK-based businesses with 250 employees or less, statutory sick pay will be refunded by the government. This refund will cover up to 2 weeks’ SSP per employee who has been off work due to the Coronavirus.
The government has advised employers of the critical need to maintain records of staff absences and payment of SSP – however, employees will not be required to provide a doctor’s note. If you do require evidence from an employee, fit notes can be procured from NHS 111 online.
SSP will be payable from day one rather than day four for affected individuals. The rate of SSP, for working a five-day week is currently £95.85 per week.
Ever-increasing business rates have long been the peril of organisations across the British economy. While small businesses using a single property with a rateable value of £12,000 or less already have full relief, a large volume of businesses must still find a way to foot the bill.
Fortunately, government measures have been introduced to give retail, hospitality and leisure businesses who depend on footfall a break on business rates for the 2020/21 tax year.
Cash grants of £25,000 are also to be provided to retail, hospitality and leisure businesses operating from smaller premises with a rateable value between £15,000 and £51,000. A one-off grant of £10,000 will be available for businesses eligible for small business rate relief (SPRR) or Rural Rate Relief.
Funding for the scheme will be provided to local authorities by the government in early April. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
Coronavirus Business Interruption Loan Scheme
A key part of the government’s support package includes the introduction of the temporary Coronavirus business Interruption Loan Scheme which helps SMEs through the provision of loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
The chancellor has also set out a measure to cover the first 12 months of interest payments via a one-off Business Interruption Payment for organisations, allowing them to benefit from lower initial repayments and take full advantage of the loan.
All UK-based businesses with a turnover of no more than £45 million per year are eligible to the scheme and can access finance by talking to their banks or building societies to make arrangements.
The Business Interruption Loan Scheme is covered by the government and 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.
There are 40 accredited lenders able to offer the scheme including all major banks.
How we can help you
During this current state of uncertainty, our dedicated corporate, commercial and employment lawyers are working around the clock to assist our clients the best we can. Should you seek further advice on how to prepare for the coming months, we’re here to help, offering reduced hourly rates and flexible pricing models to keep your costs to a minimum. Call us at your convenience on 0333 772 0926 or get in touch via our contact form.