Coronavirus updates

Financial support for self-employed announced: The Government will provide grants worth 80% of their average monthly profits. See below for further details.

New restrictions: The public have been told to stay at home except for shopping for basic necessities, daily exercise, any medical need and travelling to and from essential work. Shops selling non-essential goods are being told to shut and gatherings in public of more than two people who do not live together are prohibited. The government is also stopping all social events, including weddings, baptisms and other ceremonies.

US tax filing deadline moved: US Treasury Secretary Steven Mnuchin has announced that the country’s income tax filing date has been pushed back from April 15 to July 15.

IR35 delayed: The launch of new IR35 rules which was due to launch on 6 April has been postponed for a year. This will cause the shelving of plans made by some businesses, but will come as a relief to many worried about the additional admin burden that would have been placed on them.

Bank of England: The BOE has cut the base interest rate further to 0.1%. An additional £50bn of quantitative easing is also expected.

Brexit transition period: It has been reported by the Telegraph that the Government is preparing to ask for an extension to the Brexit transition period.

Schools closing: UK schools, colleges and nurseries will close from Friday until further notice. Provisions will be made for those looking after the children of key workers and vulnerable children.

Paying your employees and and funding

Coronavirus Job Retention Scheme: Under the new Coronavirus Job Retention Scheme (CJRS), government grants will cover 80% of the salary up to £2,500 each month for PAYE employees who would otherwise have been laid off during this crisis.

What we know so far:

• The scheme will be available to all UK employers, of any size and in any sector (small or large, including charitable or non-profit).
• It involves “furloughing” designated workers who would otherwise have been “laid off” during this crisis.
• This will involve keeping those workers on the payroll instead of dismissing them as redundant or putting them on unpaid lay-off.
• HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per worker per month. It is being reported by the BBC that this cap is against gross pay, but we await confirmation on this.
• Workers cannot do any work for an employer that has furloughed them.
• The employer can top-up the 80% HMRC payment but does not have to.
• The scheme will be backdated to 1 March 2020 and run for three months from that date. It will be extended if necessary.
• The system will be managed through an online portal being set up by HMRC.
• It is expected to be open before the end of April 2020.
• The narrative used in the information released so far says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This conditional phrase may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description and will update you when this becomes available.
• Further detail on furloughing workers was released on 26 March 2020 and can be found on .gov here.

We have had a large volume of calls regarding this scheme, however there are currently many unanswered questions on any conditions, eligibility and the process for claiming. Therefore, employers will need to wait a little while longer for more clarity before planning their approach. We will update our information here as soon as this is known. Businesses not in a position to wait until this becomes available (possibly the end of April for payments to be made) may benefit from the VAT deferral, arranging 'Time to Pay' agreements with HMRC regarding PAYE tax liabilities or by considering a Coronavirus Business Interruption Loan or bridging loan type arrangement (if funding is needed you should speak to your bank relationship manager).

Coronavirus Business Interruption Loan Scheme: Any business that needs access to cash to pay their rent, salaries, suppliers, or to purchase stock, will be able to access a government-backed loans under the ‘Coronavirus Business Interruptions Loans Scheme’ (CBILS). This will be issued by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government. The borrower remains liable for 100% of the debt.

What we know so far:

• Loans are available from £25,001 to £5 million
• Available from 1-6 years
• No interest is payable for 12 months
• Capital repayment holidays are available for 12 months as well – so some businesses will have no payments to make in the first year
• Some lenders may limit loans to 25% of the business’ turnover in 2019, or double the annual wage bill

Applications are now being taken by many of the approved lenders, however the criteria may vary from one lender to another. There has been criticism of some banks insisting on personal guarantees against the loans, but this is not across all lenders (source: BBC) and the Big Four banks have agreed that personal guarantees will not be taken as security for lending below £250,000. You should therefore check your banks terms. All major banks are issuing these loans so you should contact your bank relationship manager in the first instance. We are in touch with brokers working with CBILS lenders and can introduce you should this be of interest.

Reclaiming sick pay: A refund covering up to 2 weeks Statutory Sick Pay due to absence caused by COVID-19 will be available to employers. This applies for businesses with less than 250 employees and is available from the first day of absence. The mechanism for making claims has yet to be confirmed but employers should maintain records of staff absences and payments of SSP with immediate affect so claims can be made.

Other support

Business Support Helpline: The Government has extended its Business Support Helpline to provide advice and financial help from government-backed schemes. You can contact the helpline on 0300 456 35656.

Defer VAT payments: If you are a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to (1) defer the payment until a later date or (2) pay the VAT due as normal. Please note it does not cover VAT MOSS payments and HMRC will not charge interest or penalties on any amount deferred. This is likely to be a significant help for businesses with the immediate cashflow strains. It is an automatic offer with no applications required but you must still submit VAT returns to HMRC on time. If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking. Businesses will be given until 31 March 2021 to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims during this period will be paid by the government as normal.

Time to pay for business tax: Businesses and the self-employed in financial distress can agree bespoke ‘Time to Pay’ arrangements giving extra time to settle tax affairs. Each case must be agreed on an individual basis by contacting the helpline on 0800 0159 559

3 month extension to file your accounts: If your accounts will be late because your company is affected by COVID-19, you can apply for an automatic and immediate 3 month extension to file your accounts. Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible. You can apply online here providing the reason, your company number, your email address and any supporting documents (optional). You should hear back within 5 days to tell you whether your application has been successful or not.

Exemptions and cash grants

Business rates holiday for hospitality, retail and leisure businesses: A 12-month business rates holiday for all retail, hospitality and leisure businesses in England has been announced. Also 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. To arrange this, you should contact your local authority.

Cash grants up to £10,000: There will also be funding up to £10,000 and business rates support for businesses currently on the Small Business Rates Relief (SBRR). Further details are expected to be confirmed in early April.

Further options

Existing funding and grant initiatives: We are reminding clients of existing regional funding initiatives which may still be relevant in helping them invest in new opportunities. You can find further details on .gov here.

Raise finance with Enterprise Investment Scheme (EIS): For businesses who need a cash injection, an EIS scheme allows qualifying companies to raise finance from new and existing shareholders, with potentially attractive tax breaks. We can advise whether this is a suitable option and guide you through the process.

Paying your employees and and funding

Coronavirus Job Retention Scheme: Under the new Coronavirus Job Retention Scheme (CJRS), government grants will cover 80% of the salary up to £2,500 each month for PAYE employees who would otherwise have been laid off during this crisis.

What we know so far:

• The scheme will be available to all UK employers, of any size and in any sector (small or large, including charitable or non-profit).
• It involves “furloughing” designated workers who would otherwise have been “laid off” during this crisis.
• This will involve keeping those workers on the payroll instead of dismissing them as redundant or putting them on unpaid lay-off.
• HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per worker per month. It is being reported by the BBC that this cap is against gross pay, but we await confirmation on this.
• Workers cannot do any work for an employer that has furloughed them.
• The employer can top-up the 80% HMRC payment but does not have to.
• The scheme will be backdated to 1 March 2020 and run for three months from that date. It will be extended if necessary.
• The system will be managed through an online portal being set up by HMRC.
• It is expected to be open before the end of April 2020.
• The narrative used in the information released so far says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This conditional phrase may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description and will update you when this becomes available.
• Further detail on furloughing workers was released on 26 March 2020 and can be found on .gov here.

We have had a large volume of calls regarding this scheme, however there are currently many unanswered questions on any conditions, eligibility and the process for claiming. Therefore, employers will need to wait a little while longer for more clarity before planning their approach. We will update our information here as soon as this is known. Businesses not in a position to wait until this becomes available (possibly the end of April for payments to be made) may benefit from the VAT deferral, arranging 'Time to Pay' agreements with HMRC regarding PAYE tax liabilities or by considering a Coronavirus Business Interruption Loan or bridging loan type arrangement (if funding is needed you should speak to your bank relationship manager).

Coronavirus Business Interruption Loan Scheme: Any business that needs access to cash to pay their rent, salaries, suppliers, or to purchase stock, will be able to access a government-backed loans under the ‘Coronavirus Business Interruptions Loans Scheme’ (CBILS). This will be issued by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government. The borrower remains liable for 100% of the debt.

What we know so far:

• Loans are available from £25,001 to £5 million
• Available from 1-6 years
• No interest is payable for 12 months
• Capital repayment holidays are available for 12 months as well – so some businesses will have no payments to make in the first year
• Some lenders may limit loans to 25% of the business’ turnover in 2019, or double the annual wage bill

Applications are now being taken by many of the approved lenders, however the criteria may vary from one lender to another. There has been criticism of some banks insisting on personal guarantees against the loans, but this is not across all lenders (source: BBC) and the Big Four banks have agreed that personal guarantees will not be taken as security for lending below £250,000. You should therefore check your banks terms. All major banks are issuing these loans so you should contact your bank relationship manager in the first instance. We are in touch with brokers working with CBILS lenders and can introduce you should this be of interest.

Reclaiming sick pay: A refund covering up to 2 weeks Statutory Sick Pay due to absence caused by COVID-19 will be available to employers. This applies for businesses with less than 250 employees and is available from the first day of absence. The mechanism for making claims has yet to be confirmed but employers should maintain records of staff absences and payments of SSP with immediate affect so claims can be made.

Other support

Business Support Helpline: The Government has extended its Business Support Helpline to provide advice and financial help from government-backed schemes. You can contact the helpline on 0300 456 35656.

Defer VAT payments: If you are a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to (1) defer the payment until a later date or (2) pay the VAT due as normal. Please note it does not cover VAT MOSS payments and HMRC will not charge interest or penalties on any amount deferred. This is likely to be a significant help for businesses with the immediate cashflow strains. It is an automatic offer with no applications required but you must still submit VAT returns to HMRC on time. If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking. Businesses will be given until 31 March 2021 to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims during this period will be paid by the government as normal.

Time to pay for business tax: Businesses and the self-employed in financial distress can agree bespoke ‘Time to Pay’ arrangements giving extra time to settle tax affairs. Each case must be agreed on an individual basis by contacting the helpline on 0800 0159 559

3 month extension to file your accounts: If your accounts will be late because your company is affected by COVID-19, you can apply for an automatic and immediate 3 month extension to file your accounts. Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible. You can apply online here providing the reason, your company number, your email address and any supporting documents (optional). You should hear back within 5 days to tell you whether your application has been successful or not.

Exemptions and cash grants

Business rates holiday for hospitality, retail and leisure businesses: A 12-month business rates holiday for all retail, hospitality and leisure businesses in England has been announced. Also 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. To arrange this, you should contact your local authority.

Cash grants up to £10,000: There will also be funding up to £10,000 and business rates support for businesses currently on the Small Business Rates Relief (SBRR). Further details are expected to be confirmed in early April.

Further options

Existing funding and grant initiatives: We are reminding clients of existing regional funding initiatives which may still be relevant in helping them invest in new opportunities. You can find further details on .gov here.

Raise finance with Enterprise Investment Scheme (EIS): For businesses who need a cash injection, an EIS scheme allows qualifying companies to raise finance from new and existing shareholders, with potentially attractive tax breaks. We can advise whether this is a suitable option and guide you through the process.

Set up a response team: Assign responsibility, form a team to identify your business vulnerabilities, establish contingency plans and carry out internal communications.

Review your business risks: Review your liquidity, funds held in reserve and your demand side risk, supply chain risk and your workforce mobility.

Confirm your contingency plans: Assess how a temporary office closure, more expensive suppliers or delivery delays will impact your business. Do you have sufficient cash flow and reserves to overcome these challenges?

Check your supply-chain: Is there any likely disruption to your supply-chain? Consider whether you should ration critical parts, pre-book rail/air-freight capacity, use after-sales stock as a bridge until production restarts or try to gain higher priority from your suppliers.

Review your funding and cash flow support: Speak to your bank relationship manager about solutions they may be able to offer, such as a temporary overdraft or loan facility. We have been speaking to our contacts at the banks to stay up-to-date with solutions they are offering.

Check your insurance policy: You may need to check the terms and conditions of your insurance policy to ensure that you are covered under your business interruption insurance.

Review your HR policies: Review your sickness, absence and reporting policies/processes to check they are fit for purpose and are feasible for the business. Are your team able/prepared to work from home and has the technology and systems that will enable this been tested?

Consider your travel arrangements and visitors: Do you have processes or systems in place to ask employees and visitors if they have visited high risk areas so that appropriate action can be taken, such as postponing meetings or working from home?

Check your audit: Do your auditors consider the new risks to your business and follow the new guidelines set out by the ICAEW? From an accounting point of view, asset valuations may be impaired and inventories may need to be written off.

Read further commentary from our team on these points here.

Self assessment tax bills deferred: Self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This will not require an application. Penalties and interest for late payment will not be charged in the deferral period.

Mortgages: Mortgage lenders will offer at least a three month mortgage holiday so that people will not have to repay their mortgage. You should speak to your mortgage provide to discuss their terms and eligibility.

Those renting: The government will bring forward emergency legislation to protect private renters from eviction. But will also avoid "passing on the problem" by "taking steps to protect other actors in the economy". Further details are expected shortly.

Those living abroad: Guidance has been issued for British people living or travelling overseas following the outbreak. Find the updated guidance on .gov here.

Financial support package for self-employed: The Chancellor has announced a Self-employment Income Support Scheme (SEISS) providing a grant to the self-employed worth 80% of their average monthly profits - up to a maximum of £2,500 a month - to help them cope with the financial impact of coronavirus. Rishi Sunak said the cash will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest, due to the complexity of the scheme.

What we know so far:

• The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month. In a recent briefing note from the Institute for Fiscal Studies, it was suggested that the £2,500 figure (which also applies to the employees’ Job Retention Scheme) is the maximum payment that will be made, not the maximum earnings that are protected, i.e. 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) will be covered.
• The initial payment term of the SEISS grant will be “at least three months”.
• The payment of the grant will not prevent the claimant from continuing to work.
• The SEISS will be restricted in that:
  • Self-employment must provide the majority of the claimant’s income. It is unclear how this is calculated.
  • Trading profits either: are less than £50,000 in 2018/19; or trading profit was less than £50,000 averaged over the three tax years from 2016/17.
    
    
  According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).
• The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.
• HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system.
• Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.
• Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.
• Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities.

Financial support package for self-employed: The Chancellor has announced a Self-employment Income Support Scheme (SEISS) providing a grant to the self-employed worth 80% of their average monthly profits - up to a maximum of £2,500 a month - to help them cope with the financial impact of coronavirus. Rishi Sunak said the cash will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest, due to the complexity of the scheme.

What we know so far:

• The SEISS will pay a directly payable taxable grant to the self-employed (including members of partnerships) based on 80% of profits averaged over the last three tax years (or shorter periods if self-employment started after 2016/17), subject to a maximum of £2,500 a month. In a recent briefing note from the Institute for Fiscal Studies, it was suggested that the £2,500 figure (which also applies to the employees’ Job Retention Scheme) is the maximum payment that will be made, not the maximum earnings that are protected, i.e. 80% of up to £37,500 of profits ([£37,500 x 80%] /12 = £2,500) will be covered.
• The initial payment term of the SEISS grant will be “at least three months”.
• The payment of the grant will not prevent the claimant from continuing to work.
• The SEISS will be restricted in that:
  • Self-employment must provide the majority of the claimant’s income. It is unclear how this is calculated.
  • Trading profits either: are less than £50,000 in 2018/19; or trading profit was less than £50,000 averaged over the three tax years from 2016/17.
    
    
  According to the Chancellor, these thresholds mean the scheme covers 95% of the self-employed. The corollary is that it creates a cliff edge at £50,000, a figure that appears elsewhere in the tax system (e.g. the higher rate tax threshold).
• The claimant must have submitted a 2019 tax return (covering the 2018/19 tax year). As a concession, any later filer will have four weeks to submit their overdue return if they wish to be included in the scheme.
• HMRC will use their existing information to assess eligibility and contact individuals directly, requesting completion of “a simple online form”. A gov.uk webpage gives more details, but is somewhat confusingly headed “Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme”. The “don’t call us, we’ll call you” approach is aimed at preventing HMRC being overwhelmed with telephone queries, as has happened with the DWP’s Universal Credit system.
• Payments from HMRC should start at the beginning of June. The initial sum will represent three months’ cumulative payments. Until then the self-employed can claim Universal Credit. In his statement the Chancellor said Universal Credit could give a self-employed person with a non-working partner and two children, living in the social rented sector, support of up to £1,800 a month.
• Anyone whose self-employment started after 5 April 2019 and thus has no self-employed earnings recorded with HMRC cannot benefit from the scheme and must rely on Universal Credit.
• Those who operate through one person companies are not covered by the scheme as, despite the media label often given to them, they are not self-employed. The Treasury press release states that such people “will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes”. The use of the word ‘salary’ is key here, as many one person companies route the bulk of their employee’s remuneration via dividends to reduce National Insurance liabilities.

Self assessment tax bills deferred: Self assessment income tax payments due on the 31 July 2020 (the second payment on account for 2019/20) will be deferred until the 31 January 2021. This will not require an application. Penalties and interest for late payment will not be charged in the deferral period.

Mortgages: Mortgage lenders will offer at least a three month mortgage holiday so that people will not have to repay their mortgage. You should speak to your mortgage provide to discuss their terms and eligibility.

Those renting: The government will bring forward emergency legislation to protect private renters from eviction. But will also avoid "passing on the problem" by "taking steps to protect other actors in the economy". Further details are expected shortly.

Those living abroad: Guidance has been issued for British people living or travelling overseas following the outbreak. Find the updated guidance on .gov here.