On Friday 20 March, the Chancellor of the Exchequer, Rishi Sunak, announced numerous plans to help and support businesses through the coronavirus crisis.
The continuing spread of coronavirus and the uncertainty of financial markets has led to many businesses worrying about both their short and long-term futures. However, government measures put in place have looked to ease the burden and provide some relief to those who are struggling during this difficult time.
Table of contents
- What measures have been announced?
- The Coronavirus Job Retention Scheme (CJRS)
- The Coronavirus Self-Employment Income Support Scheme (SEISS)
- Deferring VAT and Income Tax Payments
- The Coronavirus Business Interruption Loan Scheme
- Business rate support & cash grants
- Statutory Sick Pay reimbursement
- PayFit & Coronavirus
What measures have been announced?
Rishi Sunak revealed a number of emergency policies that would look to help stave off any immediate job losses and any businesses from closing. These included measures such as a job retention scheme and the deferring of VAT and Income Tax payments.
The Coronavirus Job Retention Scheme (CJRS)
To try and minimise the number of employees losing their job amid the coronavirus crisis, all UK employers will be able to access support to continue paying part of their employees’ salary. The Coronavirus Job Retention Scheme is open to all businesses, regardless of their size.
To access the scheme, employers will have to designate affected employees as ‘furloughed workers’ and notify them of this change. Employers will then have to submit all the information about the relevant employees—including their earnings—to HMRC through a new online portal.
How can an employee be 'furloughed'?
To furlough a worker, the employer must receive the agreement from the employee unless furloughing is already covered in the employment contract.
The furlough agreement should be in writing and should mention the date the furlough starts, when it will be reviewed, and how the employer and employee intend to maintain contact throughout the period.
A furloughed worker will remain employed during the furloughing period; however, they are not able to work.
On 8 July, Rishi Sunak announced a £9 billion bonus scheme that would see employers rewarded for bringing back furloughed employees once the Coronavirus Job Retention Scheme ends.
Employers will be eligible for a £1,000 bonus for each employee they bring back from furlough.
However, to access the scheme previously furloughed employees would need to continuously remain in work until at least January 2021 and be paid at least £520 on average each month from November to the beginning of next year.
The Coronavirus Self-Employment Income Support Scheme (SEISS)
A package to support those who are self-employed – the Coronavirus Self-Employment Income Support Scheme (SEISS) – has also been introduced.
Self-employed people will be able to apply for a grant worth up to 80% of their average monthly profits over the last three years. The package is, like the Coronavirus Job Retention Scheme, worth up to £2,500 per month. Unlike the Coronavirus Job Retention Scheme, self-employed people will be able to continue working as they receive support.
To be eligible, someone will have had to have received at least half of their income from their self-employment, as is registered on the 2018/19 tax return filed in January. Anyone who missed the initial filing deadline will have four weeks from 26 March 2020 to complete this and qualify for support. Only those who earn under £50,000 a year will able to apply.
The grants will begin in June 2020 but will be backdated for three months to March. They will also be taxable and will need to be declared on tax returns submitted in January 2022.
Deferring VAT and Income Tax Payments
Value Added Tax (VAT) payments will be deferred for three months – from 20 March until 30 June 2020 – for all UK businesses.
Those who are self-employed will be able to defer Income Tax payments that were initially due in July of this year under the Self-Assessment scheme until January 2021. There will be no penalties or interest for late payment during the deferral period.
No application is required to access the scheme and businesses will not need to make a VAT payment throughout this period. Taxpayers will have until the end of the 2020/21 tax year to pay any liabilities that will have accumulated throughout the deferred period. VAT refunds and claims will continue to be processed, as is normal, during this time.
The Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme is a temporary initiative that has been put in place by the British Business Bank. It launched on 23 March 2020 and will support small and medium-sized businesses access bank and lending overdrafts.
It has already been confirmed that lenders will be provided with a guarantee of 80% on each loan to give them confidence when providing finance to SMEs. There will be no charge for businesses or banks on this guarantee and the loans supported can be up to £5 million.
Companies are eligible if they are UK based, have a turnover no greater than £45 million per year and must meet the other British Business Bank eligibility criteria.
The Coronavirus Business Interruption Loan Scheme’s rules and list of accredited lenders can be accessed on the British Business Bank’s website.
Should businesses wish to get up and running on the loan as soon as possible, then it is recommended that they reach out to their bank or finance provider to discuss the business plan with them.
The government website has more guidance for employers and businesses, including information relating to cash grants for retail, hospitality, leisure businesses and support for larger firms.
Coronavirus: payroll in times of crisis
Many aspects of daily life have come to a standstill as a result of coronavirus; however, employer obligations to pay employees accurately and on time remain the same.
Business rate support & cash grants
Businesses in the hospitality, leisure and retail sector in England will be able to benefit from a business rates holiday for the 20/21 tax year, as well as cash grants.
Properties that will benefit from the relief will be those that are occupied or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues. Hotels, guest and boarding premises or self-catered accommodation will also be eligible.
There is more information available in the expanded retail discount guidance.
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000, while businesses with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.
An additional Small Business Grant Scheme for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief will be provided. The grant, while a one-off, will provide £10,000 to eligible businesses to help meet their ongoing business costs.
What is the eligibility criteria for the Small Business Grant Scheme?
Business is based in England
A business that occupies property
A business that receives SBRR or RRR as of 11 March 2020
Statutory Sick Pay reimbursement
Legislation allowing small and medium-sized businesses to reclaim Statutory Sick Pay (SSP) paid for any absence related to coronavirus will be brought forward.
The refund will cover up to two weeks’ SSP for each eligible employee who has been absent from work due to coronavirus.
Only employers with fewer than 250 employees on 28 February 2020 will be eligible. Employers should be diligent and maintain records for all staff absences and payments of SSP.
The law stipulates that medical evidence is not required for the first seven days of sickness. After seven days, the employer has the power to determine what proof, if any, they require from the employee.
For any coronavirus-related absences of more than seven days, employees can obtain an isolation note through a new online service. The notes can be accessed through the NHS website and NHS 111 online.
To obtain a note, all that is required is to answer a few questions. Once completed, an isolation note will be emailed to the user. If they don’t have an email address, they can have the note sent to a family member or friend, or directly to their employer. The service can also be used to generate an isolation note on behalf of someone else.
PayFit & Coronavirus
PayFit is a cloud-based software that allows employers and employees to have greater control and visibility on payroll and HR admin.
Due to recent government changes relating to SSP, we have added a feature that allows all employees to claim coronavirus-related absences directly through the app.
We've also updated our app to help customers with any employee furloughs they choose to implement within their organisation. Through the app, the furlough calculation is done automatically, as is the reclaimable employer contributions for National Insurance (NI) and pensions.
If you would like to find out more about PayFit or have any questions about the ways we may be able to support you with your payroll and HR processes, then why not book a demo with one of our product specialists?