Coronavirus Business Support for Employers and Workers
Estimated reading time 15 minutes
Last updated: 2nd June 2020 9:30
Every day, governments and central banks around the world are announcing new measures to support the economy through the COVID-19 crisis. Set out below is a summary of the UK measures which we will be keeping you up to date with as updates are published. It is critical that businesses apply for direct cash assistance as soon as it is available and understand the impact of cash flow assistance measures such as tax payment deferrals and loans as well as other tax and regulatory announcements affecting employers as they arise.
Our dedicated, multi-disciplinary COVID-19 Assistance Team (“CAT”) is available to help you understand and access all the critical support you are entitled to.
The government have announced four key initiatives for employers to enable them to apply for cash assistance:
- The Coronavirus Job Retention Scheme
- A Statutory Sick Pay relief package for small and medium sized businesses
- Small business grant funding of £10,000 for all businesses in receipt of small business rate relief
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a ratable value between £15,000 and £51,000
More detail on the Coronavirus Job Retention Scheme and Statutory Sick Pay relief package including how we can help are set out below. The grant funding will be automatically provided by local authorities.
The Coronavirus Job Retention Scheme
What is available?
All UK employers are eligible to access support to continue paying part of their employees’ wages if they would otherwise have been made redundant.
Her Majesty’s Revenue and Customs (HMRC) will reimburse the lower of 80% of workers’ regular wages, up to a maximum of £2,500 per month where employees are kept in employment but not working (furloughed employees). In addition, HMRC will reimburse employer National Insurance contributions and employer’s auto enrolment pension contributions. The employee’s furloughed pay will be subject to PAYE and employee NIC’s as normal through the payroll. The scheme was originally announced on 19 March 2020 and opened for claims on 20 April 2020. The arrangement was originally intended to cover the three months until the end of May 2020 but will now continue until 31 October 2020 after which it will close.
From 1 July 2020 furloughed workers may return to work part-time with employers being able to make a claim under the scheme in respect of the balance of their full-time salary. In addition, the amount that can be claimed under the scheme will be tapered from August to October with the scheme closing at the end of October 2020.
In summary, claims made under the scheme are as follows:
|
|
April to July 2020 |
August 2020 |
September 2020 |
October 2020 |
|
Wages |
80% up to £2,500 |
80% up to £2,500 |
70% up to £2,187.50 |
60% up to £1,875 |
|
Employer NICs and Pension |
Yes |
No |
No |
No |
|
Employee receives |
80% up to £2,500 |
80% up to £2,500 |
80% up to £2,500 |
80% up to £2,500 |
|
Maximum claim per employee |
£2,803.38 |
£2,500 |
£2,187.50 |
£1,875 |
For the purposes of the scheme fees, commissions, bonuses, benefits in kind and salary sacrifice arrangements are excluded for the calculation of wages. There are also particular rules for calculating wages of employees on zero hours contracts or with irregular pay.
The furloughed pay is tax deductible for the employer, however, any reimbursement from the scheme is taxable.
When is it available and how do I apply?
Claims under the scheme have been possible since 20 April 2020 and so far, 1 million employers have made claims in respect of 8.4 million employees with HMRC making payments promptly. Claims under the scheme will continue to be made monthly as the scheme continues to operate. Guidance on the parameters of the scheme is being updated regularly. Each claim requires information to be sent to HMRC through an online portal about all employees who have been furloughed. The information you should expect to need is:
- your ePAYE reference number
- the number of employees being furloughed
- names of, national insurance numbers for and payroll/employee numbers for the furloughed employees
- your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Refererance or Company Registration number
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
You will need to calculate and pay furloughed employees using your payroll. You can choose to top up the salary of each furloughed employee at your own cost. You must keep accurate records of the amounts claimed including, for five years, a record of the communication in writing to each employee confirming they have been furloughed. HMRC may audit your claim in the future.
If you have less than 100 furloughed employees you will need to enter details of each employee onto the online portal. If you have 100 or more furloughed employees you will need to upload a file to the portal which can be .xls, .xlsx, .csv, .ods..
An agent who is authorised to act for you for PAYE purposes can file the claim. If you use a ‘file only’ agent they cannot make the claim on your behalf.
What are the conditions?
You will need to notify employees that they have been ‘furloughed’ and apply to HMRC. This will require a review of the employment contract and may require negotiation. The minimum period of furlough is three weeks and the furloughed employees must undertake NO work for their employer. From 1 July 2020 furloughed employees may return to work on a part-time basis and claims under the scheme with be accordingly restricted. The consent of furloughed employees for any change will be required and employers will need to submit details of both the usual hours the employee would be expected to work and the actual hours worked with their claim under the scheme.
You can only claim for furloughed employees that were on your UK payroll on or before 19 March 2020 and which were notified to HMRC on a Real Time Information (‘RTI’) submission on or before this date. You can also claim for employees made redundant on or after 28 February 2020 provided you re-employ them and out them on furlough.
The Scheme will close to new entrants from 30 June 2020 and the entire scheme will close on 31 October 2020. Claims may only be made after that date for employees who have already been furloughed. This will mean that, to comply with the three week qualification period, the latest date on which employees who are still working may be furloughed is 10 June 2020.
Employees can be on any type of employment contract. Please refer to our addition document about eligibility requirements by type of employee. Foreign nationals are eligible to be furloughed and grants under the scheme and not counted as ‘access to public funds’.
How can we help?
We can help advise you on all employment law aspects of furloughing employees, help you track your entitlements and support you with your application to HMRC for access to the funds you are entitled to under the scheme as soon as it becomes live. Get in touch for further advice.
Statutory Sick-Pay relief package
What is available?
All UK-based small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 from 13 March 2020.
How do I apply?
A rebate scheme was launched on 26 May 2020. Existing systems are not set-up to issue employer refunds of SSP. More detail on the rebate scheme can be found here.
What are the conditions?
The eligibility criteria for the scheme will be as follows:
- employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
- employers will be able to reclaim up to two weeks’ SSP for any eligible employee who is absent as a result of COVID-19 including those who are required to self-isolate
- employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.
- eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
How can we help?
We can help you establish a system of tracking eligible employers and, with your authorisation, apply for the rebate on your behalf as soon as the scheme is launched. Get in touch for further advice.
The measures above provide cash assistance to businesses. Some will take time to implement and therefore businesses will need to use loans and tax deferrals to manage cash flow. The government have announced a series of additional measures and loan schemes to support businesses. To date these are as follows:
- Deferral of VAT and Income Tax payments
- The HMRC Time to Pay Scheme
- The Coronavirus Business Interruption Loan Scheme
- A Bank of England lending facility for larger firms
- Bounce Back Loans
Deferral of VAT and Income Tax payments
What is available?
Business will not be required to make a VAT payment during the period 20 March 2020 until 30 June 2020. VAT refunds and reclaims will be paid by the government as normal. The deferred payments will need to be made by 5 April 2021 instead.
Income Tax Self- Assessment payments of account due on 31 July 2020 will be deferred until 31 January 2021. The payment due in July is the 2nd payment on account for 2019/20, it is generally equal to one half of the tax for 2018/19.
How do I apply?
Both deferral measures are automatic, no application is required. No interest or penalties will be charged in the deferral period.
What are the conditions?
The VAT deferral applies to all UK businesses. The payment on account deferral applies to the self-employed.
How can we help?
The payment on account due on 31 July 2020 is the 2nd payment on account towards the 2019/20 tax. Many of the self-employed will set aside money for payments on account. Such funds can now be used for other means in the short-term. However, the payment will be due on 31 January 2021, the due date for the filing of the tax return for 2019/20.
We can help individuals plan for these liabilities and look ahead to the 2020/21 tax year to assess future liabilities and manage cash-flow. Get in touch for further advice.
The HMRC Time to Pay Scheme
What is available?
All businesses and self-employed individuals in financial distress and with outstanding tax liabilities may be eligible to receive support through HMRC’s Time To Pay Service, allowing scheduled payments without penalty.
HMRC will discuss the following:
- agreeing an instalment arrangement
- suspending debt collection proceedings
- cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately
How do I apply?
If you have missed or could miss a tax payment due to COVID-19 you can call HMRC’s dedicated helpline on 0800 024 1222.
What are the conditions?
You are eligible to apply if you are self-employed or a business that pays UK tax and has outstanding tax liabilities. Arrangements are agreed on a case-by-case basis.
How can we help?
We can support you or your business with reviewing all forthcoming tax payment due dates to identify any payments you may miss and help you set up the arrangement with HMRC. Get in touch for further advice.
The Coronavirus Business Interruption Loan Scheme
What is available?
All UK-based small and medium sized businesses may be supported with access to loans, overdrafts, invoice and asset finance of up to £5 million pounds for 6 years. As part of the scheme, the government will make a Business Interruption Payment to cover the first 12 months of interest payments and any fees.
How do I apply?
The scheme is open. To apply you should talk to one of the 40 accredited finance providers.
What are the conditions?
The full rules of the scheme are available on the British Business Bank website. You are eligible to apply if your business has a turnover of no more than £45 million per year and you will require a plan.
A new scheme for larger businesses with turnover of between £45 million and £500 million was also announced on 3 April where such businesses can apply for a loan of up to £25 million, More detail on the terms of this scheme are expected shortly.
How can we help?
Our business and financial consultancy service can offer direct assistance by helping you pull together and make the application for the loan. Get in touch for further advice.
COVID-19 Corporate Financing Facility
What is available?
The Bank of England will buy short-term debt from larger UK businesses. The scheme will operate for at least 12 months.
How do I apply?
The scheme is open. You will need to contact your bank or other banks that are able to issue commercial paper. More information can be found on the Bank of England’s dedicated site.
What are the conditions?
The scheme is open to companies and their Finance subsidiaries that make a material contribution to the UK economy. Full details of the eligibility criteria is available on the Bank of England’s dedicated site.
How can we help?
Our Covd-19 Assistance Team can out you in touch with advisers who can help you to determine eligibility for the arrangements and to make the necessary applications. Get in touch for further advice.
Bounce Back Loans
What is available?
Small firms and sole traders will be able to borrow between £2,000 and up to 25% of their turnover to help them through the crisis. The maximum loan is £50,000. The loans are 100% government-backed. The length of the loan is 6 years with no repayments due in the first 12 months. No fees or interest is payable in the first 12 months either but after this the rate of interest will be 2.5%.
How do I apply?
The scheme is open. There are 11 lenders participating in the scheme and more details of how to apply can be found here.
What are the conditions?
The scheme is open to UK businesses adversely impacted by the coronavirus established before 1 March 2020.
How can we help?
Our Covd-19 Assistance Team can out you in touch with advisers who can help you to determine eligibility for the arrangements and to make the necessary applications. Get in touch for further advice.
Delay to IR35
These measures were set to be introduced in April 2020 and will be delayed to April 2021.
Businesses will not have to deduct PAYE and NICs from the fees they pay to the Personal Service Companies of individuals they determine are employees until April 2021.
This deferral will provide some breathing space for the many businesses who use contractors. Some businesses were very advanced with the implementation of the planned new regime for April 2020. They may need to reverse some of the changes they were set to make, such as payrolling contactor fees; however this will save businesses employer national insurance costs.
How can we help?
This welcome deferral will free up time to focus on more pressing and urgent business issues. They will be introduced next April and we can support you with preparing for the change once the current crisis passes.
UK Tax residence
With many UK citizens on overseas assignment returning unexpectedly returning to the UK as a result of COVID-19, there are two potential impacts:
- How many assignees may unexpectedly become tax resident in the UK?
- Will any work undertaken in the UK whilst here give rise to a tax charge in the UK?
This could lead to administrative and additional cost burdens for the employee and employer such as applying Pay As You Earn both in the UK and overseas where the assignee is based.
Under the Statutory Residence Test individuals can ignore up to 60 days spent in the UK in any tax year for exceptional circumstances. This provision may become important in ensuring some assignees do not become UK tax resident as a result of current and future travel restrictions. These restrictions could otherwise lead to unexpected additional tax and social security costs for both employees and employers. As the legislations refers to 60 days in a tax year a new 60 days count will start from 6 April 2020 (start of the new UK tax year). Clearly the longer the restrictions are in place, the more risk there will be of individuals becoming UK tax resident.
HMRC has confirmed that days spent in the UK that can be disregarded for the purposes of the Statutory Residence Test due to ‘exceptional circumstances’ will (depending on the facts and circumstances of each case) include:
- quarantine or advice by a health professional or public health guidance to self-isolate in the UK as a result of the virus
- restricted by official government advice not to travel from the UK as a result of the virus
- inability to leave the UK as a result of the closure of international borders, or
- request by employer to return to the UK temporarily as a result of the virus
How can we help?
Our team can help you identify any specific cases where there are risks of additional potential costs and help you identify any additional compliance burdens / mitigation strategies.
Immigration
Many individuals have heeded advice to return home. However, some have not been and may not be able to for some time. This could lead to some employees overstaying the duration of their VISAs. At this stage there has not been any announcement in the UK on this issue. You may wish to identify any employees who are travelling for business purposes
How can we help?
We can help you identify any ‘at risk’ employees under current rules and keep you informed of any announcements and help your employees apply for any extensions should they need to.