The Coronavirus Bill is passing through parliament today (19th March 2020). Measures announced so far, by the government to support individuals and businesses, as we get through COVID-19, are summarised below.
At a glance
Announcements cover the following topics:
- IR35 & off-payroll working
- Statutory Sick Pay (SSP)
- IR35: off-payroll working & SSP
- Self-employed and low earners
- Business rates
- Small business one off grants
- SMEs: Coronavirus Business Interruption Loan Scheme
- Larger business: COVID-19 Corporate Financing Facility
- Business taxes: Time to Pay
- Hardship Fund: Social housing and homeless
- Other direct and indirect tax measures
Overview of the measures
IR35 & off-payroll working
- HM Treasury have said they intend to postpone the introduction of the Off-payroll working rules to the private sector.
- The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date is now be deferred to 6 April 2021.
Speaking in the House of Commons on the evening of 17 March, Chief Secretary to the Treasury Stephen Barclay stressed that this was a deferral, and not a cancellation, to help businesses and individuals in response to the ongoing spread of the virus.
No official announcement has yet been made by HM Treasury or HMRC.
Statutory Sick Pay (SSP)
- SSP is paid to eligible employees by their employers.
- SSP is not available to those earning below the Lower Earnings Limit of £118 per week, see Sick Pay (below).
The government said that it will bring forward legislation to allow small and medium-sized businesses and employers to reclaim SSP paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- SSP will be payable from day one instead of day four for affected individuals.
- HMRC’s SSP calculator does not appear to have been yet updated.
- SMEs may reclaim up to two weeks’ SSP expenditure per eligible employee who has been off work because of COVID-19.
- The rate of SSP, for working a five-day week is currently £95.85 per week.
Key essentials for employers:
- An SME is an employer with fewer than 250 employees. The size of an employer will be determined by the number of people they employed as of 28 February 2020.
- Employers should maintain records of staff absences and payments of SSP.
- Employees will not need to provide a GP fit note.
- People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the fit note to cover this by contacting NHS 111, rather than visiting a doctor.
- This can be used by employees where their employers require evidence.
- Further details will be confirmed shortly.
- The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home/self-isolating comes into force.
- The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.
IR35: Off-payroll working & SSP
Following the government’s announcement to postpone the introduction of the off-payroll working rules to the private sector, all workers providing their labour via their own Personal Service Companies (PSCs) to private sector end clients, will be entitled, as they are currently in 2019-20 above to claim SSP under the current rules, via their own PSC.
The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date will now be deferred to 6 April 2021.
Self-employed and low earners
- Self-employed individuals and people earning below the Lower Earnings Limit of £118 per week are not eligible for SSP.
- These individuals can make a claim for Universal Credit or Contributory Employment and Support Allowance
- Special measures apply for the duration of the virus outbreak.
- The requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice. This is to ensure self-employed claimants will receive support.
- People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a jobcentre if they are advised to self-isolate.
- A contributory Employment and Support Allowance will be payable, at a rate of £73.10 a week if you are over 25. This may be claimed by eligible people affected by COVID-19 or self-isolating in line with advice from Day one of sickness, rather than Day eight.
- More details are expected from the government on eligibility criteria. We assume that you may self-certify perhaps after receiving advice by ringing NHS 111,
- Existing small business rate relief continues to apply, this provides full relief for businesses using a single property with a rateable value of £12,000 or less.
- A business rate holiday applies to retail, hospitality and leisure businesses in England for the 2020/21 tax year.
- Pubs are given a rates discount of £5,000.
- 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.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
- The government will provide a one-off grant of £10,000 (this appears to have increased from the £3,000 announced at the budget) to around 700,000 businesses currently eligible for SBRR or Rural Rate Relief.
- For a property with a rateable value of £12,000, this is one-quarter of their rateable value, or comparable to three months of rent.
- Funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme will be provided shortly.
SMEs: Coronavirus Business Interruption Loan Scheme
- A new Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank.
- This is aimed at small and medium-sized businesses to access bank lending and overdrafts.
- The 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.
- The government will not charge businesses or banks for this guarantee and the Scheme will support loans of up to £5 million in value.
- Businesses can access the first six months of that finance interest-free, as the government will cover the first six months of interest payments.
Further details, including on the lenders providing access to this scheme will be announced in the coming days, and the scheme will be available from early week commencing 23 March 2020.
Larger business: COVID-19 Corporate Financing Facility
- The Bank of England has announced a new lending facility for larger businesses to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt.
- This will support companies which are ‘fundamentally strong’ (we assume more detail will be provided as to the criteria to be met) to enable them to continue financing their short-term liabilities.
- The Bank will also support corporate finance markets overall and ease the supply of credit to all firms.
Further details, including on how to access this funding will follow in the coming days, and the scheme will be available from the week commencing 23 March.
Business taxes: Time to Pay
- All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
- These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
- It is essential to contact HMRC and make a Time To Pay agreement before the tax debt becomes due.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Standard business interruption policies are unlikely to cover a pandemic. You need to check your policy wording and contact your insurer.
Hardship Fund: Social housing and homeless
- The government has announced a new £500 million Hardship Fund so Local Authorities can support economically vulnerable people and households.
- The government expects most of this funding to be used to provide more council tax relief, either through existing Local Council Tax Support schemes or through similar measures.
- The Ministry of Housing, Communities and Local Government will set out more detail on this funding, including allocations, shortly.
Other immediate changes applicable for direct and indirect taxes
- No further changes have so far been announced.
- We can only speculate that certain other measures due to commence in 2020/21 may be delayed in due course.
For further advice on any of these issues, please contact Graham Fyfe or Alan Moir:
Graham – firstname.lastname@example.org
Alan – email@example.com