As in any time of uncertainty, businesses and individuals around the world are naturally concerned about the impact to their finances and the safety of their employees. Here are some details regarding financial support that may be available to you and advice on how to prepare and guide your team through this crisis. It is important to remember businesses constantly have challenges to overcome, this is another challenge that we are all experiencing together and will come out the other side having learnt from this situation.
Coronavirus Job Retention Scheme
On Friday 20th March, the chancellor announced for the first time in history the government will pay peoples wages via a Coronavirus Job Retention Scheme.
How do I apply?
What is it and what will it cover?
HMRC will reimburse 80% of workers wage costs, up to a cap of £2,500 per month.
Employers can choose to top up pay either for the unfunded 20% of pay or the amount above £2,500 for higher earners, but this will not be a formal requirement to obtain access to the scheme.
Who is eligible?
All employers are eligible for this scheme.
How do I apply?
If you are an employer you will need to:
- Designate affected employees as ‘furloughed workers,’ and notify your employees of this change
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
- HMRC will reimburse the employer therefore the employer will make the wage/ salary payment to the furloughed worker and then be reimbursed by HMRC.
When will it be available?
- HMRC are working urgently to set up a system for reimbursement a existing systems are not set up to facilitate payments to employers.
- The scheme will be open before the end of April and will be backdated to 1 March 2020.
- If you need cash flow in the meantime you may be eligible for a Coronavirus Business Interruption Loan
What is a furloughed worker?
We understand that a furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus out
Support for Businesses
• Loans – There is an increase in the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2 million to £5 million, and the Government will cover the first 12 months of interest payments to ensure businesses can access the first 12 months of this finance interest free.
- The Government is assuring businesses they will be able to access a government-backed loan or credit on attractive terms to aid their current cash-flow problems.
- These loans will become available during the week commencing 23rd March 2020.
- Finance terms are from 3 months – 10 years for term loans and asset finance. Revolving Finance and invoice finance have finance terms of up to 3 years.
• HMRC Time To Pay Scheme – A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities to receive support with their tax affairs. Through this, businesses may be able to negotiate a bespoke Time to Pay arrangement. You can contact HMRC’s dedicated helpline on 0800 0159 559.
• Rates -There will be a three month rates holiday for all business ratepayers, excluding public sector and utilities. This means that no rates will be charged for April, May and June 2020. This automatically reduces the 2020-21 annual rate bill for business ratepayers by 25 per cent. This amount does not need to be paid back.
• Statutory Sick Pay – Companies with fewer than 250 staff will be 100% refunded by the government for the cost of providing statutory sick pay for up to two weeks per employee.
• Hospitality, Tourism and Retail Sectors Grant Scheme – To support retailers, leisure businesses and hospitality firms, small companies occupying business premises with a rateable value of between £15,000 and £51,000 will be eligible for grants worth £25,000. Local councils will be contacting all businesses eligible and automatically sending the grant to the business. There is no further detail on how and when this will be implemented yet.
• COVID-19 Small Business Grant – All businesses with a NAV up to £15,000 will be eligible for cash grants in the Small Business Rate Relief scheme of £10,000.
Local Councils have began paying this to eligible businesses however there are 27,000 small businesses in the North and the Land and Property Services only have BACS details for 9,500 of them. An online portal is currently being set up to enable the remaining eligible businesses to register their details and receive payment.
• The Government will relax planning regulations which will allow pubs and restaurants to start providing takeaways without a planning application to support the food industry and help provide meals for people who need to self-isolate.
•Companies House – You can apply for a 3 month extension to file accounts with Companies House, those citing issues around COVID-19 will be automatically and immediately granted an extension. There has been no change to filing deadlines for confirmation statements and late filing of a confirmation statement could lead to the company being struck off.
• Deferring VAT Payments – We are assuming VAT returns are still required to be submitted, however any VAT payments will automatically be deferred for any submissions between 20th March – 30 June 2020. No application will be required as this will be automatic and all VAT refunds will be paid to traders as normal. Taxpayers will be given until end of 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.
• IR35 – Changes to IR35 off payroll working rules will now come in in April 2021 instead of April 2020 as originally planned
• The Government has issued a general workplace guide for businesses throughout the COVID-19 outbreak. See the link: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19
•Irish Companies Annual Returns – all annual returns due to be filed by any Irish Company now and up to 30th June 2020 will be deemed to have been filed on time if all elements of the annual return are completed and filed by that date. This will enable businesses and their financial advisers to focus on the more immediate financial challenges facing them at this time. The situation will be kept under review and the date of 30th of June may be extended depending on the situation as it develops. This does not apply to UK companies, only Irish companies.
Support for the Self Employed
• Universal Credits minimum income floor is to be temporarily abolished to support those who have reduced income as a result of coronavirus.
• There will be a shorter wait time to receive Universal Credits with benefits now being deposited into individuals accounts within 2 weeks as opposed to 5 weeks.
• Employment Support Allowance – Anyone self employed can claim ESA, which is currently sitting at £73 per week. To be eligible to claim this support, you are required to have paid National Insurance Contributions for the past two years.
• Tax Credits – If you are currently in receipt of tax credits, after 5 April 2020, it is possible to ask tax credits to base your payments on your projected income for 2020/21 which will likely be lower than your income for 2019/20. This means your payments from tax credits will increase. If your projected income for 2020/21 is lower than what you actually earn, you will have to repay this back to HMRC after April 2021, however this could be seen as an interest free loan to assist you in the current climate.
• Tax Credits – There is an increase in the basic element by £1,000 for the next 12 months. This means the basic allowance is up from £1,960 per annum to £2,960 per annum. The date when this change will come into affect has not been announced yet.
Information for Individuals
• Mortgages – Mortgage lenders have agreed to a 3 month mortgage holiday for homeowners if they are suffering difficulties due to the outbreak so they will not have to pay anything “while they get back on their feet”. Contact your mortgage provider if you need to avail of this.
• Delay in Domestic Rates Bills – Rate bills for 2020-21 were due to be issued in April 2020. To avoid placing financial pressure on ratepayers affected by COVID-19, rate bills will not be issued until June 2020. This will happen automatically. Ratepayers do not need to request to have their rate bill deferred until June 2020. When rate bills issue in June 2020, ratepayers can still choose to pay their bill in monthly instalments between June 2020 and March 2021. Monthly Direct Debit payment plans will be automatically updated to collect payments between June 2020 and March 2021.
Guide for Employees/ Employers
• Statutory sick pay will be made available for employees from the first day of self-isolation, even if no symptoms are present.
• By law, medical evidence is not required for the first 7 days of sickness (employees can self-certify). After 7 days, it is for the employer to determine what evidence they require, if any, from the employee.
• To make it easier for people to provide evidence to their employer that they need to stay at home, the Government is developing an alternative form of evidence to the Doctors sick note. These will shortly be available through NHS 111 online.
General Steps for Businesses to Take Today
• Stay Informed – Stay up to date by following credible, official sources like the World Health Organization (WHO) and your local government health department so you can respond quickly to changes that could affect you, your staff or your customers.
• Review expenditure – Cut any unnecessary expenses and review the businesses cash flow position. If you have to close either voluntarily or forced closure, how long could you keep going for with no income? Do you need to arrange additional funding should this happen?
• Speak to your Bank – The Government is making it clear that it expects the banks to take a sympathetic approach to small business customers during this crisis and from speaking to some local banks this seems to be the case. Talk to your bank about the help that it might be able offer your business. That might include new credit facilities such as overdrafts or loans, or payment holidays on existing commitments. It may also be prepared to relax the terms of your loans – if you have covenants you’re in danger of breaching, for example.
• Your landlord – It’s possible that your landlord may be prepared to discuss reduced rents or even a rent holiday for a period, particularly if that makes the difference between keeping you as a tenant for the longer term and having a property stand empty.
• Voluntary Closure – If you voluntarily decide to close your business, you will need to consider the following:
- Employees: your employees are entitled to full pay unless it states in their employment contract that you are able make temporary layoffs. If you are unable to make temporary layoffs and cannot afford to continue to pay your employees you may need to consider going into administration /appointing a liquidator.
- Review your expenditure to see how long the business can sustain having no income.
- Consider cutting any unnecessary expenses/direct debits.
- Take into account if closed, you may have reduced purchases and other expenses such as light and heat.
• Forced Closure – You may need to plan for a forced closure of the workplace temporarily. If this is the case you may need to look at the following options:
- Having facilities in place for staff to work from home if possible.
- Layoffs and short time working – if stipulated in employment contracts.
• Review Insurance Policies – Check if your business insurance policy covers forced closures caused by any notifiable infections/disease/ pandemics. It may be best to speak to your insurance provider now to see where you stand should you have to close.
- Also look into what other insurances you may have that may pay out e.g. key person insurance.
- The Government has confirmed that advice to avoid pubs, clubs and theatres etc. is sufficient for businesses to claim on their insurance where they have appropriate business interruption cover for pandemics in place.
• Pandemic Preparedness Plan – Prepare plans to establish possible action that can be taken to ensure employee safety while reducing business disruption. How resilient is your business to increased absences? Remember, employees will not only be absent due to their own sickness, but that of their relatives and may well also have increased childcare responsibilities due to the closure of daycare facilities and schools. Who are the critical employees that your business relies on day-to-day? In the event of an office closure, are they able to work from home? And if they are sick, do they have colleagues capable of stepping up into their roles. Additionally, you should be clear when any plan will be put into action. It could be the moment the pandemic is declared, when a virus case confirmed in the vicinity of your business or only when a staff member shows symptoms.
• Stay in Touch with Customers – Continuously share important information with your customers using your email, website, Facebook Page, Instagram Business Profile, or however you typically contact your customers. You may want to include information about the measures you’re taking to make your office/ premises or products safe, or how you will handle customer inquiries if there are expected shipping delays/ will there be possible delays or even business closures?
• Communicate with Suppliers – Make sure you are in constant communication with all of your suppliers to ensure you can maintain your supply chain resilience by continuing to get your products delivered to your office/ premises, if they expect delays/ closures or if they have any price changes due to currency fluctuation/ general trading uncertainty. Try to make sure you have agreed terms with each of your suppliers so that you know what to expect for your own trade, which will allow you to keep your customers and staff informed with reliable and real-time information.
• Prepare a Customer Service Plan – So that you can be seen to be interactive and transparent with your customers during this challenging period, prepare for incoming questions and requests. Consider drafting templated responses for common question through your emails or set up other response platforms such as instant-reply messages with information you expect your customers will be looking for.
• Provide a List of Frequently Asked Questions (FAQ’s) – Prepare a list of responses for questions your customers are likely to ask, and provide as much reassurance and detail as possible within your answers.
• Stay Safe – Be sure to stay up to date with all official steps to prevent the spread of COVID-19. Encourage social distancing within the business premises, maintain high standards of cleanliness, send all sick or potentially sick employees home, track recent and future business/ personal travel for the all staff and keep employees informed as to how they can help stay safe.
• Actively encourage sick employees to stay home – The Government urge employers to respect the need for staff to stay at home where they are following government advice to do so and to show flexibility in the evidence they require from employees as proof of sickness.
We will continue to update you as more information relating to Covid-19 becomes available. If you would like more information specific to you and your business, please do not hesitate to contact us.
Updated: 25th March 2020