Guidance for Clients: COVID-19
We have put together the following guide, which we will continue to update over the coming days and weeks. Where more information is available on each topic, we have provided a link to a longer and more details article.
This guide covers:
- The Coronavirus Job Retention Scheme (CJRS)
- The Self-Employed Income Support Scheme
- Deferring Valued Added Tax (VAT) & Tax Payments
- Coronavirus Business Support Scheme
- Extension of Filing Company Accounts
- Payroll Guidance
- Cash Management
- The Coronavirus Business Interruption Loan Scheme
- Unlocking Cashflow through Proactive VAT Management
- Year-End Stocktakes
- IR35 Delayed
- Charities & Not-for-Profits Support
- Statutory Sick Pay Relief Package
- Other Measures to Support Businesses and Individuals
- Bank of England Interest Rates & Quantitative Easing
- Gender Pay Gap Reporting Suspended
- New Measures Introduced for Right to Work Checks
- Commercial Leases and the Coronavirus (Scotland) Act 2020
- Government Support Package for Startup Businesses
- Inheritance Tax Relief for NHS and Frontline Staff
- Bounce Back Loan Scheme
WEBINAR: Coronavirus Job Retention Scheme and the impact on Payroll
As well as the further updates we have added to this page, you can also access our webinar below from Thursday 9th April, which covered the Coronavirus Job Retention Scheme and the impact on payroll. This was delivered by Avril Craig, Payroll Manager and our new COVID-19 Employer Advisory Team, David McIndoe & Louise Mackie.
The Coronavirus Job Retention Scheme (CJRS)
The CJRS is focussed around encouraging employers to “furlough” staff rather than laying them off. The term “furlough” isn’t well known in the UK but it is widely understood in (for example) the US economy. It refers to an involuntary temporary leave of absence which is imposed due to the special needs of the company or employer.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Both the Chancellor’s statement and HMRC’s guidance are a little ambiguous but we understand this to be a grant of up to £2,500 a month per employee.
The Self-Employed Income Support Scheme
The Chancellor of the Exchequer, the Rt Hon Rishi Sunak MP, has announced more measures designed to help the self-employed through the coronavirus crisis.
The key announcement:
Self-employed Income Support Scheme – the Government will pay self-employed people a taxable grant worth 80% of average monthly profits over the past three years up to £2,500 a month.
Deferring Valued Added Tax (VAT) & Tax Payments
The VAT deferral will apply from 20 March 2020 until 30 June 2020. This is an automatic deferral with no applications required.
The deferral for income tax self-assessment applies to the second payment on account for 2019/20 due on 31 July 2020 which is deferred until 31 January 2021. This is an automatic offer and no application is required.
Coronavirus Business Support Fund
On 15 April 2020, Finance Secretary, Kate Forbes announced the second phase of funding to protect against the effects of COVID-19. Details are light on these further aspects of support at present, but we will update this page with more information as it’s announced.
- The new package of measures includes £120 million to extend the Small Business Grant scheme to ensure that, in addition to a 100% grant on the first property, small business ratepayers will be eligible to a 75% grant on all subsequent properties.
- A further £100 million fund is also being made available to protect self-employed people and viable micro and SME businesses in distress due to COVID-19. This fund will be channelled through local authorities and enterprise agencies to target newly self-employed people and businesses who are ineligible for other Scottish Government or UK Government schemes. Applications for the £100 million fund will be open by the end of the month, and the new arrangements for the Small Business Grant will be in place to receive applications on 5 May.
Extension of Filing Company Accounts
In response to the Coronavirus, the Government have announced that the filing deadline for company accounts can be extended with prior agreement by 3 months.
Under the measures, any company that applies for an extension to file their results citing COVID-19 will automatically and immediately be granted an additional three-months but you must apply before your filing deadline.
Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.
We have prepared this guidance to help reduce the impact that may be caused by your current payroll process being disrupted. We’ve highlighted the common areas of concern in clients’ payroll processes and the actions that can be taken to help mitigate them.
The Coronavirus (COVID-19) pandemic has had an unprecedented impact on the global economy. Businesses are facing uncertain times and the government has responded by announcing a series of welcome support measures. However, businesses cannot simply rely on government support and must be pro-active in navigating their way through the current situation.
There are four key areas that you must focus on: short-term cashflow, stakeholder management, medium-term funding, restructuring & director’s responsibilities.
The Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) was announced by the Chancellor in the budget and has been extended since to provide greater support to business during these difficult times. The scheme is now live and the key features and how to apply can be found in this article.
Unlocking Cashflow through Proactive VAT Management
Effectively managing cashflow has scarcely been more important to businesses across the UK than in the current COVID-19 pandemic. It is important to optimise your cashflow position as much as possible and take advantage of VAT reliefs that are available.
In these unprecedented and uncertain times, the preparation of year-end accounts will not be high on many people’s list of things to worry about; but considering some things now, before the year-end, may prove to be invaluable in the future when drawing up your year-end financial statements.
This article addresses year-end stocktakes and is particularly important as 31 March 2020 is upon us. We recognise that similar issues will still exist at the end of April and possibly beyond.
It has now been confirmed that the new “off-payroll” (IR35) rules have been delayed until 6 April 2021, as part of the package of measures to help businesses deal with COVID-19.
Charities & Not-for-Profits Support
In the current situation, some parts of the third sector will be called upon to support people impacted by the Coronavirus (COVID-19). This will increase the demand on services at a time when income could be reducing.
Such a vital infrastructure needs support when it is most under pressure and additional funding will provide strength to support communities now to help immediate needs. We have highlighted some of the support which has been outlined so far, but we will update this with more information as we receive it.
Statutory Sick Pay Relief Package
In response to the coronavirus outbreak, new Regulations known as The Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2000 came into force on 13 March 2020. These will remain in force for a period of 8 months.
The government will bring forward legislation to allow small and medium-sized businesses (SMEs) and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19.
- 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 expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
- Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
- The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators 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.
Other Measures to Support Businesses and Individuals
- Mortgage lenders will provide three-month mortgage holidays for those that are in financial difficulty. It is important to note that borrowers will have to make up the payments at a later date and when you resume payments the amount will be adjusted to be slightly higher because the missed interest payments will be added to the loan.
- There will be an increase in the standard Universal Credit of £20 a week, with the same rise for those still on the working tax credit scheme.
- £1bn has been set aside to help those struggling to pay rent, through increases in housing benefit and Universal Credit.
Bank of England Interest Rates & Quantitative Easing
The Bank of England has cut interest rates to the record low of 0.1%. The Bank also plans to restart Quantitative Easing by buying another £200bn of bonds, mostly government bonds known as gilts. This is in addition to the £445bn of bonds the bank already owns. The goal here is to improve conditions in the gilt market. By buying bonds and providing ready cash the Bank can increase the total amount of cash in the system, hopefully making it run more smoothly.
Gender Pay Gap Reporting Suspended
The Government Equalities Office (GEO) and the Equality and Human Rights Commission (EHRC) have suspended enforcement of gender pay gap reporting deadlines for reporting year of 2019/20. The decision means there will be no expectation on employers to report their data.
More information can be found on the GOV.UK website here.
New Measures Introduced for Right to Work Checks
The UK government has confirmed that the process in carrying out the right to work checks will be amended to allow employers to still carry out these checks during the coronavirus pandemic. These new measures took effect from 30th March 2020. This should make it easier for employers to carry out their compulsory right to work checks in light of the stringent social distancing measures currently in place.
More information can be found on the GOV.UK website here.
Commercial Leases and the Coronavirus (Scotland) Act 2020
The Coronavirus (Scotland) Act 2020 came into force on 7 April 2020. Here are the key points to take from the Act, regarding commercial leases:
- Protection for commercial tenants from termination for non-payment of rent – extending the notice period from 14 days to 14 weeks.
- The government can elect to extend the 14-week notice period even after a notice has been served.
- Pre-irritancy notices served on tenants prior to 7 April 2020 become void if they haven’t already expired.
- Tenants are not entitled to a rent holiday. The Act only delays termination for non-payment.
- No protection for tenants in breach for non-monetary reasons, but a fair and reasonable landlord will still have to consider the impact of Coronavirus on its tenants.
- Landlords can still pursue tenants to recover arrears, but this is proving practically difficult while Courts in Scotland are generally dealing with urgent business only.
As it stands, the Act is due to expire on 30 September 2020, but the Scottish Government has reserved the right to extend this date to 31 March 2021 and then again by a further six months to 30 September 2021.
More information can be found here.
Government Support Package for Startup Businesses
UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package.
The comprehensive package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small and medium-sized businesses focusing on research and development.
Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5 million from the government, with private investors at least matching the government commitment.
These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third-party investors in the last five years.
More information can be found here.
Inheritance Tax Relief for NHS and Frontline Staff
Many have called for tax relief in recognition of the exceptional work being done by NHS staff and frontline workers. What is not widely know is that there already is a relief for inheritance tax (IHT) that can apply.
The IHT relief for armed forces extended in 2015 to cover emergency service personnel will also cover most NHS and many other frontline workers. The current situation with Coronavirus is regarded as responding to emergency circumstances meaning that qualifying frontline workers lost in the fight against Coronavirus, will get 100% relief meaning they will pay no IHT on their estate.
Bounce Back Loan Scheme
On 27 April 2020, the Chancellor of the Exchequer, Rishi Sunak MP, announced a new coronavirus loan scheme – Bounce Back Loans. The Chancellor has said that for this scheme, the Government will support lending by guaranteeing 100% of the loan.
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