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What help is the Government offering me? Coronavirus financial help explained

26 March

COVID-19 – What help is the government offering me?

On 17 and 20 March 2020, the Chancellor set out a package of temporary measures to support businesses, public services and people through the difficulties caused by COVID-19.  There was nothing specifically targeted at the transport sector. However, this article explains what was offered for businesses:

  • Coronavirus Job Retention Scheme;
  • Self-employment Income Support Scheme.
  • statutory sick pay reimbursement;
  • business rates holiday;
  • grants;
  • loans and lending facility;
  • mortgage holiday;
  • insurance claim clarity; and
  • Taxation deferral.

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

All UK businesses are eligible.

Full details of what is required is not yet available, but we have been told that to access the scheme, you will need to:

  • designate affected employees as ‘furloughed workers’;
  • notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation;
  • 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 80% of furloughed workers wage costs, up to a cap of £2,500 per month for three months and can be back-dated from 1 March 2020. We assume that this amount will not be repayable, but we await confirmation of this.

We understand that HMRC are working urgently to set up a system for reimbursement.

Although we do not know how soon this will be available, this is a scheme of major importance to operators.

This is not presently open to the self-employed which have a separate scheme.  See our separate article on this here.

Statutory sick pay reimbursement

The Chancellor previously promised to reimburse small and medium sized companies for the cost of statutory sick pay for any employee forced to self-isolate or who become sick due to coronavirus.  SSP has also been made available from day one of sick leave.

Legislation is to be implemented 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:

  • will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19;
  • employers with fewer than 250 employees at 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;
  • employees will not need to provide a GP fit note after the usual 7 days but employers should maintain records of staff absences and payments of SSP;
  • eligible period for the scheme will start the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force;
  • the government will work with employers over the coming months to set up the repayment mechanism for employers.

Business rates holiday

If your business pays business rates, a business rates retail holiday has been proposed for businesses in the retail, hospitality, leisure and nursery sectors in England for the 2020 to 2021 tax year.  At this stage, not is not clear if “leisure” would include coach operators.

We do know that properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
  • for assembly and leisure;
  • as hotels, guest & boarding premises and self-catering accommodation.

The way it is expected to work is that this will apply to operators’ (if applicable) next council tax bill in April 2020. However, local authorities may have to reissue the bill automatically to exclude the business rate charge. The guidance says the people to whom this is relevant do not need to do anything, however we would recommend operators contact their local authority to find out if they are eligible. To do this, find your local authority here.

Grants – The Retail and Hospitality Grant Scheme and Small Business Grant Scheme

The Retail and Hospitality Grant Scheme

The Retail and Hospitality Grant Scheme has been announced for retail, hospitality and leisure businesses.  Also, again, no guidance has been issued on how wide the term “leisure” will be and if coach operators could be included in this, although we are aware that the CPT are speaking to a government department directly about this.  We haven’t seen the terms of the grant, by usually they are not repayable (save in certain circumstances) so are different to a loan.

Two grants are available:

  • £25,000 grant for businesses operating from smaller premises, with a rateable value between £15,000 and £51,000;
  • £10,000 grant for businesses in these sectors with a rateable value of under £15,000.

If you are eligible,  you will be contacted by your local authority, but if you wish to find out contact your local authority.

Small Business Grant Scheme

Additionally, the government has said it will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. Local authority will write to operators if they are eligible for this grant or you can contact them if you have queries or want to check.

Loans and lending facility – Coronavirus Interruption Loan Scheme and COVID-19 Corporate Financing Scheme

Coronavirus Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme to the value of £330bn has been announced. It will include additional bank loans, asset finance, invoice finance and overdrafts for businesses for a period of up to either three or six years.  This amount will be made available to any business in the UK with a turnover of no more than £45 million per year provided the business meets the other British Business Bank eligibility criteria. Obviously, these will be repayable.  It is available to all sorts of business entities including sole traders and free-lancers.

The government will provide lenders with a guarantee of 80% on each loan (subject to certain limitations). The government will not charge businesses or banks for this guarantee.

The government will also pay the interest on such borrowing for the first twelve months (increased from the earlier six), which means for business, the borrowing will be interest-free for the first twelve months.

Further details of the Scheme and the list of accredited lenders is now available on the British Business Bank website.  All the major banks will offer the Scheme once it has launched and you should approach your own bank initially and if need be one of the other providers. There are 40 accredited providers in all and these can be found here.

The government say that operators should talk to their bank or finance provider (not the British Business Bank) as soon as possible and discuss their business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme is now available.

COVID-19 Corporate Financing Scheme

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.  The aim of this is to support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.  It is available to all UK businesses and information on how to access it is to follow.

The scheme is now available.

Mortgage holiday and rental payments

The Chancellor said anyone in difficulty due to coronavirus will be offered “at least a three-month mortgage holiday” from their repayments.  However, we have no further details on how this is expected to work and we urge people to speak to their lenders if they are struggling to pay their mortgage.

Protection from eviction for non-payment of rent to 30 June 2020 for those renting property has also been announced.

Taxation deferral

VAT deferral – All UK businesses may defer Valued Added Tax (VAT) payments for 3 months.  This is a deferral so it means it will still be payable though. The deferral will apply from 20 March 2020 until 30 June 2020. Operators do not need to apply as the right is automatic and do not need to make a VAT payment during this period.

Income tax – If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.  This is a deferral so it means it will still be payable. Operators will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.   For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. Operators do not need to apply as the right is automatic. No penalties or interest for late payment will be charged in the deferral period.

Time to Pay – 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.  To discuss this, call the HMRC on 0800 0159 559.  After our recent webinar on this, some of our clients tell us they have negotiated reasonable repayment terms already.

Insurance claim clarity

There have been concerns that, unless the government orders all pubs and other social venues to close down, they will not be able to claim off their insurance policies. The government announced that businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. They have also since on 20 March 2020 ordered that pubs, clubs, theatres and leisure centres should close.

COVID-19 has been added to the list of notifiable diseases, so this may aid some to make an insurance claim if your policy covers this.

Insurance policies do differ significantly, so businesses are recommended to check the terms and conditions of their specific policy and contact their providers. However, many businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will normally exclude pandemics.

For more information, please contact the marketing team on 01254 828300 or email marketing@backhouses.co.uk.

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