Updated 3 Dec 2020
Following the rapid spread of Coronavirus (COVID-19) throughout the UK & the world, people are understandably concerned about the health and wellbeing of their loved ones. The latest guidance on Coronavirus from the NHS can be found at https://www.nhs.uk/conditions/coronavirus-covid-19/ and we would like to wish you, your family and friends the best of health in facing this illness.
The UK Government has introduced, and will continue to, a wide range of measures to help tackle the spread of the illness, which will also have a profound effect on the way we live our lives for the immediate future.
As a result, individuals and businesses are rightly concerned as to the potential impact upon their finances and livelihoods. These are uncertain times and as such, we would recommend that businesses operate within their means and exercise prudence and careful judgment.
The government has promised £300 billion or whatever it takes to help deal with the impact of the measures introduced, and we have outlined below how these resources and support can be accessed, as well as other relevant information. We will do our best to keep you as up to date as possible, but please note that a lot of the information provided is constantly changing.
We hope that this guide helps provide you with some comfort of the options available, but please contact our dedicated Corona Virus Business Support team on 01226 213131 or email@example.com if you require any assistance.
Gibson Booth Limited
The following announcements were made by the Chancellor at the Summer Update on 8 July 2020 and have been updated to reflect the additional announcements made by the Chancellor over the course of September, October and November.
Job Retention Scheme
On 20 March the Government promised to pay up to 80% of staff costs where employers would otherwise have had to lay off employees during this period, up to a cap of £2,500 (plus employers’ NIC and minimum pension costs) per employee per month. This was initially intended to run for at least 3 months from 1 March 2020. On 29 May the Chancellor, Rishi Sunak, announced some changes that would be brought in with regard to the Job Retention Scheme.
- From 1 July furloughed staff can be brought back part time whilst still allowing a grant to be claimed for the portion of the time they are not working.
- From 1 August employers will need to start to contribute to the wages of furloughed staff. This will be brought in gradually over August, September and October.
- From 30 June employers will no longer be able to furlough any members of staff who have not already been furloughed for at least three weeks prior to that date.
From 1 August the Job Retention Scheme payments will be gradually tapered.
Until the end of July the government continued to pay 80% of wages up to a limit of £2,500 for each furloughed employee. They also paid the employer NICs and pension contributions for the same staff.
From 1 August the government continued to pay 80% of furloughed wages up to a limit of £2,500; however they no longer paid the employer NICs and pension contributions, this cost must be met by the employer.
From 1 September the government paid 70% of furloughed wages up to a limit of £2,187.50. Employers had to make up the 10% shortfall up to a cap of £2,500 and also had to pay all employer NICs and pension contributions.
From 1 October the government will pay 60% of furloughed wages up to a limit of £1,875. Employers must make up the 20% shortfall up to a cap of £2,500 and must also pay all employer NICs and pension contributions.
The Chancellor announced on 5 November 2020 that the scheme will now run until the end of March. The relevant amounts for November to March are in line with August as above, i.e. the government will contribute 80% of the employee’s wages for these months, up to a limit of £2,500, with the employer continuing to meet the National Insurance and pension contributions. Employees can continue to work part time if required and still qualify for the grant for the hours not worked.
Note that where the employee works a proportion of their usual hours, the limits above are similarly reduced.
From 1 November 2020 a new scheme, the Job Support Scheme, was planned to commence. This has now been delayed with the Chancellor stating it will be brought in ‘at the appropriate time’. Further details on the JSS are provided later on this page.
Recap of general rules
The basic guidance relating to the furlough scheme remains unchanged and is as follows.
Firstly, it will be necessary for the relevant affected employees to be designated as ‘furloughed workers’ and they should not undertake any work for the employer whilst furloughed.
Employers need to:
- select and tell (‘designate’) the employees affected that they’re furloughed
- keep employees on the employer’s payroll
The employer needs to get agreement from the employee to do this, unless it’s covered by a clause in the employment contract. They also need to select employees in a fair way to avoid any discrimination.
If an employee disagrees with their employer's decision, they'll need to talk to their employer and try to come to an agreement.
Any furlough agreements should be in writing. It's a good idea to include:
- the date furlough starts
- when it will be reviewed
- how to keep in contact during furlough
If the workplace needs to close temporarily further guidance can also be found via the ACA website https://www.acas.org.uk/coronavirus/if-the-employer-needs-to-close-the-workplace
Please note that changing the status of employees remains a matter of employment law and accordingly, should be done with the agreement of the relevant employees or an employment law specialist.
The business will need to pay the employee initially, who will usually be contractually entitled to their normal wage. However, it can be agreed in conjunction with the employees that a reduced amount could be paid (potentially down to the 80% that would be reimbursed). HM Revenue & Customs must then be informed of the employees that have been furloughed and their earnings through a new online portal (which has yet to be set up). HMRC would then arrange for the 80% to reimbursed in due course, but do not currently have systems in place to do so. They are working on this urgently and will advise when it is available, although are targeting the end of April.
Additional guidance has now been issued by HMRC, which can be seen at the links below. Main points to note include:
- Employees need to have been employed as at 28 February 2020
- If made redundant after 28 February 2020, the employer can re-employ employees and place on furlough instead
- Any type of contract including zero hours or temporary contract is allowable
- Directors are eligible for their salary, but not dividends (please remember that furloughed workers can’t work for the company)
- The furlough period is a minimum of 3 weeks and maximum of 3 months (although may be extended)
- Where earnings are consistent, the employees’ actual pay as at 28 February 2020 before tax will be used to calculate the 80% reimbursed.
- If it varies, it will instead be based on the higher of the earnings in the same month in the previous year or the average monthly earnings over the last year (or from when the employee started work)
- Bonuses & commissions are not included in the above
Job Support Scheme
The Job Support Scheme is currently planned to come into effect some time after March 2021, having been delayed by a month due to the extension of the JRS. The Job Support Scheme was originally announced to apply for 6 months from 1 November 2020 to 30 April 2021; as its commencement has been delayed it is not yet clear how long the scheme will apply and the dates it will commence and end. More details will follow in due course.
There will be two types of grant available; open grants and closed grants.
To access the JSS and employer must have enrolled for PAYE online and have a UK, Channel Island or Isle of Man bank account. To make a claim the employee in question must have been on the employer’s payroll on 23 September 2020, though this may change due to the delayed commencement of the scheme. If an employee left after this date and was rehired, they are eligible for the scheme.
Further conditions apply depending on which grant is being claimed.
The below is an overview of the new rules, further details can be found at https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme.
JSS claims can be made in arrears from 8 December 2020 to cover November pay periods.
Open grants - eligibility
Open grants can be claimed by employers who have faced a downturn in business but have remained open and have reduced their employee working hours. For a claim to be made the employee must still work at least 20% of their usual hours.
Employers with less than 250 employees automatically qualify for the grant, subject to the conditions above, but employers with 250 or more employees must undertake a financial impact test to demonstrate that they have been adversely affected by coronavirus.
This test only needs to be undertaken once before the first claim is made. Broadly, the employer must compare their turnover for the current year to the previous year. If turnover has remained the same or fallen then they qualify.
Open grants – amount of claim
Employees must work at least 20% of their usual hours and the employer must meet the full cost of these hours. The government will then pay a contribution of 61.67% of the unpaid wages, capped at £1,541.75 per month, and the employer must contribute a further 5%, up to a maximum of £125 per month. The employer is free to top this amount up if they wish.
An employee will therefore receive a minimum of two thirds of their usual wages for any hours not worked, subject to the relevant caps.
The employer must continue to pay all National Insurance payments due.
An employee and their employer meet all the necessary conditions above and the employee’s normal salary is £3,000 per month. Their hours are reduced to 1/3 of their normal working hours.
The following payments would apply:
- £1,000 from the employer for the hours actually worked.
- £1,233 from HMRC (i.e. 61.67% of the £2,000 unpaid).
- £ 100 from the employer.
- Total received by employee is £2,333, i.e. 77.77% of their normal salary.
Closed grants – eligibility
Closed grants are available to businesses that are legally required to close by the government due to the coronavirus. This does not include premises required to close due to specific workplace outbreaks but does include businesses restricted to delivery or collection only services and those restricted to providing food and/or drink outdoors.
Closed grants – amount of claim
The government will fund two thirds of eligible employee wages for time not worked, up to a maximum of £2,083.33 per month. Employers are not required to contribute but can top up the government contribution if they wish.
The employer must continue to pay all National Insurance payments due.
An employee and their employer meet all the necessary conditions above and the employee’s normal salary is £3,000 per month. The employer is required by law to close their premises for the entire month.
The following payments would apply:
- £ Nil from the employer as no hours actually worked.
- £2,000 from HMRC (i.e. 66.67% of the £3,000 unpaid).
- Total received by employee is £2,000, i.e. 66.67% of their normal salary.
The government announced on 26 March the Coronavirus Self-employment Income Support Scheme (SEISS) to provide a one-off grant for self-employed individuals, either in a partnership or as a sole trader. This is not available in respect of income taken from your own limited company (where the job retention scheme applies).
On 29 May the Chancellor announced that the SEISS will be extended to include a second, grant claimable in August, covering the quarter to 31 August. The deadline for claiming the first and second grants has now passed.
The Chancellor has since announced two further grants would be available to cover the three months to January 2021 and April 2021. The criteria for claiming these further grants are that the taxpayer must have submitted a tax return showing self-employed income in the 2018/19 tax year, have continued to trade through the 2019/20 and into the 2020/21 tax year and intend to continue to trade for the foreseeable future. Further, self-employed trading profits must not exceed £50,000 and must account for more than 50% of total taxable income for the same period. These tests must be met either in the 2018/19 tax year or on average over the three years to 5 April 2019.
The taxpayer must also have been impacted by Coronavirus, leading to reduced activity, capacity or demand for products/services after 1 November 2020. Alternatively, they must have been trading but become temporarily unable to do so due to Coronavirus. HMRC have specified that increased costs caused by Coronavirus (such as having to purchase masks) do not count for this purpose and that trading profits must be reduced ‘significantly’ to qualify.
The January grant will be based on 80% of average monthly trading profits in respect of November, December and January. This will be capped at £7,500. This grant will be available to self-employed persons who temporarily cannot trade at all, in addition to ones who have experienced a downturn in profits. Further details on this grant and the April 2021 grant will follow in due course.
Note that any grants received will represent taxable income and should be included on your 2020/21 tax return as additional self-employed income.
If you would like to apply for the grant you should first visit https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference and enter your UTR and, on the next screen, your National Insurance Number. This will confirm whether you are eligible to make a claim, before taking you through the remainder of the process. You will need a Government Gateway ID and password to continue; if you do not have one already you will be given the option to create one.
If you are self-employed, you can apply for Universal Credit or contributory Employment and Support Allowance (as you would not be eligible for SSP). You can look to make a claim for these if you are self-isolating or being prevented from working due to a risk to public health, as well as being ill.
The government are making the process easier to apply for and from 6 April the standard allowance in Universal Credit and the basic element in Working Tax Credit increased by £20 per week for 1 year.
Further details of these benefits and links to the relevant applications can be found at the following link https://www.understandinguniversalcredit.gov.uk/coronavirus/ or by calling the Universal Benefits helpline on 0800 328 5644 (Monday to Friday 8am to 6pm)
Local Restrictions Support Grant
The LRSG is intended to support businesses that have been required to close due to temporary coronavirus local lockdown restrictions. Currently business forced to close due to Coronavirus will be eligible to receive grants of up to £3,000 per month, with local authorities being given £1.1 billion for one-off payments.
For businesses operating in Barnsley, please visit www.enterprisingbarnsley.co.uk/covid-19-coronavirus for details of local grants available.
From 15 July 2020 the VAT rate will be reduced from 20% to 5% for certain businesses within the leisure and hospitality sector. This was originally intended to apply until 12 January 2021, however the Chancellor has extended the end date and this will now continue to apply until 31 March 2021.
This will apply to businesses providing accommodation, non-alcoholic drinks, eat-in food and hot takeaway food, as well as admission to cinemas, zoos, amusement parks and similar establishments.
VAT payments due between 20 March 2020 and 30 June 2020 were available to be deferred until March 2021. The Chancellor has announced that these payments can now instead be made over 11 instalments if the taxpayer prefers. This will not happen automatically but the exact method of how to ‘opt-in’ is not yet known and will be announced at a later date.
Stamp Duty Cut
In order to assist the housing market, anyone purchasing a main home between now and 31 March 2021 will not pay Stamp Duty Land Tax unless the purchase price exceeds £500,000. This is an increase from the £125,000 which applied previously.
Green Homes Grant
From September 2020 homeowners, including landlords, will be able to apply for a grant from the government to make homes greener and create local jobs. The grant will cover two thirds of the cost of the work, up to a maximum of £5,000 (£10,000 for low income households).
Support for Young Workers
Three new schemes will be brought in to encourage businesses to take on more young staff.
Firstly, from autumn, where an employer creates a new job of at least 25 hours per week for a person aged between 16 and 24 who would otherwise face unemployment, the government will provide a grant of up to £6,500 to the employer to cover that employee’s first 6 months of wages, plus some additional overheads. The worker must be paid at least the minimum wage throughout their employment.
Secondly, the government will begin to pay employers £1,000 to hire new trainees studying level 2 or 3 courses.
Thirdly, for the six months to 31 December 2020 the government will pay employers a grant of £2,000 for each apprentice hired, with a further bonus of £1,500 for those over 25.
Further career support will be given to young workers via additional resources and advice, as well as an increase in sector-based work academies.
Assistance with Business Funding
If you have any concerns regarding your existing business finance, please speak to your bank relationship manager in the first instance. All the major banks have promised to give support to affected businesses through a range of measures, which include repayment holidays, reviewing overdrafts & loans or considering trade finance solutions. Gibson Booth Limited have a number of contacts at the local and regional branches and will be happy to assist where we can.
Bounce Back Loans
The Bounce Back Loan Scheme (BBLS) is a scheme being offered by many UK lenders which allows small and medium-sized businesses to borrow between £2,000 and £50,000, subject to a cap of 25% of their turnover.
There will be no fees or interest for the first 12 months of the loan, nor will repayments be required for the same period. The interest rate following the first 12 months will be 2.5% per annum. The government will guarantee 100% of the loan and following the Chancellor’s announcements in September, the loan can now last for up to ten years. Further, businesses can apply to make interest only payments if they are struggling to make their full repayment amounts, or even to suspend repayments altogether for up to 6 months.
The majority of non-public sector organisations can apply for the loan, provided they:
- Are based in the UK
- Were established before 1 March 2020
- Have been adversely affected by the coronavirus
Businesses already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the COVID-19 Corporate Financing Facility are not eligible to apply for a BBLS loan, however it may be possible to transfer an existing loan from one of the above to the BBLS.
If you wish to apply for a BBLS loan you can visit https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/ for a list of eligible lenders. You should contact them directly to arrange the loan, and a refusal by one lender does not mean you cannot apply to another.
Coronavirus Business Interruption Loan Scheme
In addition to normal borrowings, the government has introduced the Coronavirus Business Interruption Loan Scheme (CBILS). The scheme will provide lenders with a government backed guarantee, with the aim to reducing ‘no’ credit decisions, where businesses have sound borrowing proposals, but have insufficient security to meet lender’s requirements. Businesses will benefit from the government covering the first 12 months of interest payments, although they will remain 100% liable for the debt & capital- although a capital holiday of up to 12 months is available.
The scheme supports a wide range of business finance (including term facilities, overdrafts, invoice & asset finance) with borrowings of up to £5m, depending upon qualifying criteria. The scheme is now up and running and will be available through 40+ accredited lenders (see link below for full list):
From our discussion with the banks, we understand that loans from circa £10,000 to £5m are available depending on the lender, but that they are often looking to put personal guarantees in place on other assets owned by the individual. The banks generally require a detailed business proposal and typically a 12-month cashflow projection, which we will be happy to assist with if required. The Chancellor announced in September that the government will now guarantee CBILS loans for up to 10 years.
Finally, we can also put you in touch with specialist funding providers should you have any particular or unusual funding requirements which can’t be met through the normal commercial options- please do not hesitate to contact us for more information.
Assistance with Tax Liabilities
HM Revenue & Customs (HMRC) have acknowledged that businesses or self-employed individuals may need support in respect of any outstanding taxes due, as a result of current or expected financial difficulties arising. They have therefore set up a dedicated Coronavirus Time-to-Pay helpline which will look to assist on a case-by-case basis for Corporation tax, VAT, PAYE and Self-Assessment.
They have a range of options available to them which include providing tax payment delays (typically to 3 months), arranging instalment plans, suspending debt collection proceedings and cancelling penalties & interest where you have administrative difficulties contacting or paying HMRC immediately.
The number is 0800 0159 559 and lines are open Monday to Friday 8am to 8pm and Saturday 8am to 4pm (not available on bank holidays). Although HMRC currently have significant waiting times on this line, we have found them very helpful when answered and have been happy to agree to the deferrals we have requested without queries. Please do not hesitate to contact us should you need any assistance regarding this.
HM Revenue & Customs have also announced an automatic tax deferral scheme to help further support businesses, for which no applications will be required.
Any taxpayers paying income tax under Self-Assessment will not be required to make any 2nd payment on accounts, which would be normally have been due for payment by 31 July 2020. Any liability will be deferred until 31 January 2021, with confirmation being provided that no interest or late payment penalties will apply. The Chancellor announced in September that for those who are still struggling to make the necessary payments by 31 January 2021, a time to pay arrangement can be entered into whereby the amount becomes payable over a 12 month period. This is not an automatic arrangement and will need to be applied for, but where the tax liability is below £30,000 the application will always be accepted.
Assistance with Business Rates
Businesses who are sustaining financial difficulties due to Coronavirus can apply to their local council for support in respect the payment of business rates. Barnsley Metropolitan Borough Council (BMBC) can be contacted on 01226 787787 and selecting option 5 (lines are open Monday to Friday 9am to 4pm), who will arrange for a business rates manager to call back & discuss any support available.
A 12-month business rates holiday has extended the 50% reduction previously announced in the 2020 Budget for shops, restaurants, cafes and bars with a rateable value less than £51,000, and has been widened to all retail, hospitality and leisure businesses sectors. Businesses who met the original Budget criteria will automatically receive a new 2020/21 bill (sent 18 March) with the full 100% reductions.
Further guidance has now been published detailing the other businesses to which the business rate holiday applies, which includes (but is not limited to): Nurseries, Opticians, Carpets warehouses, Hair salons, Travel agents, Funeral directors, Car hire, Coffee shops, Gyms, Clubs, Hotels and Holiday homes.
Your local authority should automatically review businesses and issue amended 2020/21 bill shortly and before the first payment is due. However, we would suggest contacting them directly if you believe you should be eligible for the holiday, but have not received any correspondence- Barnsley MBC can be contacted by filling in the following form:
A £25,000 grant will be made available to all retail, hospitality and leisure businesses operating from smaller premises (with a rateable value of between £15,000 and £51,000), whilst a similar grant of up to £10,000 will be available to small businesses eligible for either Small Business Rate Relief (SBRR) or Rural Rate Relief.
We can confirm that Barnsley MBC are now starting to automatically issue these grants (although it may be a few weeks for other local councils), but would suggest that you contact your council if you think you qualify, as payments can be made within 3 working days. You can contact BMBC via the link below or on 01226 787787:
Advice for Employers
The government’s current advice is that any employee who develops Coronavirus symptoms at work, should be sent home, where they should self-isolate for a period of 7 days. Likewise, if a member of their household has symptoms, then they should self-isolate for a period of 14 days. Full details of the guidance can be found at https://www.gov.uk/government/publications/covid-19-stay-at-home-guidance/stay-at-home-guidance-for-households-with-possible-coronavirus-covid-19-infection
If ill or self-isolating, the employee should be entitled to Statutory Sick Pay (SSP) of £94.25 per week (rising to £95.85 from 6 April) from day 1 for up to 28 weeks. They may also be entitled to contractual sick pay as agreed in their contract/terms of employment.
From 13 March 2020, employers will be able to reclaim up to two weeks of SSP per employee who are off as a result of coronavirus (assuming they have less than 250 employees as at 28 February 2020).
The government will make further announcements relating to how the repayment mechanism for employers will work as soon as they are able. In the meantime, employers should keep a record of staff absences and payment of SSP, but do not need to provide a doctors’ note.
In terms of working from home, the current government guidance is that this should be encouraged where possible, if the employees’ job role allows it. However, if this is not practical and an employee does not want to come to work (because they are afraid of catching coronavirus for example), then they should discuss with the employer whether they can take time off as holiday or unpaid leave, although this would be at the employer’s discretion.
Temporary closure of the workplace
If an employee has been in the workplace with coronavirus, it is not necessary to close the workplace although it will be significantly safer if the area can be kept closed for a period of 72 hours prior to cleaning. In this event, any employees would be entitled to SSP, with the employer following the government’s cleaning advice, which can be found at:
However, if an employer does need to close their business due to commercial reasons, or ask staff to temporarily reduce their hours, employers will still need to pay their employees for this time unless it states in their employment contract (in which case they would be entitled to a statutory guarantee payment of up to £29 per day for a maximum of 5 days) or is otherwise agreed. It is very important to take professional advice from an Employment Law Solicitor in this regard, who we can put you in touch with.
Employers do have the right to tell employees and workers when to take holiday if they need to, for example if the workplaces needs to close for a week. The employer is required to give staff twice as much notice before the amount of days people need to take, for example if the office closed for a week and staff had to use 5 holiday days, the employer must notify staff at least 10 days before.
As with business borrowings, mortgage lenders are willing to offer payment holidays where required, and we would recommend contacting your bank or mortgage broker if this is something that you would require for either personal or investment properties. The Prime Minister has confirmed this will be extended beyond the intended end date of 31 October 2020.
The government has also advised that landlords will not be able to evict tenants for a period of at least 3 months due to Coronavirus and are encouraging tenants and landlords to work together to agree sensible repayment plans. This 3 month ‘buffer’ has been extended to at least 30 September 2020.
Domestic Reverse Charge
A change in the way VAT is accounted for within the construction industry is due to come into effect on 1 March 2021. The original intended date was 1 October 2019, however due to Covid this was delayed.
This will only affect VAT registered businesses who are within the Construction Industry Scheme. Further information will follow in due course, however if you would like to discuss this in the meantime please let us know.
The proposed rules impacting upon contractors working for large private companies caught under the intermediaries legislation (IR35) has been delayed for 12 months. It will now not be introduced until April 2021
Company accounts filing
Companies House have confirmed that companies can now apply for a 3-month extension to the filing of their annual accounts so they can focus on dealing with the impacts of the Coronavirus. It will be necessary to apply for the extension (not granted automatically), but ensure late filing penalties are not issued. See:
Other Areas of Business Support for companies
If your business is based in Barnsley and you require other areas of business support please contact the following:
Barnsley based businesses: The Enterprising Barnsley business support team on 01226 787535 or firstname.lastname@example.org See: https://www.enterprisingbarnsley.co.uk/
Sheffield based businesses: The Sheffield City Region Growth Hub on 03330 00 00 39
or email@example.com See: https://www.scrgrowthhub.co.uk/
West Yorkshire based businesses: The Leeds City Region business support team on 0113 348 18181 or businessgrowth@the-LEP.com See: https://www.the-lep.com/business-support/covid-19-support-for-businesses/