COVID-19 BRIEFINGS FOR BUILDING LEGACIES CLIENTS
The Covid-19 situation is having profound effects on businesses and individuals. The aim of this first briefing is to provide our Building Legacies SME clients with factual information and advice, including some links to Government sources of more detailed information.
The first and most important part of the briefing refers to the extensive package of additional provisions outlined by the Chancellor of the Exchequer on Tuesday 17th March, together with those Government clarification updates issued on Wednesday 18th March.
Included in the first part of the briefing is some general advice for our SME clients. Clearly, we are still waiting for formal announcements to be made in terms of where and how SMEs can access financial relief and support, but in advance of that information being released, we have detailed a number of practical steps which might be useful to undertake in the interim.
(The second part of the briefing is a useful ‘for reference’ summary of those provisions originally announced in the Budget on Wednesday 11th March.)
As mentioned in our Covid-19 Response Plan, we will issue further advice and guidance bulletins as the situation develops.
1 – Additional measures announced on 17/03/2020
- A statutory sick pay relief package for SMEs – A repayment mechanism for employers to be established as soon as possible.
- A Business Rate Relief for all retail, hospitality and leisure businesses in England – Contact your Local Authority
- Small business grant funding of £10,000 for all business in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief – If eligible, you will be contacted by your Local Authority
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 – If eligible, you will be contacted by your Local Authority
- The Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance – approach one of the 40+ accredited lenders with a borrowing proposal.
- The HMRC Time To Pay Scheme – call HMRC’s dedicated helpline on 0800 0159 559
Statutory Sick Pay Relief Details
The Government has announced that it will bring forward legislation to allow SMEs 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 2 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 and payments of SSP, but employees will not need to provide a GP fit note
- eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force
The Government has stated it will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
1.1- Advice for our SMEs
Business Rates Discount Details
The Government will introduce a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible. 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.
Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount. Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the application of the expanded retail discount is expected to be published by 20 March.
Support for businesses that pay little or no business rates
The Government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. If your business is eligible for SBRR or Rural Business Rate Relief, you will be contacted by your local authority – you do not need to apply. Funding for the scheme will be provided to local authorities by Government in ‘early April’.
Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The Government 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 6 months of that finance interest free, as Government will cover the first 6 months of interest payments. The British Business Bank is in the process of defining and agreeing the scheme’s details, specifications and eligibility. The scheme will be available ‘from early w/c 23 March 2020’. To be to be eligible for support via the scheme, the small business must:
- be UK based, with turnover of no more than £41 million per annum
- operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see here)
- have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
- be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal years
Any small business interested in the scheme should, in the first instance, approach one of the 40+ accredited lenders with their borrowing proposal, which means that you should update your business plan immediately. – As advised through our Covid-19 Response Plan, our office is closed so we will not be able to pick up calls through our main office number however, you can contact your BGM via email or phone to support you with updating your business plan or email us if you are not a client and we can advise you accordingly.
HMRC 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.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Sole Traders, Unregistered Businesses and the Self-Employed:
The Government have not yet agreed a package of financial measures to support these key groups, but we understand that Orders (or emergency legislation if required) are being drafted. The current expectation is that measures should be announced by Monday 23rd March.
In the meantime, anyone with a mortgage should immediately contact their mortgage provider and apply for the 3-month ‘mortgage holiday’ that has already been agreed between the Government and most lenders. Be prepared for a long wait if you phone your lender as their staffs are handling a huge increase in volumes of calls, as well as some of their colleagues being absent through sickness/self-isolation. Our strong advice is to make contact right now; be firm in your request for a ‘holiday’ and follow up any verbal/telephone agreement with an email confirming the details.
If you are anticipating potential financial hardship and have loan repayments, credit card payments or interest charges due we suggest you contact the relevant organisation and seek to negotiate a temporary suspension of interest and/or capital repayments for a period of three months – although these types of arrangements do not yet carry the same Government backing as the ‘mortgage holiday’ detailed above. Once again, follow up any verbally arranged agreement with a confirmatory email.
All UK schools will close at the end of the school day on Friday 20th March. This may well cause problems for parents/carers in terms of looking after children at home.
The Government have said that children of families where the adults are ‘Key Workers’ will still be able to go to school as usual, but they may, in some geographical areas, be asked to go to a different school in the neighbourhood to maximise limited staff availability. A list of ‘Key Workers’ should be announced today (19/03/20) but will almost certainly include all healthcare workers in both the public and private sectors, emergency services personnel, some call centre staff in both the public and private sectors, some public transport workers, some shop/supermarket staff and all delivery and distribution staff in the food and allied sectors.
Vulnerable children will also be able to attend school. All children those in receipt of free school meals will continue to receive them, either at their current school premises or via a voucher system at another designated site.
- We strongly suggest that you look at your children’s school website/s for updated information. In the case of foster carers, you should contact your Local Authority’s Children’s Services designated officer if you have any concerns. Contact your Local Authority
Banks & Building Societies:
Most banks and building societies are scaling back their branch and call centre staff availability due to the number of their people self-certifying as ill or going in to precautionary self-isolation. This may result in additional queues at branches and much longer waits on telephone banking lines. The advice is to try to use online services as much as possible – although you will almost certainly need to speak to a member of staff if you want to make any of the special financial arrangement detailed earlier in this bulletin.
2. The Budget 11/03/2020
Here is a summary of the key announcements contained in the Budget:
- The Bank of England cut the interest rate by half a percentage point to an historic low of 0.25%.
- Workers who are unable to work due to the virus or as a result of “self-isolation” requirements can claim Statutory Sick Pay (SSP) from their first day of illness. There will not be a requirement to attend a doctor and confirmation via the NHS 111 phone line or website will be enough
- Businesses with fewer than 250 employees will be able to reclaim the first 14 days of Coronavirus related SSP payments from the Government.
- Those not eligible for SSP as a result of being self-employed or those in the gig economy will have easier access to benefits. As a temporary measure, the “minimum income floor” used in assessing earnings for the purpose of determining eligibility to benefits will be removed.
- A £500m hardship fund will be provided to local authorities to enable them to support vulnerable people.
- HMRC will scale up time to pay arrangements with a dedicated helpline to assist businesses who require more time to pay their tax liabilities.
- Business loans – the government will make up to £1.2m available to small and medium businesses with generous government guarantees.
- An “exceptional” business rates holiday for retail, leisure or hospitality firms with a rateable value of under £51,000.
- To manage fixed costs for small businesses, those who already qualify for full business rates relief will be able to apply for £3,000 cash grants. This will affect 700,000 of the smallest businesses.
- The Personal Allowance remains at £12,500 and the Higher Rate threshold at £50,000.
- The National Living Wage will rise to £8.72 for workers over the age of 25.
- The National Insurance threshold for employees and the self-employed to rise to £9,500 in April
- The Employers Allowance is rising to £4,000 meaning that qualifying employers will not be required to make Employers National Insurance payments until this liability reaches £4,000.
- The adult ISA annual subscription limit for 2020-21 will remain unchanged at £20,000 but the limit for Junior ISAs and Child Trust Funds will be increased from £4,368 to £9,000.
- “Tampon Tax” abolished – No VAT on sanitary products from April.
- VAT on digital publications (known as the “reading tax”) will be scrapped from December 2020.VAT
- A planned increase in spirits duty will be cancelled and duties on beer and wine will be frozen.
- Fuel duty freeze for a year.
- New plastics packaging tax to be introduced from April 2022.DutiesBusiness and Enterprise
- From 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million.
- Research and development investment will increase to £22bn a year. The rate of the tax credit provided to qualifying Research and Development has been increased to 13%.
- The Annual Investment Allowance of £1 million introduced on investments made from 1 January 2019 will apply until 31 December 2020. Thereafter the allowance will be capped at £200,000.
- From April 2020, the 100% First Year Allowances for certain energy-saving and water efficient products (Enhanced Capital Allowances) will be abolished.
- The threshold at which a tax charge is payable on pension contributions will be increased to £200,000. On earnings above this level the tax-free allowance of £40,000 will taper down to £10,000 and on earnings above £300,000 the annual allowance will reduce to £4,000.
- The lifetime allowance, being the maximum which can be invested in a registered pension scheme before tax charges apply, will increase to £1,073,100.
- The VAT domestic reverse charge for building and construction services, which prevents losses through so-called ‘missing trader’ fraud, will be introduced on 1 October 2020.
- Structures and Buildings Allowance – The annual rate of capital allowances available for qualifying investments to construct new, or renovate old, non-residential structures and buildings will increase from 2% to 3%.
- From 1 April 2020, the government will restrict the proportion of annual capital gains that can be relieved by brought-forward capital losses to 50%.
- Housing co-operatives will obtain relief from the Annual Tax on Enveloped Dwellings Charge and the 15% Stamp Duty Land Tax rate applicable to enveloped dwellings over £500,000.
- The Government will introduce a 2% Non-UK resident Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.
- An extra £12bn for affordable homes programme.
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