Who can claim the Job Retention Bonus?
Taking a look at the Job Retention Bonus.
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One of the most headline-grabbing announcements of Chancellor Rishi Sunak's Summer Economic Statement saw the promise of a Job Retention Bonus (JRB) aimed at encouraging employers to keep employees on the payroll until the end of January.
The JRB is designed to follow the end of the Coronavirus Job Retention Scheme (CJRS), which is being wound down and will finish at the end of October. The Chancellor said furloughing had been the right step to take to protect jobs during the first phase of the coronavirus (COVID-19) pandemic. Here, we look at the JRB and assess which employers and employees will be eligible.
What is the JRB?
The JRB is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the CJRS and who remains continuously employed through to 31 January 2021.
Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021. Employers will be able to claim the JRB after they have filed PAYE for January and payments will be made to employers from February 2021.
Which employers can claim the JRB?
An employer will be able to claim the JRB for any employees that were eligible for the CJRS whom they have claimed a grant for. Where a claim for an employee was incorrectly made, a JRB will not be payable.
Employers must keep their payroll up to date and accurate and address all requests from HMRC to provide missing employee data in respect of historic CJRS claims. Failure to maintain accurate records may jeopardise an employer's claim. HMRC will withhold payment of the JRB where it believes there is a risk that CJRS claims may have been fraudulently requested or inflated until the enquiry is completed.
Which employees can an eligible employer claim the JRB for?
Claims will only be accepted for employees that were eligible for the CJRS. Employers will be able to claim for employees who meet the following criteria.
- Were furloughed and had a CJRS claim submitted for them that meets all relevant eligibility criteria for the scheme.
- Have been continuously employed by the relevant employer from the time of the employer's most recent claim for that employee until at least 31 January 2021.
- Have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021. The employee does not have to be paid £520 in each month but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI.
- Have up-to-date RTI records for the period to the end of January.
- Are not serving a contractual or statutory notice period that started before 1 February 2021 for the employer making a claim.
How is the £520 a month average minimum earnings threshold calculated?
Only earnings recorded through RTI records can count towards the £520 a month average minimum earnings threshold.
Where employees are on fixed-term contracts or have been on statutory parental leave, the calculations become more complex. Please contact us for additional assistance.
How can employers claim the JRB?
From February 2021, employers will be able to claim the JRB through the GOV.UK website. The bonus will be taxable, so the business must include the whole amount as income when calculating their taxable profits for corporation tax or self assessment.
Employers should ensure that their employee records are up to date, including accurately reporting their employees' details and wages on the Full Payment Submission through RTI. Employers should also make sure all their CJRS claims have been accurately submitted and any necessary amendments have been notified to HMRC.
Further information on the JRB can be found here.
We are here to help and advise you in these difficult times. Please contact us for more information.
Closing the UK's skills gap
Outlining ways in which the UK can boost employment.
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Employers and business groups have been issuing warnings about the UK's skills shortage for some time now, but the gap between the skills needed to fill vacancies and those possessed by applicants has widened still further during the coronavirus (COVID-19) lockdown. Despite the rise in unemployment and the flood of applications for each vacancy, many recruiters are unable to find the employees they need.
It is a problem that will require both government and employers to look beyond the short-term and focus on future investment in skills. Here, we look at the areas where the issue is most acute and consider some of the solutions being proposed.
Prior to the pandemic, a 2019 report by the Industrial Strategy Council estimated that 20% of the workforce will be significantly under-skilled for their jobs by 2030.
According to the Quarterly Recruitment Outlook for the second quarter of 2020 published by the British Chambers of Commerce (BCC), of the firms that have still been attempting to recruit during the pandemic, 65% faced recruitment difficulties, particularly for skilled manual/technical or managerial roles.
The COVID-19 recession is doing significant damage to the UK labour market and unemployment is rising. This is also being accompanied by a slump in the number of self-employed individuals as freelancers fall through the cracks of the government's support schemes. The situation has led to fears of a 'brittle' and 'rigid' UK workforce that lacks the vital skills the economy requires in order to forge a recovery.
The BCC urged the government to take further action to support, upskill and reskill employees as businesses adapt to change. The Chartered Institute of Management Accountants (CIMA) says that while the government must tackle immediate issues such as restoring jobs and increasing consumer spending, it must also put greater emphasis on creating long-term recovery, including boosting social mobility.
The CIMA believes investing in education and skills development in sectors such as digital technology, education technology, healthcare, financial services, engineering and construction will be critical.
Funding boosts are needed for vocational and technical education, for apprenticeships and for incentives to help more employers provide high-quality job-related training.
To address the ongoing challenges that the economy faces, the Chancellor of the Exchequer, Rishi Sunak, announced a large-scale plan to support people in finding jobs in his July Summer Economic Update. The Chancellor made funds available to enable jobseekers to gain the skills they need to get jobs and provide targeted help for young people to get into work.
The Kickstart Scheme
One of the main announcements in the Update was the introduction of a new Kickstart Scheme designed to 'fund the direct creation of high-quality jobs for young people at the highest risk of long-term unemployment'.
This is a £2 billion fund aimed at creating hundreds of thousands of high-quality, six-month work placements for those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage (NMW) for 25 hours a week, plus the associated employer national insurance contributions (NICs) and employer minimum automatic enrolment contributions.
Training and apprenticeships
The government is also funding high-quality traineeships for young people by paying employers who provide trainees with work experience £1,000 per trainee.
Additionally, there is now a payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over. This applies from 1 August 2020 to 31 January 2021.
Many businesses are still suffering from a cash crunch and reduced demand despite the welcome interventions made in the Summer Economic Update. Those looking to the future must invest wisely, using the available government support, to develop a skilled and motivated workforce.
We are happy to advise in detail on the best approach to suit your circumstances. Please contact us for more information.
Extending Making Tax Digital
Taking a look at the extension of Making Tax Digital to other taxes.
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The government's landmark Making Tax Digital (MTD) initiative, which sees taxpayers move to a fully digital tax system, is to be gradually extended over the next three years.
The Treasury's roadmap for MTD is currently going through Parliament as part of this year's Finance Bill. New legislation will make MTD compulsory for all VAT registered businesses, including those with a turnover below the VAT threshold from April 2022. In April 2023 MTD will apply to taxpayers who file income tax self assessment tax returns for business or property income over £10,000 annually. Here, we look at MTD and what the extension means for small businesses and those filing self assessment returns.
What is MTD?
Making Tax Digital for Business was introduced in the 2015 Spring Budget. The government's 'Making Tax Easier' document was published shortly after, which outlined plans for the 'end of the tax return'. It also set out the government's vision to modernise the UK tax system, with digital tax accounts set to replace tax returns for ten million individuals and five million small businesses.
Under the rules, businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software. Since it was introduced in 2019, more than 1.4 million businesses have joined the programme, submitting over six million returns.
The advantages of MTD
According to the government, MTD only changes the way that taxes are reported, not the level of tax that is collected. It says MTD will help to minimise avoidable mistakes, saving the Treasury billions in lost taxes.
In addition, the government states that MTD makes it easier for businesses to keep on top of their tax affairs. It points to the 300,000 smaller VAT-registered businesses that are not yet required to use MTD, but have chosen to do so voluntarily because of the wider benefits the digital tools offer, including fewer errors and increased productivity.
Under MTD, self assessors will have to make quarterly submissions of income and expenses. HMRC says this will allow it to give taxpayers an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they will be able to add any non-business information and finalise their tax affairs using MTD-compatible software.
According to the government, the long lead-in time for the extension of MTD will allow businesses, landlords and agents time to plan. It will also give software providers enough notice to bring a range of new products to market, including free software for businesses with the simplest tax affairs.
Errors and costs
However, a survey of businesses and their advisers carried out by the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) revealed that nearly 90% of respondents said that Making Tax Digital for VAT (MTD for VAT) had not reduced errors and just 14% of respondents said there had been an increase in productivity in their organisation as a result of MTD for VAT.
The Low Incomes Tax Reform Group (LITRG) is urging HMRC to make effective use of the next three years, running full pilots and supporting taxpayers in making the transition to the new MTD system.
Using third party software and keeping digital records
Businesses must keep specified records in 'functional compatible software', which calculates the VAT return and submits it to HMRC via an Application Programming Interface (API).
HMRC acknowledges there are different ways to do this. However, the transfer of data to HMRC, from the mandatory digital records to the filing of the return, must be entirely digital.
Under MTD, the required digital records can be held within more than one piece of software, however there must be a digital link between them: the data cannot be transferred manually between software products. HMRC has confirmed that all businesses now have until their first VAT return period starting on or after 1 April 2021 to ensure digital links are in place.
A HMRC communications pack on Making Tax Digital can be found here.
How we can help
No matter if your business is big or small, MTD affects you. As your accountants, we can help you to stay compliant with the MTD rules and advise on suitable software packages for your business.
For more information, please contact us.
Chancellor unveils a plan for jobs
Analysing the measures announced in the Summer Economic Update.
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On 8 July Chancellor Rishi Sunak unveiled a three-point plan to support jobs as the UK economy begins its recovery from the coronavirus (COVID-19) lockdown. The first phase of the COVID-19 pandemic created extraordinary challenges for businesses and the wider economy, prompting the UK government to respond with a raft of unprecedented measures.
As lockdown rules are being relaxed and support schemes are being wound down, the Chancellor announced a raft of measures to create jobs, protect jobs and help people find work. Here, we look at Mr Sunak's Summer Economic Update and what it means for businesses and individuals.
Furlough scheme replaced with job retention bonus
The Coronavirus Job Retention Scheme (CJRS) and Self-employment Income Support Scheme (SEISS) are being wound down after helping support 11 million people through the crisis.
The Chancellor said furloughing had been the right measure to protect jobs through the first phase of the crisis and it will be followed by a Job Retention Bonus. This will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021. To qualify for the payment, the employee must be paid at least £520 on average in each month from November to January. Payments will be made from February 2021 and further details on this scheme will be announced by the end of July.
Kickstart Scheme for young people
The Chancellor also launched a £2 billion Kickstart Scheme that will aim to create high-quality, subsidised six-month placements for young people at risk of long-term unemployment.
The aim of the scheme is to give young people the chance to build their confidence and skills in the workplace and then to gain experience that will improve their chances of going on to find long-term, sustainable work.
The Kickstart Scheme will see the creation of work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer national insurance contributions (NICs) and employer minimum automatic enrolment contributions. Employers will be able to top this wage up if they so wish.
More changes to support jobs
To address the ongoing challenges that the economy faces, the government has a large-scale plan to support people in finding jobs, enable them to gain the skills they need to get jobs and provide targeted help for young people to get into work.
Measures will include a boost to the National Careers Service, enhanced work search support and payments of £1,000 for employers who hire new apprentices.
Eat Out to Help Out
One of the more eye-catching announcements made by Mr Sunak is the launch of a 'eat out to help out' scheme designed to encourage people to return to eating out in restaurants and cafés.
This will entitle every diner to a 50% discount of up to £10 per head on their meal at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the month of August across the UK. Participating establishments will be fully reimbursed for the 50% discount.
In order to further support the hospitality and tourism sector, the Chancellor cut the rate of VAT from 20% to 5%. This applies to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, as well as supplies of accommodation and admission to attractions, including theme parks and zoos, across the UK.
Stamp duty temporarily reduced
The Chancellor also introduced measures to bolster the construction sector and boost confidence in the flagging housing market in his Summer Economic Update.
Property transactions fell by 50% in May this year and house prices have fallen for the first time in eight years. In response, the government will temporarily increase the nil-rate band of residential Stamp Duty Land Tax (SDLT) in England and Northern Ireland from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021.
However, both Scotland and Wales have their own versions of SDLT, namely the Land and Buildings Transaction Tax (LBTT) and the Land Transaction Tax (LTT). Neither of the devolved governments have yet commented on their plans in regard to the taxes.
Additionally, the Chancellor announced a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. The scheme aims to upgrade over 600,000 homes across England, helping to reduce energy bills and support the green economy.
Changes to tax rules and rates can be complex. We would be only too pleased to provide any further assistance you may need: please contact us.
Tax relief while working from home
Considering the tax reliefs available to those working from home because of COVID-19.
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Millions of employees have been forced to work from home during the coronavirus (COVID-19) pandemic, which has meant significant changes to both working practices and home life. For many, these changes have proved to be a boon, and some employees may never return full-time to their workplaces. For others, the reopening of their place of business cannot come soon enough.
As more people turned their homes into offices, tax-related questions have arisen over the availability of reliefs, and HMRC has responded with guidance and temporary exemptions. Here, we provide answers to some frequently asked questions around expenses related to equipment, cars and travel.
The Treasury took action in response to the unprecedented situation with a temporary tax exemption that is in effect from 16 March 2020, the date the government recommended working from home, until 5 April 2021.
The exemption ensures that home office expenses do not attract tax and national insurance contribution (NIC) liabilities where reimbursed by an employer. The exemption is designed to support employees who are working from home as a result of the COVID-19 pandemic and need to purchase home office equipment.
To be eligible for relief, the expenditure must meet two conditions:
- The equipment must be obtained for the sole purpose of enabling an employee to work from home as a result of the COVID-19 pandemic.
- The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer.
However, HMRC has also confirmed that a taxable benefit charge will arise if the ownership is subsequently transferred to the employee.
In addition, HMRC has also confirmed that employees working from home because their workplace shut, or following advice to self-isolate, meet the requirements for 'regular' homeworking. This means that employees are covered by the rules regarding homeworking expenses and can claim £6 a week or £26 a month, either through an employer or by claiming tax relief themselves.
There is also the potential to claim a larger sum if necessary. However, this does involve providing analysis of costs and is more cumbersome. Employees can claim online, by phone or post, or via their self assessment tax return, if they usually file one.
Further guidance can be found here.
Tax and travel
HMRC has updated its guidance information on paying travel and subsistence for employees travelling to temporary workplaces during the pandemic. Where an employee was furloughed when they were travelling to a temporary workplace, the period of furlough is part of the period of continuous work at that temporary workplace (for the purposes of the maximum period of 24 months). The same applies to a period of working from home.
In regard to cars, although most have clocked up little or no mileage during the lockdown, the usual rules do remain in place for furloughed employees and those working at home because of COVID-19. This means a car is still treated as 'available for private use' for tax purposes.
HMRC will accept a car is unavailable in limited circumstances, applying only where COVID-19 restrictions on movement prevent it from being returned to the employer or collected.
Business as usual
In most cases it is business as usual and the normal rules on taxable benefits still apply during the pandemic: for example, the provision of one mobile phone and SIM card per employee, with no restriction on private use. This doesn't count as a taxable benefit.
This applies to a range of equipment providing it meets three conditions:
- It's provided solely to enable the employee to perform the duties of the employment.
- Any private use is not significant.
- It isn't an 'excluded' benefit – such as a car.
The rules on tax relief and home working can be complex. We are happy to advise in detail on the best approach to suit your circumstances. Please contact us for more information.
Looking ahead: exiting lockdown
Considering how businesses can restart operations once the COVID-19 lockdown ends.
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The coronavirus (COVID-19) lockdown happened quickly and with relatively little warning. Businesses were forced to make a rapid transition to home working where this was possible or pause operations altogether. Few firms were fully prepared for this shift and some have adapted better than others. Although the lockdown caused major disruption, it also meant new operating practices were established and new efficiencies gained.
The emergence from lockdown looks likely to be a more gradual process; it may even by a cyclical one if we face further peaks of infection. Here we look at some of the practical issues that firms will need to address if they are to map out a successful recovery from the pandemic.
The 'new normal'
Nobody can say for certain how workplaces will look and function when we return to them. One thing is for sure though: they will look different to the ones left behind in March. However, where working practices and newly adopted technologies have proved a success during lockdown, businesses will be keen to keep digital alternatives in place rather than return to conventional working practices.
Because of the benefits outlined above and the imperative to maintain social distancing, many organisations will be planning for a greater volume of employees requesting to work flexibly. The ability to implement social distancing in the workplace will be key to a successful return. However, it will mean reduced capacity in most workspaces, so staffing requirements and working patterns will have to be reviewed.
Crucial to managing a flexible return to work will be technological capabilities that support a combination of office and remote working, which will mean a continued reliance on video conferencing in many cases.
Updated hygiene practices will also be vital to a safe return, especially if a business is expecting to welcome visitors onto its premises. Firms will need to consider measures such as creating one-way walkthroughs, installing hand sanitising stations, opening more entrances and exits and changing seating layouts in break rooms. Where people cannot be two metres apart, employers must manage the risk of transmission.
An event such as the COVID-19 pandemic triggers the need to review risk assessments and record the findings of the review. Firms will need to follow all normal safety practices while also incorporating any new regulatory policies, procedures and control measures (for example, using the latest guidance published by the Health and Safety Executive). Additionally, employees will need to be informed of any new procedures and protocols that must be followed, for example the use of hot desking and deep cleaning.
Keep the cash flowing
As well as keeping a close eye on order books, stocks and supply chains, managing cashflow will be vital for firms aiming to exit the lockdown successfully. This means having a thorough understanding of your business's cash position both prior to exit and for the immediate future.
Understanding the cash position in the short and medium-term will help firms assess what steps they need to take in order to keep the business moving. Devising forecasts with different scenarios will help gain an understanding of what the organisation's options might be.
Many businesses are likely to need some additional help as they start back up again. Existing banks and lenders should be the first port of call, but remember there are other sources of finance available. These include the various government COVID-19 support schemes: we can provide help and advice if your business needs to raise finance.
Also, businesses must make sure that they utilise the tax reliefs available to them. There are various reliefs available for business owners which can assist with tax planning. We can offer advice and guidance to make sure your business is benefiting from the appropriate reliefs.
The road ahead may not be an easy one. It is unlikely to be straightforward and setbacks are probable. However, careful planning will help businesses be prepared to take advantage of a surge in economic activity and return of market confidence.
Our team can help businesses with a range of financial planning issues. For more information, please contact us.
COVID-19: the Coronavirus Job Retention Scheme
Analysis of the Coronavirus Job Retention Scheme.
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The government has announced a range of extraordinary measures to try and prop up the UK economy and safeguard jobs during the COVID-19 lockdown. There are business interruption loan schemes to help firms secure funding, VAT deferrals to aid cashflow issues and special schemes for organisations including charities, tech start-ups and the arts. The importance of the Coronavirus Job Retention Scheme was underlined when 140,000 companies applied to claim wages for over one million UK employees on the day it was launched.
Here, we analyse the Coronavirus Job Retention Scheme and offer some practical guidance on applying for it.
What is the Coronavirus Job Retention Scheme?
The Coronavirus Job Retention Scheme (CJRS) is a temporary scheme open to all UK employers. It offers salary support from 1 March 2020 and will stay open until at least the end of June. The CJRS aims to encourage employers who cannot pay staff wages to not make redundancies. Instead, they can keep employees on the payroll and claim a government grant to cover some of the wage cost.
Who is eligible?
The scheme is open to all UK employers that have created and started a Pay as You Earn (PAYE) payroll scheme on or before 19 March 2020, have enrolled for PAYE online and have a UK bank account. Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
What can be claimed?
Businesses can claim a grant from HMRC to cover the lower of 80% of an employee's salary or £2,500 per month, plus the associated employers' national insurance contributions (NICs) and the minimum automatic enrolment employer pension contributions on that subsidised wage.
How is the grant claimed?
Employers must calculate the amount for the claim and apply themselves, although an authorised agent can make a claim on an employer's behalf. Claims can only be made online, so employers need to have a Government Gateway (GG) ID and password and be enrolled for PAYE online.
Various information will be required to make a claim, including the employer PAYE reference number, the number of employees being furloughed, the claim period (including the start and end date), the amount claimed (per the minimum length of furloughing of three weeks) and the UK bank account number and sort code.
HMRC will undertake initial checks on the claim, and if they believe the employer to be eligible, pay the grant by BACS to a UK bank account.
The employer must pay the (relevant) employee the full amount of grant received in the form of money, without adjustment for benefits in kind, administration fees or any other costs in connection with the employment. More information on the CJRS can be found here.
Those workers who are not eligible for the CJRS, such as contractors and the self-employed, will need to use the government's Self-employment Income Support Scheme (SEISS).
This scheme will allow businesses to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next three months. It is open to those who have submitted their self-assessment return for 2018/19, have traded in 2019/20, are trading when they apply (or would be except for COVID-19), intend to continue to trade in 2020/21 and have lost trading/partnership trading profits due to COVID-19.
HMRC will contact relevant businesses if they are eligible for the scheme and invite them to apply online. HMRC will aim to contact businesses by mid-May 2020 and will make payments by early June 2020. More information can be found here.
We are here to help and advise you in these difficult times. Additionally, the latest government guidance can be found by accessing the GOV.UK COVID-19 webpage.
Chancellor unveils help for self-employed workers
Government support for the impact of COVID-19.
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On the 26 March, Chancellor Rishi Sunak announced a scheme to help self-employed workers who have been hit by the COVID-19 crisis.
Under the scheme the government will pay self-employed people a taxable grant based on an average of their earnings over the past three years.
The grant will cover up to 80% of earnings up to a limit of £2,500 a month.
To be eligible self-employed workers must have filed a tax return for the 2018/19 tax year and have average trading profits under £50,000 for the past three years.
Directors of their own companies who are paid through PAYE may be able to get support using the Coronavirus Job Retention Scheme.
The self-employed scheme will be available from June this year and run for three months but may be extended if necessary. In the meantime the Chancellor said people can access Universal Credit, business loans or keep on working.
HMRC will contact self-employed workers if eligible for the scheme and invite them to apply online.
Detailed guidance about the grants can be found here.
Business groups welcome Chancellor's support for the self employed
Business groups have backed Chancellor Rishi Sunak's scheme to help self-employed workers through the COVID-19 crisis.
Dame Carolyn Fairbairn, CBI Director-General, said: 'Many self-employed people across the UK will be hugely relieved.
'These new measures will provide essential support to those facing significant uncertainty and loss of income.
'Given the complexity of the task, it's understandable this will take time to deliver. Fast clarity on how and when money will reach their bank accounts will help individuals to plan.'
Derek Cribb, CEO of the Association of Independent Professionals and the Self-Employed, said: 'This is an unprecedented package and a very welcome response to our campaign for freelancers and the self-employed.
'While this assistance is practical and wide-ranging it does not, however, cover all self-employed people. We will keep working to fill in these gaps.'
Mike Cherry, the National Chairman of the Federation of Small Businesses, said: 'This bold support package from the government will give much-needed help to vast numbers of self-employed workers.
'The self-employed community underpins the UK economy. They are the individual risk-takers who don't expect the same benefits as employees.
'Many tax-paying self-employed who will be helped by today's measures will be relieved. Although the deal is not perfect, the government has moved a very long way today.'
COVID-19: measures for UK businesses
Reviewing official guidance on COVID-19.
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The coronavirus (COVID-19) pandemic that began in China and spread rapidly around the globe has caused major disruption to businesses and economies worldwide. The UK government has responded to COVID-19 with measures aimed at delaying its spread and mitigating damage to the economy with a substantial stimulus package.
Chancellor Rishi Sunak has set out a package of temporary, targeted measures to support public services, people and businesses through the period of disruption caused by COVID-19. This is a fast-moving area and the government will publish the details of further measures on: https://bit.ly/33vU1cD.
Here we consider the measures announced to support businesses including the significant package of measures announced on 17 March 2020:
- grant funding of £10,000 for small firms in receipt of Small Business Rate Relief (SBRR) and Rural Rates Relief
- grant funding of £25,000 for certain businesses in the retail, hospitality and leisure sectors
- a 12-month business rates holiday for businesses in the retail, hospitality and leisure sectors
- a temporary Coronavirus Business Interruption Loan Scheme to support businesses in accessing bank lending and overdrafts
- extended access to Statutory Sick Pay (SSP), with reliefs available to SMEs
- expanded access to HMRC's Time to Pay scheme.
Increases and extensions to business rates reliefs
The government had previously announced business rates discounts of 50% for retailers, cinemas and music venues with a rateable value below £51,000, and a £5,000 discount for pubs. On 17 March the Chancellor announced that the business rates discount will be increased to 100% and expanded further to include all hospitality, retail and leisure businesses, no matter what their rateable value, for the 2020/21 tax year.
Many small businesses pay little or no business rates because of SBRR. The government will supply funding for local authorities in England, which will provide one-off £10,000 grants to businesses currently eligible for SBRR or Rural Rate Relief. In addition, one-off grants of £25,000 will be available to retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000.
Business rates have been devolved to Scotland, Northern Ireland and Wales, so the UK government has announced measures that affect business rates in England. We have not considered other parts of the UK in this summary.
The Coronavirus Business Interruption Loan Scheme
In the Budget the Chancellor announced the implementation of the Coronavirus Business Interruption Loan Scheme, which will support the continued provision of finance to UK businesses during the COVID-19 outbreak. Delivered by the British Business Bank, the scheme will temporarily replace the Bank's Enterprise Finance Guarantee scheme, with an additional £1 billion made available on top of existing support supplied via the programme.
The government will increase the scope of the Business Interruption Loan Scheme announced in the Budget from £1.2 million to £5 million, with no interest due for the first six months.
Extended access to Statutory Sick Pay (SSP)
As part of a package to widen the scope of SSP and make it more accessible, SSP entitlement will begin from the first day of sickness absence, rather than the fourth, for those who have COVID-19,or self-isolate in accordance with government guidance.
SSP relief for SMEs
Small and medium-sized businesses will be allowed to reclaim SSP paid for absence due to COVID-19. The 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, with the size of an employer being 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 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 commenced the day after the regulations on the extension of SSP to self-isolators came into force on 13 March 2020. The government intends to work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. It stated that existing systems are not designed to facilitate employer refunds for SSP.
Expanded access to Time to Pay
The government will ensure that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs.
HMRC has set up a dedicated COVID-19 helpline, on 0800 0159 559, for those in need, and they may be able to agree a bespoke Time to Pay arrangement. Time to Pay gives businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
We are here to help and advise you in these difficult times. The latest government guidance can be found by accessing GOV.UK coronavirus webpage.
Don't let flooding sink your business
Considering ways in which you can safeguard your business from flooding.
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Flooding has become a sad fact of life in many areas of the UK, with homes and businesses washed out by torrential rainfall and swollen rivers. Last year ended with one of the wettest autumns in living memory, while 2020 began with storms Ciara and Dennis saturating areas of the country. Flooding causes damage to buildings and machinery, the loss of records and stops businesses from running normally. Dealing with the aftermath of flooding while trying to stay afloat is an anxious and challenging time for any affected business.
Protecting your property against the threat of flood damage should be a priority for any business, and there is plenty of support and advice available. The government advises all businesses to take seven steps to protect themselves.
- Sign up for Environment Agency flood warnings.
- Create a flood plan.
- Train staff in flood safety procedures.
- Create a stockpile of potentially useful materials.
- Consider installing flood protection products.
- Make sure the business has appropriate flood insurance.
- Store insurance policy documents digitally, or away from the premises.
Once the shock of being flooded has passed, businesses will want to act. The Association of British Insurers (ABI) advises anyone who has suffered flood damage to contact their insurer or broker as soon as possible. Most will have 24-hour emergency helplines that give advice and help arrange repairs. Insurers also have teams on the ground helping their customers and managing the claims process.
Once the floodwater begins to recede, businesses will be eager to begin the recovery process. However, the ABI also recommends warns people not to return until it is safe to do so. It also advises businesses premises not to throw away damaged items in case they can be repaired while redecoration should wait until a property is fully dried out.
Maintaining vital cashflow
Flooded businesses will still need to pay many of their expenses, despite suffering a loss of income. HMRC's payment deadlines will still loom large, even for a business crippled by flooding. The tax authority can offer payment plans to those in financial difficulty. However, early dialogue with HMRC is essential in advance of payment deadlines.
Loss of business records
Floods can destroy paper and damage computers. Books, receipts and other records needed for filing tax returns could be lost, possibly irretrievably. Even a temporary loss could cause problems in meeting HMRC's deadlines for filing corporation, tax, VAT or self assessment returns. For businesses afflicted by flooding reconstructing records and bringing paperwork up to date as quickly as possible will be as important as property recovery.
Those affected should not wait until the deadline has passed before notifying HMRC and opening discussions. Following past floods HMRC has shown a degree of leniency around filing deadlines, although it must receive advance notification of the delay to filing and a revised submission date.
Making financial recoveries
Ideally, most businesses will have flood cover as part of their property insurance, so will be able to make a claim for damages. A full insurance recovery will result in a tax neutral position. However, full recovery is unlikely if there is a policy excess.
Following this year's floods, the government announced that affected small and medium-sized enterprises (SMEs) would be eligible for 100% business rates relief for at least three months. Also, those SMEs that suffered uninsurable losses can claim up to £2,500 from the Business Recovery Grant.
Additionally, the government announced that businesses affected by flooding can apply for up to £5,000 to help make them more resilient to future flooding.
The availability of tax relief for expenditure on remedial works will be an important consideration for business-owners. This is particularly the case where there is no valid insurance policy in place. Expenses that are classed under 'repair and refurbish' will qualify for a deduction against taxable profits as revenue expenses. However, any 'improvements' will be regarded as investments and treated as capital expenses, so will not qualify for a deduction against taxable profits.
Learning the lessons
Sadly, flooding is becoming a fact of life in some parts of the UK. For businesses that are based in these areas, preparing for the worst will be key to surviving. A measured response will also be vital to an effective recovery.
Our team can help businesses with tax returns or negotiating with HMRC: please contact us.