The outbreak of Coronavirus (COVID-19) has seen the UK Government launch a series of unprecedented announcements in the support of businesses, employees and individuals. The measures so far include:
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme is open to all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. The HMRC Job Retention Scheme portal is now live and accepting claims. Full details for eligibility can be found here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month per employee. The scheme will run for at least 3 months, backdated from 1 March 2020, but will be extended if necessary. The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Furloughed employees must have been on the payroll on 28 February 2020 and can be on any type of contract. This includes full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts. The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
If an employee is working, but on reduced hours, or for reduced pay, they are not eligible for this scheme. The employer will have to continue paying the employee through their payroll and pay their salary subject to the terms of the employment contract you agreed.
Employers must be mindful not to discriminate in deciding which staff to offer furlough to. Equality and discrimination laws will continue to apply in the usual way. The issue of seeking to protect vulnerable workers has not been specifically covered in the guidance.
To be eligible for the subsidy, employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
There are specific issues that must be considered if an employee is on unpaid leave, on Statutory Sick Pay, has more than one job or takes part in volunteer work or training. For example, employees on sick leave or self-isolating should get Statutory Sick Pay but can be furloughed after this.
Employees on maternity (or similar) leave can continue to draw SMP (or similar) payments and the normal rules continue to apply for up to 39 weeks.
Employers need to make a claim for wage costs through this scheme. Employers will receive a grant of up to the lower of 80% of wage costs or a capped £2,500 per month, plus the associated employer NICs and minimum automatic enrolment pension contributions on that subsidised wage. Fees, commissions and bonuses are not included.
An employer can choose to top up to 100% but does not have to under the scheme. Employers need to be mindful of any contractual entitlements.
Where an employee has varied pay, the employer can claim for the higher of the same month’s earning from the previous year; or average monthly earnings from the 2019-20 tax year.
Individuals are only entitled to the minimum wage for the hours they work. So, if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding. Claims can be backdated until the 1 March if applicable, but employers can only claim once every three weeks.
Coronavirus Business Interruption Loan Scheme
The government has launched a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, 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 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
A business is eligible for the scheme if it is UK based, with turnover of no more than £45 million per year and if it meets the other British Business Bank eligibility criteria.
Lenders are banned from requesting personal guarantees on loans under £250,000. For loans over £250,000 personal guarantees will be limited to 20% of any amount outstanding on the Coronavirus Business Interruption Loan Scheme lending after any other amounts have been recovered from business assets.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme. There are 40 accredited providers in all.
Support for businesses paying tax: Time to Pay service
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.
You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.
Deferring VAT payments
VAT registered businesses can defer any VAT payments due between 20 March 2020 and 30 June 2020. There is no application process required to defer the relevant payment. However, businesses can still choose to pay any VAT due as normal.
It is important to note that this is only a deferral and whilst no interest or penalties will be due on deferred payments, the full amount of VAT due will still need to be paid. If you choose to defer your VAT payment as a result of Coronavirus then you must pay the VAT due to HMRC on or before 31 March 2021.
If you are planning to make use of the deferral offer, and you pay by direct debit, then you should cancel your direct debit. You can cancel your direct debit online using online banking or contact your bank if necessary. Please make sure that you do this as soon as possible to ensure that HMRC do not automatically collect the VAT due. You should also keep a note to re-establish the direct debit when your next VAT payment is due (if no further deferrals are announced).
HMRC has said that they will continue to process VAT reclaims and refunds as normal during this time.
Business rates support
The Business Rates retail discount in England will be increased to 100% in 2020-21 and expanded to the leisure and hospitality sectors including hair and beauty salons. Taken together with existing small business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21. Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible. Those businesses eligible for the newly expanded retail 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.
Working Tax Credit / Universal Credit
As part of the package of measures to tackle the Coronavirus outbreak, the government has announced that the basic element Working Tax Credit payments will be increased from an expected £1,995 to £3,040 for the 2020-21 tax year starting on 6 April 2020.
This annual increase of £1,045 is equivalent to £86.67 per month for one year from 6 April 2020. The actual amount that Working Tax Credits recipients will receive depends on their circumstances, including their level of household income.
If you claim Working Tax Credits, you don’t have to take any action or contact HMRC – the increase in your payments will start from 6 April 2020.
There have also been increases in of up to £20 per week in Universal Credit available to many employed and self-employed workers on low incomes or who have become unemployed. This includes an increase in the basic element and the removal of the minimum income floor in a move to benefit the self-employed. The minimum income floor won’t apply to anyone after 6 April 2020. This will last until the Coronavirus outbreak is over.
Deferring Income Tax payments
Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. If you do not wish to take advantage of this deferral you can continue to pay as normal.
Contactless payment limit
The spending limit for contactless card payments increased to £45 (from £30) on 1 April 2020. The change in the limit had been under consideration and has now been expedited as part of the industry’s response to the Covid-19 outbreak.
The change will allow more contactless payments to be made reducing the need to enter pin numbers and handling of cash. Mobile payments such as Apple Pay and Google Pay, do not have an upper limit once they’ve been authenticated using biometric technologies such as a fingerprint or face scan.
The updated limit will take some time to be introduced at all retailers as many retailers are facing staff shortages and other pressures as a result of COVID-19.
Bank support from mortgage lenders
A number of banks and other mortgage lenders are offering a moratorium on mortgage repayments to those directly affected by the Coronavirus. This is welcome support for individuals whose income may be diminished by absence from work. Banks will also consider increasing credit card limits and cash withdrawal limits.
More information about government support for businesses can be found at