Covid-19 – The Implications on Business and Employers in the UK

published on 19 June 2020 | reading time approx. 9 minutes

Support for businesses through the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) aims to support employers with adversely affected operations due to coronavirus (COVID-19).  This is a temporary scheme open to UK employers from 1 March 2020.
Employers can use the online portal (link below)  to claim for 80% of furloughed employees’ usual monthly wage costs, up to a cap of £2,500 a month, plus the associated National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. 
https://www.access.service.gov.uk/login/signin/creds

Update June 2020

Eligibility

You can claim for any employees you have furloughed if you have:

 
1. You are a UK organisation with employees
2. You have created and started a PAYE payroll scheme on or before 19 March 2020.
3. Enrolled for PAYE online
4. Furloughed that employee for at least 3 consecutive weeks between 1 March and 30
5. You have a UK bank account
6.  Submitted a report under the Real Time Information (RTI) reporting system for that employee on or before 19 March 2020

 
For employees that meet the criteria above, the number of you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June.
Further, employers should write to their employee confirming that they have been furloughed and keep a record of this confirmation. 

How to claim

To make a claim, you will need to log on to:
https://www.access.service.gov.uk/login/signin/creds

Update June 2020

The CJRS  has formally closed to new entrants as of  10 June 2020. The only exception to this is where the individual is returning from maternity, paternity, adoption or shared parental leave. If they are due to return after 10 June, they can be furloughed.

The CJRS offers temporary contributions to the wages of workers payable by employers affected by the COVID-19 pandemic. It operates from 1 March 2020, with a modified version of the scheme in place from 1 July 2020 until the end of October 2020.

 
After the 10 June 2020, only employees who have already been furloughed for at least three weeks can be furloughed. The only exception to the above is where you furlough an individual returning from maternity, paternity, adoption or shared parental leave.

The time line for the flexible scheme

• From 1 July , employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. From this date, only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme. This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020.
• Until July 31 employers can still claim for 80% of the furloughed employees current salary, up to £2,500 as well as employer National Insurance Contributions and pension contributions. This only applies for the hours the employee doesn’t work. Employers must pay employees for the hours they work.
• 31 July is the last day that you can submit claims for periods ending on or before 30 June.
• From 1 August 2020, the grant will slowly be reduced, there will be no grant available for class 1  employer NICs or pension contributions, these will remain payable by the employer.
• From  1 September 2020 , the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will continue to pay Employer NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• From October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will continue to pay Employer NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
• The Coronavirus Job Retention Scheme will close on 31 October 2020.

Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

 
To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:

• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for 5 years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working)
• If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement.

Tax Treatment of the Scheme

Payments received by a business under the scheme are made to offset deductible revenue costs.  Therefore, they must be included as INCOME when the business calculates its taxable incomes for Income Tax and Corporation Tax.  Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes. 

 
More comprehensive guidance on the Job Retention Scheme is available at: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-
covid-19/covid-19-support-for-businesses#support-for-businessesthrough-the-coronavirus-job-
retention-scheme

Self-Employment Income Support Scheme

The government have announced that support will be offered to self-employed individuals. The government will pay self-employed people who have been adversely affected by the coronavirus a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month. The scheme will cost the government around £3bn a month.

 
This will be assessed on an average of what the individuals income has been over the preceding 3 years. It will only assist those who make the majority of their income from self-employment so only the “genuinely self-employed” would benefit.

 
The level of profit loss would not be calculated, so whether someone lost 5% or 100% of profit because of the coronavirus, they were still entitled to an 80% grant.

 
The government will contact people directly using their details from the self-assessment tax system from 2018-19. So individuals are advised not to contact HMRC themselves. The first payment of this is estimated to take place in June 2020 and anybody who could not wait until then, could apply for an advance payment of universal credit to avoid the normal five-week wait for the first payment of that benefit. The government has said it could be handed out within days.

 
Those eligible under the Self-Employment Income Support Scheme, will be able to claim a second and final grant in August 2020. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

Business extensions with Companies House filing

Companies House have announced that from 25/03/20, businesses are able to apply for a three month extension for filing their accounts, if required, due to issues relating to COVID-19. This is a joint initiative by the Government and Companies House.

 
Although companies will have to apply for this, they will automatically be granted this extension if citing issues surrounding COVID-19. It is a fast-track, online system and will take approximately 15 minutes to complete.

 
Please note, if a company has already extended their filing deadline, or shortened their accounting reference period, they may not be able to qualify for an extension.

Companies House Services

The Companies house telephone helpline and Companies House same day have also been currently suspended due to COVID-19.

Support for businesses who are paying sick pay to employees

The government will bring forward legislation to allow small and medium-sized businesses and employers 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 will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

How to access the scheme

A rebate scheme is being developed. The latest guidance now suggests that the employer and employee can now agree to end a period of SSP in order to start furlough (notwithstanding continuing SSP eligibility) – this is likely aimed at allowing employers to agree to furlough individuals whose eligibility for SSP is due to being in the extremely vulnerable category advised to shield (but who are not actually unwell).

Support for businesses that pay business rates

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. Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

Eligibility:

You are eligible for the business rates holiday if:

 
1. Your business is based in England.
2. Your business is in the retail, hospitality and/or leisure sector.

 
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

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

How to access the scheme

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

 
Further guidance for local authorities is available in the expanded retail discount guidance.

Cash grants for retail, hospitality and leisure businesses

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. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Support for businesses that pay little or no business rates

The government will provide additional 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 £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
If your business is eligible for SBRR or rural 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.

Support for businesses through the 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 primarily small and medium sized 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.

Eligibility

You are eligible for the scheme if:

 
1. Your business is UK based, with turnover of no more than £41 million per annum.
2. Your business meets the other British Business Bank eligibility criteria.

How to access the scheme

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 once it has launched. There are 40 accredited providers in all.

 
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow. The scheme will be available from early next week commencing 23 March.

Support for larger firms through the COVID-19 Corporate Financing Facility

To support larger firms, the Bank of England has announced a new lending facility to provide a quick and cost effective way to raise working capital via the purchase of short-term debt. This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. Further details, including on how to access this funding will follow in the coming days, and the scheme will be available from the week commencing 23 March.

Eligibility

All UK businesses are eligible.

How to access the scheme

The scheme will be available early in week beginning 23 March 2020.
We will provide information on how to access the scheme here shortly.
More information is available from the Bank of England.

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.

Eligibility

You are eligible if your business:

• pays tax to the UK government
• has outstanding tax liabilities

How to access the scheme

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.

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

 
Source: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-a
bout-covid-19/covid-19-support-for-businesses
https://www.theguardian.com/uk-news/2020/mar/20/government-pay-wages-jobs-coronavirus-
rishi-sunak

 
* The UK government adheres to the EU definition of an SME, which is: micro-business = less than 10 employees and turnover under €2 million; small business = less than 50 employees and turnover under €10 million; medium-sized business = less than 250 employees and turnover under €50 million.

 
Direct link for business to apply for certain support and loans:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/
873676/Covid-19_fact_sheet_18_March.pdf