The UK government has set out a package of temporary measures to support public services, people and businesses through this period of disruption caused by COVID-19. The main measures contained in the package are listed below.
Please contact Andrea Ferrarese at our London office (see www.fsreg.com for our contact details) if you require any assistance in respect of this matter.
Measures supporting businesses and self-employed individuals
1. Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
HMRC will reimburse 80% of the wage costs of affected employees, up to £2,500 per month per employee.
2. Deferring VAT and Income Tax payments
Valued Added Tax (VAT) payments due by businesses to HMRC will be deferred for 3 months.
If a person is self-employed, Income Tax payments due on 31 July 2020 under the Self-Assessment scheme will be deferred to 31 January 2021.
3. A Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
Small and medium-sized businesses will be allowed to reclaim Statutory Sick Pay paid for sickness absences due to COVID-19.
4. A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
A business rates holiday for retail, hospitality and leisure businesses in England will be introduced for the 2020/2021 tax year and, for businesses that received the retail discount in the 2019/2020 tax year, also for the 2019/2020 tax year.
The above discounts will be applied automatically to the relevant businesses in April 2020.
5. Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of £15,000 or less will receive a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.
6. Support for businesses through the Coronavirus Business Interruption Loan Scheme offered by all major British banks
The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major UK banks.
7. Support for larger firms through the COVID-19 Corporate Financing Facility helping them bridge coronavirus disruption to their cash flows through loans
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support companies if they have been affected by a short-term funding squeeze and allow such entities to finance short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
8. The HMRC Time To Pay Scheme
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 in order to defer their due payments.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Measures supporting individuals
9. Statutory Sick Pay (SSP)
If an employee is entitled to Statutory Sick Pay (SSP), they can get £94.25 per week Statutory Sick Pay in the event they are too ill to work. This amount is paid by the relevant employer for up to 28 weeks.
10. Mortgage repayments and rent payments
If a person is experiencing financial difficulties meeting their mortgage repayments because of COVID-19, they may be entitled to a mortgage or rental holiday for 3 months. This includes if they are a landlord whose tenants are experiencing financial difficulties because of COVID-19.
If a person is a tenant experiencing financial difficulties because of COVID-19, the government will ensure they do not face the threat of eviction for at least 3 months.
11. Deferring other payments
If a person is experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19, they should seek to defer their payments with the relevant financial institution who should facilitate the deferral.
The Financial Conduct Authority (FCA) called on lenders to use flexibility built into their rules to support consumers, taking into account customers’ individual circumstances. Many major lenders have already made statements to this effect.
Disclaimer: This article provides general information only. It is not comprehensive and does not constitute the provision of legal, investment or regulatory advice. FS REG is not responsible for any action taken or omitted to be taken on the basis of the information contained in this article. © 2020 FS REG Limited (www.fsreg.com). All rights reserved.