In his budget on Wednesday 11 March, the Chancellor announced several emergency measures to help business and individuals navigate their financial path through the emerging coronavirus pandemic.
At the time of going to print, the NI Executive are still in the process of finalising the details of their support for NI Businesses. However some support measures have already been identified in the Chancellor’s UK budget on 11th March 2020 and indeed the Chancellor’s UK statement of 17th March 2020.
The situation is continuing to evolve and these are difficult times for businesses. Decisions will need to be taken that will ease financial and cashflow pressure for the next 2 -3 months when it is hoped that we will be over the worst of this crisis. Current emergency measures are summarised briefly below.
Cashflow – it is essential that decisions are taken in the short term to protect cashflow. Each business should prepare a 6-12 month cashflow forecast based on likely impact on trade. Decisions should be taken accordingly to protect the business and this includes staff review, overhead reductions and cash requirements. It is critical that early decisions are taken to protect the future of the business.
Staffing – if there has been a significant downturn in trade, decisions will need to be taken regarding reduced hours, using up holidays and temporary or permanent redundancies. Advice and assistance can be obtained from www.gov.uk.
It has just
been announced by the NI Executive that there will be a three month rate free
period for all businesses. This
automatically reduces rates by 25% in addition to any existing rates
relief. This applies to all businesses
and does not need to be paid back
Coronavirus Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch in a matter of weeks 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-tender cap on claims) to give lenders further confidence in continuing to provide finance to SME’s. The Government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.
It is important to recognise that any loan scheme is a restructuring and deferral of loan facilities and not a grant or subsidy.
Tax Bill – Time to Pay (TTP) arrangements
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. These businesses can contact HMRC’s new dedicated COVID-19 helpline from 11 March 2020 for advice and support. To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms and individuals when needed. If you are concerned about being able to pay your tax due to COVID-19, then call HMRC’s dedicated helpline on 0800 0159 559.
Again these measures are a deferral of any current liability and not a cancellation. One area that can be looked at over the next few months for Self-Employed and Partnership is a planned reduction of HMRC payments on account due to a downturn in performance. Please speak to your Accountant in relation to how this works.
Statutory Sick Pay (SSP)
At present SSP is a cost borne by the employer and only kicks in after 3 waiting days for the employee. SSP will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice. In addition, SSP will be payable from day 1 instead of day 4 for affected individuals.
People who are advised to self-isolate for COVID-19 will soon be able to obtain an alternative to the sick note to cover this by contacting NHS 111, rather than visiting a doctor. This can be used by employees where their employers require evidence. The fine details of this will be confirmed shortly.
Those who are not eligible for SSP, for example the self-employed or people below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance. In addition, for the duration of the outbreak, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to Government advice, ensuring self-employed claimants will receive support. People will be able to claim Universal Credit and access advance payments upfront without the current requirement to attend a Jobcentre if they are advised to self-isolate.
The Government will bring forward legislation to allow small and medium-sized businesses and employers to reclaim 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 two 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 the COVID-19.
- Employers should maintain records of staff absences, but employees will not need to provide a GP sick note.
- The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators 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. Existing systems are not designed to facilitate employer refunds for SSP.
For more information please contact [email protected]
As the situation evolves we will continue to provide updates for our clients.