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Coronavirus (COVID-19): Tax Reliefs and Support to Businesses

23 March 2020
A summary of the key measures and packages introduced by the Chancellor on Friday to support and assist businesses and employers during this difficult period.

On Friday 20th March the Chancellor, Rishi Sunak, announced an additional package of measures to support public services, employers and employees through the period of disruption caused by COVID-19. 

The details of the packages are yet to be confirmed but we have set out below a brief summary of the provisions of each package.

The Coronavirus Job Retention Scheme

Please see our blog Coronavirus (COVID-19): Support for businesses announced through Job Retention Scheme for more detail.

Deferral of VAT

All UK VAT registered businesses can defer any VAT payments due between 20 March 2020 and 30 June 2020 until 31st March 2021.  If the VAT payment is made by direct debit it can be cancelled for that specific VAT payment but will need to be resumed for future VAT payments.  VAT returns still need to be filed for the period.

Self-Employed Income Tax payments

self-assessment payments on account due on 31 July 2020 can be deferred until 31 January 2021.

Self-employed workers are also able to claim Universal Credit which has been increased by £50 per week.

Statutory Sick Pay ("SSP") Relief 

businesses with fewer than 250 employees (as at 28 February 2020) can recover the cost of SSP paid as a result of COVID-19 from the 13 March 2020 for a maximum of two weeks' sickness per employee. Employers should retain records of staff absences and payments of SSP.

Small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief 

If you are an eligible business your Local Authority will be in touch to provide details of how to claim the funds.

Grant funding of £25,000 for retail hospitality and leisure business with property with a rateable value between £15,000 and £51,000 

The funding with be provided by your Local Authority. You should contact your Local Authority about eligibility and access to this funding. 

The Coronavirus Business Interruption Loan Scheme ("CBIL") offering loans up to £5million for small and medium sized businesses through the British Business Bank

Businesses with a turnover of now up to £45million will be able to apply for the CBIL.  Loans from £1,000 to £5million are made available for a term from three months to ten years.  The Government will cover the interest on the loans for the first twelve months and will also guarantee 80% of the loan. Please note that the borrower is still responsible for 100% of the loan.

A new lending facility from the Bank of England, the COVID-19 Corporate Financing Facility ("CCF"), to help support cash flow among larger firms

The Bank of England will buy short term debt from larger companies. The facility will look through temporary impacts on businesses’ balance sheets and cash flow by basing eligibility on firms’ credit ratings prior to the COVID-19 shock. To be eligible the business must have had, before being impacted by COVID-19, a short or long term rating of investment grade or financial health equivalent to an investment grade rating. The intention is that the CCF will operate for an initial period of 12 months.

Business Rates Relief

There will be business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year with no limit on rateable values. Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  1. as shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
  2. for assembly and leisure; or
  3. as hotels, guest & boarding premises and self-catering accommodation.

No action is required to be taken and the adjustment will apply to your next rates bill from the respective Council in April 2020.

Businesses that are nurseries and are on Ofsted’s Early Years Register or wholly or mainly used for the provision of the Early Years Foundation Stage in England will have a business rates holiday for the 2020 to 2021 tax year.

All non-domestic properties in Scotland will get a 1.6% rates relief. This relief effectively reverses the change in poundage for 2020-21.

Time To Pay Arrangements 

This is available to all businesses and self-employed people that pay tax to the UK Government.  If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 024 1222 who will be able to agree a payment schedule. HMRC will base each decision on a case by case basis.

When calling HMRC please have the relevant information to hand, such as, the amount of the outstanding tax liability; details of the business and how it has been impacted by COVID-19; a proposal for the deferment of the amount of tax liability; and potential consideration of other steps considered to fund the liability. 

The measures highlighted above aim to provide financial stimulus for employers and businesses.  However, as has been noted it does not provide significant financial help for the 5million self-employed people in the UK who are being asked to rely upon SSP.  Such self-employed people may also be struggling with payments due to HMRC following assessment regarding the recent loan charge.  If they have not done so already, they should consider contacting HMRC to look to extend the payments through the time to pay arrangements.

As the position changes and calls from MPs and trade unions mount there may be more measures introduced to assist the self-employed community. We will keep you updated as the position changes.

If you require any further information or assistance in relation to this please do not hesitate to contact our Tax team.

Further Reading