Covid-19: government support for individuals and businesses

18 March 2020
On 17 March 2020, the Chancellor promised again to “do whatever it takes to support the economy” from the impact of the coronavirus outbreak. While the package of help for business will evolve over time, the key elements of the current proposals are summarised below:

Government-backed loans to businesses

A new, temporary Coronavirus Business Interruption Loan Scheme, delivered via the British Business Bank, will support SME businesses to access 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.
All SME businesses can apply for the loans from 23 March 2020. The terms of the loans will be ‘attractive’ and the Chancellor has stated no interest will be charged for the first six months of the loan period. The British Business Bank will be working with its current Enterprise Finance Guarantee delivery partners and the government to make the new scheme available and to implement the package of enhancements. Read more.
For large businesses there is to be a special funding arrangement, the Covid Corporate Financing Facility (CCFF), available through the Bank of England. Businesses will need to issue special 1 year corporate bonds which the Bank of England will purchase to give businesses liquidity. Read more.

Business Rates reliefs

The Chancellor extended the package of Business Rates relief again in his announcement on 17 March. Retail businesses in England with a ratable value below £51,000 will pay no business rates for the year to 31 March 2021. This is expected to apply to up to 90% of independent shops, pubs, restaurants and other qualifying businesses.
For businesses in the hospitality, leisure and retail sectors who use premises with a higher ratable value, there will be full business rate exemption for the year to 31 March 2021. The government has also stated that hospitality businesses should be able to claim on their business continuity insurance as a result of government guidance to the public: as always, businesses should check their insurance cover and contact their insurer about the extent of their cover.
Local newspapers in England will also continue to benefit from a business rates discount of
£1,500 for their office space until 31 March 2025, and there will be a new 100% relief for all public lavatories in England from April 2020.
Local authorities will be fully compensated for these business rates measures. It is assumed that the reliefs will be processed automatically by each Local Authority.

Direct business grants

To support the many small businesses that pay little or no business rates because of Small Business Rate relief (SBRR), the government will provide funding for local authorities in England, who will provide the business grants.This will provide up to £10,000 each to around 700,000 business currently eligible for SBRR or Rural Rate.
Businesses that use premises with a ratable value of up to £51,000, and will therefore pay no business rates for the current year, will receive grants of up to £25,000 from their Local Authority.

Businesses should contact their local authority for further details of eligibility and payment arrangements.

Supporting the self employed

On Budget day, the Chancellor announced that the government would make it easier for those not able to work as a result of the Covid-19 crisis to claim state benefits. For those who are sick or required to self-isolate, the Employment Support Allowance will be paid from Day 1 of the sickness period. In addition, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating in line with official guidance. This means that all self-employed individuals should be able to make a claim.
Local Authorities will also operate a Hardship Fund for families and businesses in financial difficulties: support for individuals is expected to take the form of Council Tax relief.
On 17 March, the Chancellor also announced that mortgage lenders would offer an initial three- month mortgage payment holiday for those in financial need as a result of the Covid-19 crisis.
In addition, the government has delayed the introduction of the off-payroll labour/IR35 reforms for private sector businesses until 6 April 2021. Self-employed individuals will still need to consider their existing IR35 obligations when accepting work but a delay in placing new obligations onto engagers will prevent further disruption to the contractor market for the 2020/21 tax year.

Tax – Improved Time To Pay arrangements

The government has announced extra resources to assist those struggling to pay their tax liabilities and in financial distress. HMRC will be committing 2,000 experienced call handlers to support taxpayers.
This includes a dedicated COVID-19 helpline to help those in need. The helpline number is 0800 0159 559. Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.
Support will include agreeing a bespoke Time To Pay arrangement with HMRC. This will help those struggling with cash flow and allow those who enter into arrangements to spread liabilities owed over a pre-agreed period. In addition, HMRC will waive late payment penalties and interest where businesses experience administrative difficulties contacting HMRC or paying taxes due to COVID-19.
As always, it will be important to get upfront agreement from HMRC before a payment deadline. There is also a commitment to suspend debt collection proceedings.

Paying Statutory Sick Pay (SSP)

A number of measures have been announced. All employees who self-isolate will be able to claim SSP and, as a temporary measure, SSP claims can be made from Day 1 rather than Day 4 of illness. Employees who are caring for someone who is self-isolating will also be able to claim SSP on this basis.
Businesses with fewer than 250 employees as at 28 February 2020 will be able to reclaim SSP expenditure up to a maximum of two weeks per employee from the government. Details of the reclaim method have not been announced, but it is expected that the government will confirm that employers will claim by offsetting any amount of reclaim for a period against the amount of PAYE payable to HMRC for the period.

Suspension of IR35

Speaking in the Commons yesterday, Steve Barclay, chief secretary to the Treasury, said the changes to IR35 due to come into force at the start of next month would be pushed back a year and would now begin on 6 April 2021. “This is a deferral in response to the ongoing threat of Covid-19 to help businesses and individuals,” he said.
Barclay added that this was “not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay broadly the same tax as those employed directly”.