COVID-19: Budget Measures

Our team: Hamilton Forrest, Gemma Grunewald, Taj Rehal

As the UK ramps-up its response to COVID-19, with the government now advising that anyone displaying symptoms of a high fever or continuous cough self-isolate for 14 days (along with each member of their household), significant economic repercussions are almost but inevitable. In last week’s Budget the Chancellor pledged to help small and medium sized enterprises tackle the economic impact of Covid-19. On 17 March, further measures were announced by the Chancellor which now include support for large businesses. Some of the key measures are summarised below:

  • Business Rates: a 12-month Business Rates holiday will be granted to all businesses in the retail, hospitality and leisure sectors.

In addition, a £25,000 grant will be provided to retail, hospitality and leisure businesses operating from premises with a rateable value under £51,000.

To help meet their ongoing business costs, one-off grants of £10,000 will be available to businesses currently eligible for Small Business Rate Relief or Rural Rate Relief.

  • Time to Pay Arrangements: Time to Pay arrangements can give businesses a time-limited deferral period on HMRC liabilities owed. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

In an effort to help those in financial distress with outstanding tax liabilities, HMRC has set up a dedicated COVID-19 helpline to help those agree a bespoke Time to Pay arrangement.

HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties in paying taxes due to COVID-19.

  • Coronavirus Business Interruption Loan Scheme: a new temporary loan scheme, delivered by the British Business Bank, will launch next week to support businesses in accessing bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (at no charge) to give lenders further confidence in continuing to provide finance to small and medium-sized enterprises. Businesses with a turnover of no more than £41 million will be able to apply for a loan of up to £5 million in value.
  • Statutory Sick Pay (SSP): In order to help businesses meet the costs or disruptions caused to their cash flow as a result of COVID-19, the government has agreed to refund eligible SSP to small & medium-sized businesses. The eligibility requirements for the scheme are as follows:
  1. the refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19;
  2. employers with fewer than 250 employees will be eligible (with this size being determined by the number of people employed as at 28 February 2020);
  3. employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19; and
  4. employers should maintain records of staff absences, but employees will not need to provide a GP fit note.

Although not directly targeted at the economic fallout from COVID-19, the government announced in the Budget a stream of measures that are likely to help both individuals and businesses in these trying times:

  • National Insurance Contributions (NICs): The government honoured its election commitment, increasing the thresholds at which employees and the self-employed start paying NICs to £9,500 from April 2020.

It also raised the Employment Allowance by £1,000 to £4,000 from April 2020. The increase will take approximately 65,000 businesses out of paying NICs entirely.

  • Flat rate deduction: With an increasing percentage of the population working from home, the increase to the maximum flat rate income tax deduction available to employees to cover additional household expenses where they work at home under homeworking arrangements is well-timed. The deduction has been increased from £4 to £6 a week from April 2020.

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