The Chancellor said on Friday that he has set out a package of temporary measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support individuals and businesses including:

• a Coronavirus Job Retention Scheme
• help for the self-employed
• deferring Income Tax payments
• a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief

 

Support for businesses through the 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. All UK businesses are eligible

To access the scheme you will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. A furloughed worker is one who has been asked to stop working but has not been made redundant.
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details of the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

This scheme provides no help for the directors of small limited companies who are also its shareholders and employees, unless they too furlough themselves and do no work. Even if they do this (and presumably classify themselves as not working but continuing their duties as directors) and are among the many shareholder/directors who pay themselves a minimum salary and dividends then only their salary will qualify for reimbursement.

The only people to whom payment will be guaranteed are all those who are laid off by their employer and told not to work. Now it is, of course, vital that these people get support, but this is completely perverse. Many companies are seeing a reduction in activity rather than none at all and could still use the services of people who might otherwise be laid off, and who will now be paid, but they will not be allowed to make use of them to keep essential parts of their business or service going even though that may be vital if there are to be jobs to return to in due course. 

And the large number of companies that will keep their staff working but on reduced hours, and companies that need to keep essential services going (including their payroll operations to ensure that other staff can be paid) cannot claim for the costs of keeping those essential staff on board to ensure that there will be an operation for people to return to when lockdown is over.

However hard you tried you could not create a more perverse situation than this if your aim is to preserve the supply side of the economy.

Support for the self-employed

Treasury officials are understood to be putting together a fresh financial support package for the self-employed after significant criticism of the scheme announced on Friday, which would only give self-employed workers £94.25 per week (the level of SSP) paid under the Universal Credit scheme.

They say that it is more important to get the proposed scheme right than rush it out and are believed to be grappling with three issues: the technical means of delivering financial help to the self-employed; how the level of support should be calculated; and the need to make sure there is equal treatment for the employed and self-employed.

However, the TUC – which helped develop the wage subsidy plan alongside business groups and the Treasury – said the government could match the guarantee to help the self-employed, using incomes based on their last three years of self-assessment tax returns. It said payments of at least 80% of incomes could be made directly as a tax rebate.

Support for individuals and the self-employed through deferring Income Tax payments

If you’re self-employed, Income Tax payments due on 31 July 2020 under the Self-Assessment system will be deferred to January 2021.

This is an automatic offer with no applications required. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. No penalties or interest for late payment will be charged in the deferral period.

Support for businesses that are paying sick pay to employees

Small-and medium-sized businesses and employers will be to reclaim Statutory Sick Pay (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 2 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 COVID-19
• employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
• eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home 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

A rebate scheme is being developed. Further details will be available once the necessary legalisation has passed.

Support for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Businesses are eligible if:

• the business is based in England
• it is a small business and already receives SBBR and/or RRR
• it is a business that occupies property

To access the scheme they do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Many small businesses rent property under a fixed payment that covers rent, business rates and service charges; It is currently unclear whether these businesses will be eligible for the grant.

 

Summary

There is still much for the government to do, to:

1. Provide support for businesses that can continue to trade (so there are to be jobs to return to in due course) and put employees on reduced hours/pay rather than furlough them;
2. Introduce a scheme for the self-employed that provides equal treatment for the employed and self-employed;
3. Make sure that the Small Business Grant Scheme applies to all small businesses.