|Coronavirus (COVID-19) FAQS|
Disclaimer: These FAQs are intended to provide information and guidance on the HR and employment law implications of the Covid-19 situation. They do not constitute legal advice and should not be relied upon as such.
Financial support for Business
Last updated 14.15pm on 06/05/2020
1. What support for business was there for Statutory Sick Pay?
The government announced it will support small and medium sized businesses and employers to cope with the extra costs of paying Covid-19 related SSP by refunding eligible SSP costs. The Scheme will repay employers the current rate of SSP (£95.85 per week). The eligibility criteria for the scheme are as follows:
The refund will be limited to two weeks per employee who is either ill or has been told to self-isolate because of Covid-19.
The scheme covers all types of employment contracts, including FT/PT, Contractors and those on zero hour contracts. The scheme can be accessed by employers who have a PAYE payroll scheme that was created and started on or before 28 February 2020.
Employers with fewer than 250 employee will be eligible. The size of the employer will be determined by the number of people employed as of 28 February 2020.
Connected companies can also use the scheme if their total combined number of PAYE employees are fewer than 250 on or before 28 February 2020. For now it is not clear whether you would count employees across a corporate group. We will endeavour to add further information clarifying this as soon as possible.
Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to new eligibility criteria) as a result of Covid-19.
Employers should maintain records of staff absences, but will not require employees to provide a GP fit note.
The eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force. (Note – those regulations came into force on 13 March).
In order to claim you must keep a record of the following employee details (for at least 3 years following a claim):
- The employee’s reason for being off work and the details of each period when an employee could not work, including start and end dates
- Details of the SSP qualifying days when an employee could not work
- National Insurance numbers of all employees who you have paid SSP.
While existing systems are not designed to facilitate such employer refunds for SSP, the government will work with employers over the coming months to set up a repayment mechanism for employers as soon as possible.
2. Are Business Rates being adjusted to help businesses cope with the impact of Covid-19?
The government had, prior to the budget announcement, already announced the Business Rates retail discount will be increased to 50% in 2020-21. In light of the potential impact that Covid-19 will have, further measures are being introduced by the government to mitigate business disruption:
- To support small businesses affected by COVID-19 the government is increasing the Business Rates retail discount further to 100% for 2020-21.
- The 100% relief will also be expanded to the leisure and hospitality sectors.
- These temporary measures, taken together with existing Small Business Rates Relief, mean that around 900,000 properties, or 45% of all properties in England, will receive 100% business rates relief in 2020-21.
Local authorities will be fully compensated for these Business Rates measures so that their capacity to provide services will not be impacted by these measures.
Guidance for Local Authorities will be published by MHCLG by 20 March.
3. Is there any direct funding available for businesses for 2020-21 to mitigate the impact of Covid-19?
The government has announced that it recognises many small businesses pay little or no business rates because of the Small Business Rate Relief (SBRR) scheme, so they have introduced grant funding for those SBRR eligible businesses so that they too can avail of government assistance:
- To support those businesses, the government will provide £2.2 billion of funding to be distributed by Local Authorities in England.
- This will provide a one off £10,000 cash grant to businesses currently eligible for SBRR or Rural Rate Relief. The maximum rateable value for a property will be £15,000
4. What if my business has outstanding tax liabilities that I may not be able to pay in due time because of Covid-19 related business disruption?
The government is setting out measures that will seek to enable those businesses and self-employed individuals with outstanding tax liabilities to receive support with their tax affairs:
- HMRC has set up a dedicated COVID-19 helpline (0800 0159 559) to help those in need, and they may be able to agree a bespoke Time to Pay arrangements.
- Time to Pay arrangements were previously used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.
- To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms when needed.
HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.
5. My business is struggling to access finance due to Covid-19’s impact on lender confidence, is there any new government help with financing?
The government will launch a number of schemes to support businesses financially, this includes a temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. Additionally, a Coronavirus Large Business Interruption Loan Scheme (CLBILS) has also been recently announced. Finally, HM Treasury and the Bank of England have jointly announced a Covid-19 Corporate Financing Facility (CCFF). Details of each scheme are provided below:
Coronavirus Business Interruption Loan Scheme (CIBLS)
- 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 £5m in value. The government will cover the first 12 months of interest payments and any lender-levied fees.
- The borrower remains fully liable for the debt. However, under this scheme, personal guarantees of any form will not be taken for loans below £250,000
This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.
Coronavirus Large Business Interruption Loan Scheme (CLIBLS)
- The scheme will provide a government guarantee of 80% to enable banks to make loans of up to £25m for firms with turnover between £45m and £250m. Additionally, firms earning more than £250m will be able to apply for loans up to £50m. This facility is suitable for firms who do not qualify for the CIBLS or CCFF schemes.
- The scheme will be delivered through commercial lenders and be offered at commercial rates of interest. Lenders are required to conduct their own credit risk checks.
- The scheme will benefit businesses that were financially viable prior to the outbreak of COVID-19 but now face cash-flow difficulties as a result of the pandemic.
Eligibility requirements include the following:
- A UK based entity
- Annual turnover greater than £45m
- Be unable to secure regular commercial finance
- Have a borrowing proposal prepared, which the lender would consider viable if not for COVID-19 and believes the borrower will be able to trade out of any short/medium term difficulty.
Businesses from the following sectors are ineligible – banks/building societies, insurers/reinsurers, public-sector organisations (including schools)
This scheme will be launched later this month and the government expect it to be available via a range of accredited lenders.
- This new facility means the Bank of England will buy short term debt from larger companies.
- This facility will provide funding by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy.
- The facility will be open to firms that can demonstrate they were in sound financial health prior to the COVID-19 shock (i.e. by having a short-term investment grade rating of A3/P3/F3/R3 or a long-term investment grade rating of BBB-/Baaa3/BBB-/BBB low or above by at least one of the major credit ratings agencies: S&P, Moody’s, Fitch or DBRS Morningstar).
- The scheme will operate for at least 12 months.
6. Can I claim on my company’s insurance for any disruption and/or loss of earnings as a result of Covid-19?
We understand that some companies have been told by their insurance companies that they have a list of diseases for which they will pay out insurance, with some companies not adding Covid-19 to this list.
We are seeking clarification with Government on this issue.
If you have not found an answer to your question here please contact [email protected]@makeuk.org for further assistance.