COVID-19 NEWS BULLETIN 23rd March 2019
India’s market takes the biggest opening hit.
Compared with last week’s picture......... Source: BBC
CORONA JOB RETENTION SCHEME
The government announced on Friday they are to introduce the Coronavirus Job Retention Scheme (CJRS) which should potentially provide employers with much more confidence in terms of your ability to manage the costs of payroll during the Covid-19 pandemic.
At the moment however, information is sparse. The government is clearly reacting as the situation develops and will need to add detail to the CJRS but what I know at present is as follows:
It allows employers to access financial support to continue paying the salaries of employees who would otherwise have been laid off/made redundant as a result of Covid-19
Employers will need to designate affected employees as “furloughed employees” but will need their consent to do this
Once they are designated, employers need to submit information (details of the furloughed employees and their earnings) to HMRC via an online portal which has not yet been set up
HMRC will reimburse the employer up to 80% of earnings subject to a cap of £2500 (national median salary). At the moment it isn’t clear whether this is net or gross income
This scheme will be backdated to March 1 to cover a three-month period
The government expects the first job-retention grants to be paid before the end of April
From an employment law perspective, you need to consider the following:
Where contracts do not have a lay off clause, you will need employees’ permission to furlough them. Realistically however, it is inevitable they will agree given that the alternative is potential redundancy
The guidance for employees on CJRS states it is up to the employer whether they have to top up the extra 20%
If an employer chooses to withhold the 20%, they will need employees’ consent to avoid any later deduction from wages claims. This means that when an employer seeks an employee’s permission to give them furloughed status they should confirm this in writing as a variation to their contract and make it clear in the agreement that they agree to the salary cut on a temporary basis where the remaining 20% will not be paid back (my legal team are currently compiling an appropriate letter template in this regard)
It is for the employer to decide who to furlough; an employee cannot insist
At the moment this is an accurate summary of what I know at present based on what the government has released. Obviously, I will be monitoring the situation and will update you as more information is added. Hopefully though, it gives you a lot more confidence in your ability to manage the employment costs during Covid-19.
Please also see the link below direct to the gov.uk website that provides ongoing information on all of the financial support available to businesses and which is updated: source: HR Heroes
The Chancellor has set out a package of temporary, timely and targeted 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 businesses including:
a Coronavirus Job Retention Scheme
deferring VAT and Income Tax payments
a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
the HMRC Time To Pay Scheme
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.
Eligibility
All UK businesses are eligible.
How 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
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 on 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.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
Support for businesses through deferring VAT and Income Tax payments
We will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self- employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
VAT
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
Eligibility
All UK businesses are eligible.
How to access the scheme
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. 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. VAT refunds and reclaims will be paid by the government as normal.
Income Tax
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
Eligibility
If you are self-employed you are eligible.
This is an automatic offer with no applications required.
No penalties or interest for late payment will be charged in the deferral period.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.
Support for businesses who are paying sick pay to employees
We will bring forward legislation to allow small-and medium-sized businesses and employers 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
Eligibility
You are eligible for the scheme if:
your business is UK based
your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
How to access the scheme
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.
Support for retail, hospitality and leisure businesses that pay business rates
your business is based in England
your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
for assembly and leisure
as hotels, guest & boarding premises and self-catering accommodation
How to access the scheme
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
Further guidance for local authorities is available in the expanded retail discount guidance.
Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
Eligibility
You are eligible for the grant if:
your business is based in England
your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
Business rates holiday for retail, hospitality and leisure businesses
We will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Eligibility
You are eligible for the business rates holiday if:
as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
for assembly and leisure
as hotels, guest and boarding premises and self-catering accommodation
How to access the scheme
You 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.
Find your local authority.
Support for nursery businesses that pay business rates
We will introduce a business rates holiday for nurseries in England for the 2020 to 2021 tax year.
Eligibility
You are eligible for the business rates holiday if:
• your business is based in England
Properties that will benefit from the relief will be hereditaments:
occupied by providers on Ofsted’s Early Years Register
wholly or mainly used for the provision of the Early Years Foundation Stage
How to access the scheme
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator. Further guidance for local authorities is available in the nursery discount guidance.
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.
• your business is based in England
you are a small business and already receive SBBR and/or RRR
you are a business that occupies property
How to access the scheme
You 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.
Find your local authority.
Support for businesses through the Coronavirus Business Interruption
Loan Scheme
The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years.
The government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
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.
This scheme is being delivered through commercial lenders, backed by the British Business Bank.
Eligibility
You are eligible for the scheme if:
your business is UK based, with turnover of no more than £45 million per year
your business meets the other British Business Bank eligibility criteria
How to access the scheme
Eligibility
You are eligible if:
The scheme is now open for applications. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites.
All major banks are offering this scheme. If you have an existing loan with monthly repayments you
may want to ask for a repayment holiday to help with cash flow.
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.
Support for larger firms through the COVID-19 Corporate Financing
Facility
Under the new Covid-19 Corporate Financing Facility, the Bank of
England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
Eligibility
All UK businesses are eligible.
How to access the scheme
The scheme will be available early in week beginning 23 March 2020. We will provide information on how to access the scheme here shortly. More information is available from the Bank of England.
Support for businesses paying tax: Time to Pay service
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Eligibility
You are eligible if your business:
pays tax to the UK government
has outstanding tax liabilities
How to access the scheme
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 0159 559.
If you’re worried about a future payment, please call us nearer the time.
Insurance
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
Source: Gov.UK
UNW’s Dental Business Unit
COVID-19
Financial aspects and how to plan to survive **UPDATED TO REFLECT 80% EMPLOYEE SALARY GRANT SCHEME**
Over the last few days we have spoken to many dentist clients about the financial implications of the Virus problem.
The situation is fast moving, and there are very important aspects of the problem which remain uncertain and impact on financial decisions (e.g. what income will practices receive over the next few months, will they remain open or shut down, what monthly cash will NHS practices be paid, and how will clawback be calculated, will the Government subsidise employee wages if they are temporarily laid off etc).
For NHS practices, we have heard from a senior BDA committee member that discussions with NHS England might lead to NHS practices continuing to be paid, probably at a reduced amount to reflect a reduction in overheads, with amended clawback arrangements whereby no clawback will be made (subject to certain reasonable conditions).
Every practice is different in its financial outlook, and we will help our clients consider their position by considering their individual cashflow circumstances.
We are already aware that for some the problem is likely only to be serious but manageable, for others it will be business life threatening.
There are some potential solutions to cashflow problems, we have summarised them below:
1. Business Interruption Loan Scheme
A business loan of which 80% is guaranteed by the Government. The amount can be as little as £1,000 but as much as £5m. Applications are made through most high street banks (but not dental lender Wesleyan).
You should therefore initially contact your relationship manager to find out what your bank requirements are (as each bank has different procedures).
We can of course help you with the application process.
Unlike most loans we are told that the application process should be simple, there will probably be no arrangement fees, and the rate of interest charged after a 12-month interest free period will be reasonable.
2. Various ways where your normal bank can help
If you have bank loans, overdraft or finance agreements then you can ask your bank, for example, to allow you a repayment holiday. We are aware that some of our clients have already done this and have been granted repayment holidays of between 3 and 6 months. It is our impression that banks are being very cooperative and understanding with regard to these measures.
3. Automatic deferral of 31 July 2020 income tax payment for self employed
The second payment on account for 2019/20 which would have been due on 31 July 2020 will automatically be deferred until 31 January 2021.
4. HMRC Time to Pay Scheme
HMRC have had a “time to pay” scheme in existence for a number of years now. HMRC have announced that they will offer continued support for allowing “time to pay” for various taxes with an increase in HMRC resource for handling requests as this is expected to be used much more frequently because of the Virus crisis.
A “time to pay” arrangement cannot be implemented until the tax is actually due. It is also important to be aware that “time to pay” can also be requested in relation to PAYE liabilities.
Some people may be comfortable contacting HMRC directly to discuss deferring tax and the number to do so is 0800 0159 559 (this is a dedicated number set up by HMRC for COVID-19); other clients may prefer some support or assistance. If you wish to discuss “time to pay” please contact your usual UNW tax team member.
5. Mortgage repayment holiday
In relation to your personal mortgage you can approach your building society or bank for a 3-month repayment holiday. We have no experience of being hands on with this - it is an individual arrangement.
6. Other possibilities?
You might have seen publicity about rate relief, and cash grants –unfortunately most of these benefits are almost certainly not applicable to the dental sector- but whatever is available in your area is through your local authority.
You might however be eligible for the following:
Support for businesses that pay little or no business rates (rateable value less than £15,000)
The Government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
Eligibility
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority. You do not need to apply.
7. Coronavirus Job Retention Scheme
This was the big announcement that everyone had been waiting for.
The headline is that the government will pay 80% of an employee’s salary up to £2,500 per month for three months.
The detail is that this only applies to employees who have been “furloughed” and will be in the form of a grant payment from HMRC.
HMRC will be setting up a portal for employers to submit claims and will also be publishing details of the
information required.
Further clarity will hopefully be provided on what precisely what a furloughed worker is and how a business can make an employee a furloughed worker who qualifies for the payment. Furlough means leave of absence therefore it will presumably be necessary to lay-off an individual for them to become a furloughed worker. Unfortunately, this is unlikely to be as easy as it might appear as unless an employment contract has lay-off provisions, reducing pay in a lay-off situation may need to be by mutual agreement. Any business going down this route will need to take employment law advice specific to their circumstances however as the issues will be relevant to so many businesses hopefully some more detailed guidance will be published.
8. Self-employed payments
For self-employed people working for the practice, usually there is no obligation for the practice to continue to pay where no work is carried out.
If the BDA negotiations with NHS England come to a satisfactory conclusion, there may be a solution, or partial solution, whereby NHS practices receive sufficient funding, on a non-clawback basis, to enable practices to pay self- employed associates and others.
In the absence of anything else, the self-employed are only able to claim financial support of £94 per week. However, this is currently a topic which is being discussed widely and could be subject to change.
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Disclaimer
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and to the extent permitted by law, UNW LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you/or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Essential Links for assistance via Gov.uk
Self-Employment & Universal Credit
https://www.gov.uk/self-employment-and-universal-credit
Employment & Support Allowance
https://www.gov.uk/employment-support-allowance
Covid-19 Small Business Government
Grant
https://smallbusiness.co.uk/how-do-i-get-the-government-3000- coronavirus-grant-2549866/
Coronavirus Business Interruption Loan
https://smallbusiness.co.uk/how-do-i-apply-for-a-coronavirus-business-interruption-loan-2549863/
Citizen’s Advice
https://www.citizensadvice.org.uk/benefits/help-if-on-a-low-income/if-youre-struggling-with-living-costs/
Emergency Funding https://www.stepchange.org/debt-info/emergency-funding.aspx
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
By Maria Espadinha
Former pensions minister Ros Altmann has called for pension transfers to be put on hold for six months, as fund values could be inaccurate due to the current market turmoil.
Baroness Altmann said it is currently impossible for pension scheme trustees to be sure of the underlying value of a pension funds.
She said: “Therefore, introducing measures to delay all pension transfers for up to six months would seem a sensible way of helping to stabilise pension schemes and allow time for a clearer picture to emerge.”
The Covid-19 outbreak was labelled a pandemic by the World Health Organization in the beginning of March, as more than 100 countries have registered cases.
Altmann calls for six-months pension transfer hiatus
Since the start of 2020 the FTSE 100 has fallen by 31 per cent, while the S&P 500 has dropped by 29 per cent over the same period.
Analysis by Hymans Robertson showed market turmoil added £100bn to the UK’s defined benefit deficit in a week.
Baroness Altmann said stopping transfers would also help avoid further scam losses. “With so many people at home or out of work, there is a greater risk of cold-callers reaching more targets.”
There is also a “rising concern about ‘too-good-to-be-true’ fraudulent investment offersfinding willing customers who will transfer their secure pension and lose their life savings,” she added.
According to Action Fraud, there were 105 reports of fraud relating to Covid-19 since the beginning of February, with total losses reaching £970,000.
There were 46 such reports between March 1 and March 13, but then they suddenly spiked, with 38 reports in the following four days.
Baroness Altmann also suggested that while transfers are put on hold, trustees should use the time to go back over past records and undertake data cleansing and reconciliation exercises, as “the vast majority of pension schemes have error-ridden data which they have not invested sufficient time to cleanse”.
Using the coming months to focus on data cleansing would have significant advantages, she noted, adding that accurate data will be essential for the pension’s dashboard project.
maria.espadinha@ft.com
Budget increases pension allowance and JISA limit
The spring budget was unveiled by the new chancellor of the exchequer, Rishi Sunak, last week and although it focused mainly on businesses, it did include some measures that will help
consumers.
One of the most significant announcements in the budget for those with a pension was an increase in the lifetime allowance for pensions. This increase allows those with a pension to be able to pay more money into their pension pots during their lifetime. The lifetime allowance for pensions will increase from £1,055,000 to £1,073,100.
In addition to this, those wanting to save for their child’s future will be pleased with the announcement that the Junior ISA (JISA) limit will be increased. From the 6 April 2020, the JISA limit will more than double as the limit will be raised from £4,368 to £9,000. It was also revealed in
the budget that the ISA limit will remain at £20,000 during the 2020/21 tax year.
Unfortunately, there was some bad news for savers on budget day as the Bank of England made an unexpected base rate cut. In the morning before the budget was announced, the Bank of England cut base rate by 0.50% (50 basis points), from 0.75% to 0.25%.
Furthermore, it revealed an extension to the Term Funding Scheme, with additional incentives for SMEs. The Term Funding Scheme has been extended for four years and is expected to release over £100 billion in funding. As a result, banks and building societies will not be as reliant on funds from savings deposits, which, combined with the base rate cut, will likely see savings rates fall further over the coming months.
Commenting on the budget day announcements, Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “The spring budget brought great news that the JISA limit has more than doubled – now up to £9,000 can be invested for the 2020/2021 tax year, so those hoping to have towards their child’s future can now save even more money tax-free.
“However, for savers in general, this is not a great time. Already low rates are now facing the prospect of being cut even further. As banks are often quicker to pass on a rate cut (as opposed to a rate increase), anyone looking to take out a new savings account would be wise to move quickly to snap up a top rate before it is withdrawn.” Source: Savers Friend
Prime Minister: 17.13 pm 23rd March 2020 – The PM’s office has confirmed that the daily press conference has been delayed to later this evening has discussions are still proceeding.
The outcome of the meeting and the content of the PM’s address will be covered in tomorrow’s information report.