Government increases financial support as coronavirus measures intensify
On Thursday 19 March, our Employment Law team published their first blog on the support available to protect businesses and employees financially, and therefore avoid business closures and job losses, as the coronavirus pandemic intensified. Just days later, the situation has already changed beyond recognition and a raft of further support measures have been announced as the impact of the virus on the economy becomes increasingly clear. In this second blog, therefore, we take a look at the additional financial assistance now available to suffering businesses and their workers.
The Coronavirus Job Retention Scheme
In recognition that his original £30bn support package was not enough to protect workers, Mr Sunak recently announced a new scheme for employees who would otherwise be made redundant due to the crisis.
The scheme will allow employers to reclaim 80% of the salary costs of so-called ‘furloughed workers’, up to a cap of £2,500. HMRC are working to set up an online portal, to which employers can submit their workers’ details and salary in order to claim their reimbursement.
Deferment of VAT and Income Tax payments
For businesses, it has been announced that Value Added Tax (VAT) payments are to be suspended for three months. Meanwhile, for the self-employed, all Self-Assessment Income Tax payments due on 31 July 2020 will be deferred until 31 January 2021. These payment suspensions will be automatic, however, Businesses and self-employed must cancel their own direct debit arrangement otherwise the payment will still be collected.
Coronavirus Business Interruption Loan Scheme (CBILS)
Announced in the Chancellor’s March Budget speech, the CBILS originally provided a maximum of £1.2 million to smaller businesses across the UK affected by the pandemic. In Mr Sunak’s second round of support measures, this amount was increased to £5 million. The loans are government-backed with an 80% guarantee should the borrower default on the loan. Originally interest-free for six months, it was later announced that this period would be extended to 12 months.
Access to SSP equivalent for self-employed workers
Following complaints that the UK’s five million self-employed workers were not considered in the Chancellor’s first round of support measures, the current statutory sick pay rate of £94.25 per week will now be available to self-employed people, payable from the first day they are unable to work.
The minimum income floor for Universal Credit has also been temporarily suspended, enabling self-employed people to be treated the same as employees when accessing this benefit. Previously, the DWP would compare real earnings with expected earnings each month, and use this to set Universal Credit payments – to the detriment of self-employed people.
Cash grants for affected businesses
It has also been announced that a £25,000 grant will be available to businesses in the retail, hospitality and leisure industries that do not have business interruption insurance covering pandemics. Businesses in these sectors can also apply for the £25,000 grant if they work from a smaller premises with a rateable value of below £51,000.
Meanwhile, the £3,000 cash grant to businesses eligible for Small Business Rate Relief has been increased to £10,000.
Still working to assist you
While most of our staff are now working from home, our expert Employment Law solicitors remain available for remote appointments to guide you through this troubled time. Whether you’re an employer or employee, we’re here to provide clear legal advice to those worried for their business, confused about their rights as an employee, and anything in between. If you would like advice on how Covid-19 affects you, please contact us at email@example.com or 0330 221 8855.