Orr Litchfield
Solicitors and Business Lawyers
Solicitors and Business Lawyers
Covid-19 (Coronavirus) – UK Government announces new measures to protect Businesses and Workers
The UK Government announced a range of new measures at the end of last week and over the weekend and issued new or updated guidance in order to protect businesses, business owners and workers. In one way or another, directly or indirectly, this may impact upon businesses when making their contingency plans in relation to Covid-19 and, in particular, their staffing plans.
Whilst many will see the Coronavirus Job Retention Scheme (pursuant to which qualifying employers can apply for a grant to pay up to 80% of the wages of retained staff who are not working) as the most important announcement, there were a number of other important announcements and guidance documents. These included:
1. Coronavirus Job Retention Scheme;
2. Changes to the Coronavirus Business Interruption Loan Scheme;
3. Expanding the business rates holiday;
4. Deferral of VAT payments;
5. Deferral of Self-Assessment tax payments for the self-employed;
6. Changes to universal credit and working tax credit; and
7. Plans to enforce closure of businesses and other venues.
Further details of the announcements and new or updated guidance are set out below:
Coronavirus Job Retention Scheme
The Scheme will be available to all UK businesses, whatever their size.
Employers will be provided with a grant to cover 80% of the salary (up to £2,500 per month) of employees who are not able to work, so that they can be furloughed (rather than dismissed). Employers may choose to top this sum up, if they wish.
The grants will be backdated to 1st March 2020 and will be available for at least 3 months to the end of May 2020 initially (but may be extended).
There will be no limit on the amount of funding under the scheme and the first grants are expected to be paid within weeks.
Employers will need to 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 shortly.
Changing the status of an employee remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
There are many outstanding questions in relation to the Coronavirus Job Retention Scheme (for example, its applicability to directors, employees on flexible or zero-hour contracts and whether it will be extended to the self-employed). Full government guidance is expected soon.
Changes to the Coronavirus Business Interruption Loan Scheme
This scheme provides support for small and medium sized businesses (SMEs). It commenced today on 23rd March 2020.
A business is eligible if it has a turnover of no more than £45 million per year.
The scheme will support loans of up to £5 million in value. The Government will provide lenders with a guarantee of 80% of each loan and will not charge for this guarantee.
The interest-free period of the loans has now been extended from 6 months to 12 months.
To apply, you should talk to your bank. All major banks are offering the scheme. Alternatively, we can provide you with details of accredited finance providers offering the scheme.
Expanding the business rates holiday
Business rates holidays were previously announced for retail, hospitality and leisure businesses. These will now be widened to include nursery businesses operating in England.
Deferral of VAT payments
All VAT payments for the next quarter are to be deferred, but will need to be paid by the end of the tax year.
The deferral will apply automatically. Business will not need to apply for it.
VAT refunds and reclaims will continue to be paid.
Deferral of Self-Assessment tax payments for the self-employed
All Self-Assessment income tax payments due on 31 July 2020 will be deferred until 31 January 2021.
No application is required. No interest or penalties for late payment will be charged in the deferral period.
Changes to universal credit and working tax credit
Universal credit and working tax credit are to be increased by £20 per week for 12 months.
In addition, self-employed people will now be able to access full universal credit at a rate equal to Statutory Sick Pay.
Plans to enforce closure of businesses and other venues
Businesses who do not follow COVID-19 restrictions will be issued with prohibition notices.
Businesses who fail to comply will receive fines and could also face the loss of their alcohol license.
There will be no upper limit to the fines of businesses who continue to ignore restrictions.
Local government will be responsible for enforcing regulations requiring those businesses asked to close on 20 March 2020.
The following businesses are now required not to sell food or drink for consuming on the premises:
(a) Restaurants, including restaurants and dining rooms in hotels or members clubs;
(b) Cafes, including workplace canteens, but not including cafes or canteens at a hospital, care home or school; prison and military canteens; and services providing food or drink to the homeless; and
(c) Bars, including bars in hotels or members’ clubs.
The following businesses must remain closed as they involve prolonged close social contact, which increases the chances of infection spreading:
(a) public houses
(b) cinemas
(c) theatres
(d) nightclubs
(e) bingo halls
(f) concert halls
(g) museums and galleries
(h) casinos
(i) betting shops
(j) spas
(k) massage parlours
(l) indoor skating rinks
(m) indoor fitness studios, gyms, swimming pools or other indoor leisure centres
Takeaway and delivery facilities may remain open and operational. This means people can continue to enter premises to access takeaway services, including delivery drivers.
Planning regulation will be changed to enable restaurants, cafes and pubs which do not currently offer delivery and hot food takeaway to do so. Further announcements will be communicated by the government when in effect.
Those venues offering takeaway or delivery services must not include alcoholic beverages in this list if their license does not already permit. Further announcements relating to changes to licensing for delivery and takeaway will be communicated by the government.
You can find guidance on a range of business and non-business related matters connected with the coronavirus outbreak on the Government website at https://www.gov.uk/coronavirus
Need to talk?
If you would like to discuss any business matters arising from the Covid-19 (coronavirus) outbreak, please contact us. We can help you to plan and prepare your business in a way that is right for you and your business.
Contact us
If you would like more information about the impact of Covid-19 (coronavirus) outbreak on businesses or would like to discuss a potential or existing issue, please contact us by telephone on +44 (0)20 3126 4520 or +45 38 88 16 00 or by email at enquiries@orrlitchfield.com
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full Legal Notices on our website.
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