COVID-19: UK Government measures and practical next steps - EY
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1
COVID-19:
UK Government
measures and
practical next steps
Measures announced to 20 July 2020
20 July 2020 COVID-19: UK Government measures and practical next steps
2 COVID-19: UK Government measures and practical next steps
Over the last few months, the Chancellor has set out what he calls a package of “temporary,
timely and targeted measures” to support public services, people and businesses through
the disruption caused by the COVID-19 outbreak. The initial measures focused on supporting
employment, providing cash flow support to businesses, and increasing welfare support. The
Chancellor’s Summer Statement on 8 July then unveiled a “Plan for Jobs” to protect, support
and create jobs as part of the Government’s second phase of its economic response.
Outside the support being provided to the NHS and the imposition of civil restrictions, the
measures can be grouped into six main areas which are being delivered via three distinct
channels.
Areas being addressed: These aims are primarily being delivered through:
1. Providing liquidity through financing schemes • The banking system in terms of both financing
schemes that have been announced;
2. Helping employers to protect jobs
• The central tax system (covering cash tax deferral
3. Business support through removal of fixed costs and employment support) as well as the local tax
and provision of grants system (for business rates and cash grants); and
4. Cash-flow support, including tax deferrals • The benefit system (for Universal Credit), though
5. Administration, including governance Statutory Sick Pay will be paid by employers and
reimbursed to them
6. Benefits entitlements
20 July 2020 COVID-19: UK Government measures and practical next steps
3 UK Government announced responses
Phase One — March to June
Liquidity and financing Cash flow measures Administration and welfare
Coronavirus Business COVID-19 Corporate Financing Tax deferrals Tax compliance
Interruption Loan Scheme Facility All businesses were able to have their • HMRC had indicated that, during the
(CBILS) Allows larger corporates to raise short routine VAT payments due between “lockdown”, some HMRC enquiries
Helps smaller businesses affected by term finance through the issuance of 20 March and 30 June deferred until will be suspended. We expect this
coronavirus to access bank lending and commercial paper purchased by the 31 March 2021. compliance enquiry activity will
overdrafts if they need to. For loans up Bank of England. now resume in line with the general
All businesses and self-employed
to £5 million, interest will be free for easing of restrictions
people in financial distress, and with
the first 12 months. Future Fund: Investment fund outstanding tax liabilities, may be
for high-growth companies eligible to receive support with their Statutory benefits
Coronavirus Large Business tax affairs through HMRC’s Time To • Removal of minimum income floor
Scheme to issue convertible loans to
Interruption Loan Scheme innovative companies alongside other Pay service. for Universal Credit
(CLBILS) private third party matched investor(s). There is the option to defer July’s • Uprating of Universal Credit
Allows companies with turnover of payment on account for those due to
Bounce back loans pay then, including trusts and personal • Expansion of eligibility for Statutory
more than £45 million to borrow up to
representatives. Sick Pay
£200 million. Government guaranteed loans for
25% of turnover up to a maximum of
£50,000.
Fixed costs and grants Employment support Self-employed
Business Rates holiday and cash Other measures Coronavirus Job Retention The Self-Employment Income Support
grants for retail, hospitality and Scheme (CJRS) Scheme (SEISS) provides two taxable
• Statutory Sick Pay rebate for small lump sum grants. The first, which
leisure businesses and medium sized businesses The Chancellor has confirmed that the could be claimed up to 13 July is
Businesses in these sectors in England launched on 26 May scheme will close at the end of worth 80% of trading profits up to a
do not have to pay business rates for • Small business grant funding October. Claims for periods ending on maximum of £7,500 covering three
the 2020–21 tax year. There may also or before 30 June must be made by 31 months.
be the possibility of a cash grant of up • COVID-19 grant schemes July. Separate claims need to be made
to £25,000 per property. for days in June and days in July, The second and final grant can be
• Funding for charities
even if the employee is continuously claimed from August and is worth 70%
• Moratorium on lease forfeiture of furloughed. of trading profits up to a maximum of
commercial leases for non-payment £6,570, again covering three months.
of rent until (at least) 30 June 2020
20 July 2020 COVID-19: UK Government measures and practical next steps
4 UK Government announced responses
Phase Two — July onwards
Phase One (March — June) Phase Two – “A Plan for Jobs” (July onwards)
Continuing measures Jobs Stimulus measures Capital investment
The following measures introduced in CJRS Reduced rate of VAT for Infrastructure package
Phase One continue to be relevant in hospitality, accommodation and
Phase Two: From 1 July the CJRS covers part-time A £5.6 billion infrastructure package
working but from 1 August employers attractions announced by the Prime Minister in
• CBILS will be asked to cover part of the cost From 15 July 2020 to 12 January June 2020.
• CLBILS of the scheme. 2021, a reduced 5% rate of VAT to
apply (previously 20%) to supplies of Public sector and social housing
• Corporate Financing Facility Job retention bonus food and non-alcoholic drinks from decarbonisaton
• Future Fund A job retention bonus of £1,000 will restaurants, pubs, bars, cafés and
A £1 billion scheme offering grants to
be available for employers who bring similar premises across the UK.
• Bounce Back Loans public sector bodies to fund energy
back furloughed employees and pay a From 15 July 2020 to 12 January
efficiency and low carbon heat
• Business rates holiday and grants minimum specified wage until at least 2021, a reduced 5% rate of VAT
upgrades.
31 January 2021. applies (previously 20%) to supplies
• CJRS of accommodation and admission to
• Statutory Benefits attractions across the UK. Green Homes Grant
Kickstart Scheme
A £2 billion Green Homes Grant to
• SEISS A £2 billion fund to create high quality Eat Out to Help Out make homes more energy efficient.
6-month work placements aimed at
those aged 16–24 who are on Universal A scheme to encourage people to
Credit and are deemed to be at risk of return to eating out, with a 50%
long-term unemployment. discount of up to £10 per head on any
eat-in meal from Monday to Wednesday
in August 2020 across the UK.
Boosting worksearch, skills and
apprenticeships
Stamp Duty Land Tax (SDLT)
A series of measures to boost temporary cut
employment skills, including payments
of £2,000 to employers in England for Temporary increase in the Nil Rate
each new apprentice they hire under Band of Residential SDLT in England
aged under 25, and a £1,500 payment and Northern Ireland from £125,000
for apprentices 25 and over, from to £500,000 until 31 March 2021.
1 August 2020 to 31 January 2021.
20 July 2020 COVID-19: UK Government measures and practical next steps
5 Liquidity and financing: COVID-19 Corporate Financing
Facility (CCFF)
The COVID-19 Corporate Who is eligible? What does it cover? Practicalities
Financing Facility (CCFF)
• Companies which make “a material • The CCFF will provide funding to • Companies will need to consider if
will purchase up to one-year
contribution to the UK economy” businesses by purchasing Commercial they are eligible to participate and how
duration Commercial Paper
Paper long it might take to be approved to
on terms comparable to those • No requirement to have previously
participate
prevailing in markets before the issued Commercial Paper • Minimum size of the loan is £1m with
COVID-19 economic shock. primary market purchases limited to • If a Company does not have an existing
• Looks at companies’ credit rating pre
certain amounts at different credit rating, the ability to use incumbent
The scheme will be available for COVID-19 to assess eligibility (as at
bands: banks’ credit ratings via Credit
new drawings until March 2021. 1 March 2020)
• A1/P1/F1/R1 = up to £1bn Benchmark offers another avenue
• Credit rating must be “Investment
• A2/P2/F2/R2 = up to £600m • Requirement to obtain a credit rating
Grade” (ST rating of A-3/P-3/F-3 or
or otherwise utilise incumbent banks’
LT rating of BBB-/Baa3/BBB-). A split • A3/P3/F3/R3 = up to £300m
credit ratings will mean there is a time
rating is not eligible
• Duration is one week to 12 months. lag to when non-rated companies will
• If subsequently downgraded (i.e. after Drawings can be rolled over be able to access the funding
1 March 2020), company will still be
• Pricing should be on “comparable As per updates announced on 19 May
eligible
terms to those prevailing in the market 2020:
• If companies do not have an existing pre COVID-19” — initial pricing seen
• Dividend restrictions and restraint on
credit rating, they can (1) seek a rating to be the region of a 20-60bps spread
senior pay shall apply if Commercial
from one of the major agencies or (2) over SONIA
Paper is issued with a maturity date
utilise incumbent banks’ credit ratings
• The scheme will close to new drawings beyond 19 May 2021
subject to certain conditions:
in March 2021
• Have, on average, at least three • Early repayment is now an option
investment grade bank ratings • There will be public disclosure of issuer
• At least two investment grade bank names for those that have issued
ratings if BBB+/Baa1/BBB+ or above How is it accessed? Commercial Paper under the scheme
(there is no disclosure requirement for
• “Public undertaking” entities are not • Full details published by the Bank of
simply having established access to
able to access the scheme England (BoE) on Monday, 23 March
the scheme)
2020
• The facility is available for large
housing associations that continue to • Requires a bank to help issue the
be assessed as V1 grade for viability Commercial Paper For more information
from the Regulator for Social Housing Luke Reeve
lreeve@uk.ey.com
Tel: +44 (0) 20 7951 6548
20 July 2020 COVID-19: UK Government measures and practical next steps
6 Liquidity and financing: Coronavirus Business Interruption
Loan Scheme (CBILS)
The Coronavirus Business Who is eligible? What does it cover? Practicalities
Interruption Loan Scheme
Eligibility criteria has now been published • Aim is to support SMEs, who may have • Companies will need to consider
(CBILS) provides loans of up to
and includes: limited or insufficient security, to raise what collateral they have available as
£5 million, with no interest or
additional financing security — unsecured loans of up to
fees due for the first 12 months. • UK-based, in business activity
only £250,000 are allowed
• Provides loans of up to £5m subject to
Borrowers will need to approach • Turnover of no more than £45m per
sub-limits: (1) 2x annual wage bill; or • They will need to consider which
one of the 40+ accredited annum (aimed at SMEs)
(2) 25% of turnover; or (3) an amount and how many lenders to approach
lenders. • Operate within an eligible industry sufficient to cover liquidity need for and how to give themselves the best
sector the next 18 months with appropriate chance of success
justification and self-certification (12
• Have a borrowing proposal, which, • On 3 April, the Government announced:
months for SMEs > 250 employees)
were it not for the COVID-19 • It would stop lenders from
pandemic, would be considered viable • Term loans and asset finance with requesting personal guarantees for
by the lender tenors of up to six years are available loans under £250,000
• Lender believes the provision of • Overdrafts and invoice discounting • For loans over £250,000, personal
finance will enable the business to facilities with tenors of up to three guarantees will be limited to 20%
trade out of any short-to-medium term years are available on amounts outstanding on the
difficulty CBILS lending after recovery from
• The Government will also make a
• Must self-certify they have been Business Interruption Payment to business assets
adversely impacted by COVID-19 cover the first 12 months of interest • Operational changes will be made to
payments and any lender-levied fees speed up lending approvals
• Was not an “undertaking in difficulty”
on 31 December 2019 • Government provides a guarantee to • Changes have been made to the
the lender for up to 80% of facility value. scheme since launch so that Group
• On 3 April, the Government
N.B. Companies remain 100% liable for turnover for PE or VC-backed
announced the extension of the
the debt. The Chancellor has so far ruled businesses is no longer aggregated at
scheme to all viable small businesses
out providing 100% guarantees except the fund level and instead will look at
affected by COVID-19, and not
under the Bounce Back Loan Scheme the portfolio company level
just those unable to secure regular
commercial financing
How is it accessed?
• Full details published on British Business
For more information
Bank’s website on 23 March 2020 Chris Lowe
• Companies to apply for CBILS loans clowe@uk.ey.com
directly with one of the 40+ accredited Tel: +44 (0) 7920 775642
lenders
20 July 2020 COVID-19: UK Government measures and practical next steps
7 Liquidity and financing: Coronavirus Large Business
Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Who is eligible? What does it cover? Practicalities
Interruption Loan Scheme
Eligibility criteria include: • Finance products include term loans, • Companies will need to demonstrate
(CLBILS) provides loans of up to
revolving credit facilities (including that other than for COVID-19
£200 million for companies with • UK-based, in business activity
overdrafts), and for loans up to £50m, disruption, they would be considered
turnover of over £45 million. • Turnover of more than £45m per invoice finance and asset finance. to be viable by the lender
Companies borrowing more annum Tenors from three months to three
than £50 million will be subject • Lenders will still conduct their usual
years available
to restrictions on dividend • Operate within an eligible industry credit risk checks and therefore
payments, senior pay and share sector • Interest is charged at a commercial companies will need to set out a
buy-backs. rate of borrowing clear request, supported by financial
• Have a borrowing proposal, which,
information
were it not for the COVID-19 pandemic, • Government provides a guarantee
would be considered viable by the to the lender for up to 80% of facility • As with the CBILS scheme, companies
lender balance (including interest and fees). will need to consider which and how
N.B. Companies remain 100% liable for many lenders to approach and how
• Lender believes the provision of finance
the debt to give themselves the best chance of
will enable the business to trade out of
success
any short-to-medium term difficulty • Firms owned by private equity are able
to access the scheme • Consideration will need to be given
• Self-certify that it has been adversely
on how the CLBILS loans will interact
impacted by COVID-19 • Amount borrowed should not be
with existing lending (e.g. security,
greater than (i) double the borrower’s
• Was not an “undertaking in difficulty” ranking etc.). CLBILS loans must rank
annual wage bill; or (ii) 25% of the
on 31 December 2019 at least pari passu with all other senior
borrower’s total turnover; or (iii) with
obligations (including senior and/or
• Business has not received a facility appropriate justification and based on
super senior obligations)
under the Bank of England’s COVID-19 self-certification of the borrower, the
Corporate Financing Facility amount may be increased to cover • Companies borrowing more than
liquidity needs for the next 12 months £50m will be subject to restrictions
on dividend payments, senior pay and
share buy-backs during the period of
the loan
How is it accessed?
• Companies can apply for CLBILS loans
directly with an accredited lender. For more information
Accredited lenders are listed on the
British Business Bank website Chris Lowe
clowe@uk.ey.com
Tel: +44 (0) 7920 775642
20 July 2020 COVID-19: UK Government measures and practical next steps
8 Future Fund: Investment fund for high-growth companies
On 20 April, the Chancellor Who is eligible? What does it cover? Practicalities
announced that UK businesses
Company specific criteria include: • The Government will make unsecured • Consideration should be given to
driving innovation and bridge funding available alongside other expected funding rounds or corporate
development will be helped • The company must be an unlisted
UK incorporated limited company private third party matched investor(s) events over the life of the loan as it will
through the coronavirus drive the conversion or redemption price
(incorporation date before 31 December • Loan amounts provided by the
outbreak with a £1.25 billion 2019), or a non-UK jurisdiction parent of the loan
Government support package. Government of between £125,000 to
company that has participated in an a maximum of £5,000,000. Amounts • The Government will receive a minimum
The package includes a new Accelerator Programme before 19 April of Future Fund loans must be at least of 8% per annum (non-compounding)
£500 million loan scheme for 2020 matched by co-investment from interest to be paid on maturity of the
high-growth firms impacted by • The company must have raised at least investors loan. The interest rate shall be higher
the crisis. This will be made up £250,000 in equity from third-party if a higher rate is agreed between the
• The Government will not set a valuation
of £250 million of funding from investors in previous funding rounds in company and the matched investors
cap on the price at which the loan
the last five years
Government (the Future Fund) converts into equity on the company’s • The bridge funding shall automatically
and the matching balance from • If part of a group, the company must be next funding round. Where matched convert into equity on the company’s
the private sector. the ultimate parent company investors have agreed a valuation cap, next qualifying funding round (including
• At least 50% of employees must be UK the Government shall be entitled to the an exit or new funding round) at a
The remaining support based or more than 50% of revenues same terms minimum conversion discount of 20% to
package is available for small should come from UK sales the price set by that funding round
and medium sized businesses • The bridge funding must be used solely
Investors must fall within specific categories. for working capital purposes and shall • The loan shall mature after a maximum
focusing on research and Investors will not benefit from EIS/SEIS not be used by the company to repay of 36 months and cannot be repaid
development and will be treatment on their matched funding. any borrowings, make any dividends or early by the company other than
available through Innovate UK’s bonus payments to staff, management, with the agreement of all investors.
grants and loan scheme. How is it accessed? shareholders or consultants or, in If outstanding at this time, the loan
respect of the Government loan, pay any shall, at the option of a majority of
• The scheme has launched and is open for advisory or placement fees or bonuses the principal amount held by matched
applications until the end of September to external advisers investors (i) be repaid with a redemption
2020. Funds will be deployed on a first premium; or (ii) convert into equity
come, first served basis. Further details
are available on the British Business
Bank’s website
• The application process is investor led.
The investor or lead investor of a group
of investors must certify they meet the For more information
scheme eligibility criteria and provide
Chris Lowe Roxane Markarian
key investment details
clowe@uk.ey.com rmarkarian@uk.ey.com
• Investors and the Future Fund both invest
using a convertible loan agreement which Tel: +44 (0) 7920 775642 Tel: +44 (0) 20 7951 2588
is predefined and cannot be negotiated
20 July 2020 COVID-19: UK Government measures and practical next steps
9 Liquidity and financing: Bounce Back Loan Scheme
The Bounce Back Loan Scheme Who is eligible? What does it cover? Practicalities
will help small and medium-
The Scheme was launched on 4 May and • Businesses will be able to apply for • The Chancellor has said that for most
sized businesses to borrow
eligibility criteria include: a loan of £2,000 or 25% of their firms, loans should arrive within 24
between £2,000 and £50,000.
turnover, up to a maximum of £50,000 hours of approval
The Government will guarantee • UK-based, in business activity and was
100% of the finance (both established by 1 March 2020 • The Government will make a business • There will be no forward-looking tests
capital and interest). interruption payment to cover the of business viability
• Can self-certify that it has been
interest in the first twelve months of
There will be no interest or fees adversely impacted by COVID-19 • Lenders are not permitted to take
the loan
to pay for the first 12 months personal guarantees or take recovery
• Was not an “undertaking in difficulty”
and no repayments will be due • There are no fees to access the Scheme action over a borrower’s personal
on 31 December 2019 (if it was, the
during the first 12 months. assets (such as their main home or
business must confirm it complies with • No repayments will be due during the
personal vehicle)
additional state aid restrictions under first 12 months
The Government has worked
de minimis state aid rules) • The interest rate for the facility is set
with lenders to agree a low rate • The Government will support the
• Is not using the Government support at 2.5% per annum for all businesses
of interest for the remaining Scheme by guaranteeing, to the
period of the loan. provided by CBILS, CLBILS or CCFF, lender, 100% of the loan and interest
unless the Bounce Back Loan will
refinance the whole of any such support • Loan terms will be up to six years.
Early repayment is allowed without
• Businesses who have already received early repayment fees
a loan of up to £50,000 under CBILS
and would like to transfer it into the • N.B.Company remains 100% liable for
Bounce Back Loan Scheme, can the debt
arrange to do this with their lender
until 4 November 2020
• Is not in bankruptcy or liquidation How is it accessed?
or undergoing debt restructuring at
the time it submits its application for • The scheme is being delivered through
finance a network of accredited lenders.
Accredited lenders are listed on the
• Derives more than 50% of its British Business Bank’s website
income from its trading activity (this
requirement does not apply to charities • Companies should approach an
or further-education colleges) accredited lender of their choice For more information
• Companies must complete a short, Chris Lowe
• Is not a credit institution, an insurance
company, a public-sector organisation standardised online application which clowe@uk.ey.com
or a state-funded primary or self-certifies that the business is Tel: +44 (0) 7920 775642
secondary school eligible for a loan under the Scheme
20 July 2020 COVID-19: UK Government measures and practical next steps
10 Employment support: Coronavirus Job Retention Scheme,
up to 30 June 2020
The Government is providing Who is eligible? HMRC guidance Practicalities
grants which cover 80% of a
The scheme is open to any employer in the • The grant is based on salary in the last Employers will need to consider the
retained furloughed worker’s country which had a PAYE scheme on or pay period prior to 19 March 2020, or relevance of furloughing to their business
pay, up to a cap of £2,500 a before 19 March 2020 and is registered for in line with the provisions for employees and then, if appropriate, undertake
month. online PAYE services. It covers the cost of with variable pay. The grant can cover workforce planning, recognising the
Any entity with a UK payroll wages which can be backdated to 1 March. employees with more than one employer usual risks and requirements to avoid
and certain non-employees (including discrimination in selecting people for
can apply but the claim must Employers will need to designate affected
company directors) paid via PAYE furloughing.
be made online. Claims can employees as “furloughed”, and notify
be made by the business or them of this change — changing the status • Discretionary bonuses (including tips) Employers will need to explore the
by an agent authorised to act of employees is subject to employment law. and non-compulsory commissions as contractual and employment law position
for PAYE purposes and access The employee should not undertake work well as non-cash payments are not part of furloughing their staff. Very few UK
the employer’s PAYE online for the employer, or a linked or associated of “pay” styled employment contracts will contain
organisation, while furloughed — the provisions governing how to do it and what
services. Amounts overclaimed • The employee is subject to tax and
scheme does not provide support for the it means.
can now be adjusted for through National Insurance
costs of “working” employees.
a subsequent claim. There is Irrespective of whether consent (or any
• The employer needs to pay National
now a process to allow money The scheme covers employees on the PAYE form of negotiation) is required or feasible
Insurance and Apprenticeship Levy
overclaimed to be paid back payroll and notified to HMRC on an RTI in the time available, any terms relating to
(if applicable) on the payments to the
where no further claims will be submission on or before 19 March 2020. furloughing should be recorded in writing.
employee. It will be taxable on the
Employees that were employed and on Employers must confirm in writing to their
made. Potential underclaims grant and will get a deduction for the
payroll as of 28 February 2020 who were employees that they have been furloughed.
should be raised with HMRC. made redundant or stopped working for the
payments to the employees under
HMRC has stressed that it retains the right
normal principles
The scheme in this form was employer between then and 19 March can to audit all aspects of the arrangement.
open until the end of June. New also qualify for the scheme if the employer • Individuals with employees that are not
Employers will need to keep a copy of all
rules will then apply to the end re-employs them and furloughs them. employed as part of a business are not
records in relation to claims made for six
taxable on grants received under the
of October (see next page). years and copies of agreements to furlough
scheme
Claims for periods ending on or employees for five years.
before 30 June must be made What does it cover?
by 31 July. • The funds provided are grants, not loans
Under this form of the scheme, • There is no obligation for the employer
the minimum period an to cover the remaining 20%, though the
employee can be furloughed for employer can do so if they wish
is three weeks. An employee For more information
• The monthly cap is applied to wages,
can be furloughed more than with a further grant covering the David Ellis Rob Riley
once. employer’s National Insurance cost and dellis@uk.ey.com rriley@ey.com
auto-enrolment contributions Tel: +44 (0) 20 7980 0163 Tel: +44 (0) 20 7806 9572
20 July 2020 COVID-19: UK Government measures and practical next steps11 Employment support: Coronavirus Job Retention Scheme,
from 1 August to 31 October 2020
On 12 May 2020, the Who is eligible? What does it cover? Practicalities
Chancellor announced that the
• Whilst the eligibility criteria for • From July, Government support will only In bringing employees back after furlough,
CJRS will be extended to the employers for this period will remain apply to hours not worked and from employers will need to consider a a number
end of October 2020. unchanged, employers who were not August, this support will be reduced of key issues including:
From July to October, however, furloughing employees prior to 1 July • For worked hours, employees will be • Profiling which people to return to work
the CJRS will operate with 2020 will not be eligible to participate in paid by their employer subject to their and by when. This will require workforce
the more flexible version of the scheme employment contract and employers
greater flexibility. Employers planning based upon scenario modelling
currently using the scheme • Except for those returning from will be responsible for paying the tax, NI (what will be needed), availability (not all
statutory parental leave, no claim will and pension contributions due on those people will be able or willing to return)
will be able to bring furloughed
be able to be made for employees who amounts and workforce segmentation (not all
employees back part-time.
had not been furloughed for at least • When claiming the CJRS grant for employees do the same thing)
This should allow businesses to
three full weeks prior to 1 July 2020; furloughed hours, employers will need to
start to increase activity, while • Planning for a safe and healthy
in order for the current three week report and claim for a minimum period of
managing costs. transition. This could involve the
furlough period to be completed by 30 seven calendar days subject to month end
development of safe return to work
Furloughed employees will still June 2020, the final date by which an principles and governance, employee
receive a minimum of 80% of employer could furlough an employee Level of Government contribution consultation and engagement and site/
wages (capped at £2,500 per for the first time was 10 June 2020 office safety and occupancy planning
• From July the monthly cap will be
month), but the Government • There will no longer be a minimum
proportionate to the hours not worked. • How to protect the workforce and keep
will ask employers to cover the period for which employees must be them engaged as they return. Measure
Employers will be required to bear part
cost of hours worked from July furloughed could include tracking and monitoring,
of the salary costs of their furloughed
and contribute to the cost of • Employees will be able to undertake staff from August employee listening, a focus on wellbeing
hours not worked from August. work for the employer, or a linked • From August the Government will pay benefits etc
or associated organisation, whilst 80% of wages up to a maximum cap of • What “return” means? Will there be a
Claims for days in July cannot furloughed and will be able to return to £2,500 and employers will pay employer continued interest in remote working?
be made before 1 July. work part-time from 1 July 2020 NI and pension contributions for the Will people need to come back do the
Separate claims need to be hours the employee does not work
• Employers: same thing, or will an element of re-
made for days in June and days • From September the Government will pay
• Will be able to agree any working purposing be needed?
in July, even if the employee is 70% of wages up to a maximum cap of
continuously furloughed. arrangements with previously
furloughed employees £2,187.50 for the hours the employee
does not work. Employers will pay For more information
• Must agree with their employee any employer NI and pension contributions
new flexible furloughing arrangement and 10% of wages for hours not worked David Ellis
and confirm that agreement in writing • From October the Government will pay dellis@uk.ey.com
• Will have flexibility to claim under 60% of wages up to a maximum cap of Tel: +44 (0) 20 7980 0163
the CJRS for the hours that are not £1,875 for the hours the employee does
worked (i.e. there is no longer a need not work. Employers will pay employer Rob Riley
for a ‘full time’ furlough) NI and pension contributions and 20% of rriley@ey.com
wages for hours not worked Tel: +44 (0) 20 7806 9572
20 July 2020 COVID-19: UK Government measures and practical next steps12 Other employment issues
Each of England, Scotland Health and safety obligations Practical considerations For more information
Wales and Northern Ireland
Employers will need to understand the Employers should ensure risk assessment David Ellis
have the power to develop their
make-up of their workforce including requirements are met including for those dellis@uk.ey.com
own framework for lifting the
identifying vulnerable employees and working at home. In respect of COVID-19
lockdown restrictions. There Tel: +44 (0) 20 7980 0163
ascertaining which employees are affected persons, staff should be kept
continue to be slight divergences entitled to sick pay and for how long. informed, but individuals should not be
in approach across the UK and Rob Riley
They should collect employee health data named. Employers should be mindful
there are now powers given in line with GDPR/Data Protection Act of the duty to protect employees from rriley@ey.com
to local government for “local 2018. potential discrimination and harassment. Tel: +44 (0) 20 7806 9572
lockdowns” in England.
Changes to terms and conditions Practical considerations For more information
Employers will need to be aware of Employers should look to consult where David Ellis
any limits on the ability to impose new required on changes to employee terms dellis@uk.ey.com
employment terms such as flexible and conditions and update employee
Tel: +44 (0) 20 7980 0163
working (including changes to duties, policies and consider how this can best
hours or location), travel bans or be done in practice within the current
Rob Riley
redeployment to other roles. guidance on social distancing.
rriley@ey.com
Tel: +44 (0) 20 7806 9572
20 July 2020 COVID-19: UK Government measures and practical next steps13 Self-Employment Income Support Scheme
The Self-Employment Income Who is eligible? What does it cover? Practicalities
Support Scheme provides
The scheme only applies to people who Each grant is based on average monthly HMRC has looked to invite those that are
financial support for self-
are self-employed (including members trading profits. eligible to make an online application
employed workers.
of partnerships) and provides similar through the GOV.UK website. The
To work out the average trading profit
Up till 13 July 2020, workers support to the measures announced for claims service opened on 13 May 2020.
figure, HMRC will add together the total
could claim a taxable grant employed workers. This is the only way to access the scheme.
trading profit for the three tax years
of up to 80% of their average To be eligible, the following requirements (2016/17, 2017/18 and 2018/19 where The grant must be reported on the
monthly trading profits over the must be met: applicable) then divide by three (where relevant tax return and will be subject
last three tax years (2016/17, applicable). to tax and Class 4 National Insurance as
2017/18 and 2018/19), • The individual must be already in self-
well as being treated as income for tax
up to a maximum of £7,500 for employment Where an individual has not been trading
credit and universal credit purposes.
a three month period, paid as a for the full three years, but at least
• The individual must have submitted
single instalment. started trading between 2016 and 2019, In order to claim the second grant, the
their tax return for the 2018/19 tax
HMRC will use the figures for those years individual’s business must have been
year no later than 23 April 2020 (note
From August 2020, workers for which a Self-Assessment tax return adversely affected by COVID-19 on
HMRC may consider penalties where
will be able to claim a final was filed, e.g. if an individual traded in or after 14 July 2020. Claims for the
returns are late)
taxable grant of up to 70% of 2017/18 and 2018/19, it will be the second grant will be able to be made in
their average monthly trading • The individual must have traded in the trading profits for the two years divided August 2020.
profits over the last three tax 2019/20 tax year and be continuing by two.
years (2016/17, 2017/18 and to trade when they apply (or would be
Those who pay themselves a salary and
2018/19), paid out in a single except for COVID-19)
dividends through their own company
instalment covering three • The individual has reduced trading are not covered by the scheme but
months’ worth of profit, and profits due to COVID-19; HMRC has will be covered for their salary by the
capped at £6,570 in total. indicated it will take a risk-based Coronavirus Job Retention Scheme if
It is possible to claim the approach to compliance with this they are operating a PAYE scheme.
second grant without having requirement
Each partner in a partnership will need
claimed the first. In addition, the individual’s trading profit to make a claim based on their own
must have been less than £50,000 in circumstances.
the 2018/19 tax year, or their average
trading profit over the last three tax
years must be less than £50,000 a year.
More than half of the individual’s income For more information
must have come from self-employment David Ellis Tom Evennett
during the above periods.
dellis@uk.ey.com tom.evennett@ey.com
Tel: +44 (0) 20 7980 0163 Tel: +44 (0) 20 7980 0890
20 July 2020 COVID-19: UK Government measures and practical next steps14 Cash flow support: Government tax deferrals
No application was needed for VAT payments Practical considerations For more information
the deferral of VAT due before
All UK VAT registered businesses could • The deferral of VAT payments was an Tony Bullock (Indirect taxes)
30 June 2020.
defer VAT payments due between 20 automatic payment holiday with no tbullock@uk.ey.com
For deferral of all taxes, there March 2020 and 30 June 2020 until 31 application required. Note that Direct
Tel: +44 (0) 20 7951 3408
is a dedicated HMRC helpline March 2021. No interest will arise on the Debits will now need to be re-activated
to call (0800 0159 559) or an payments that are deferred.
• VAT refunds and reclaims will be
approach should be made to There was no automatic deferral for paid by the Government as normal
the group’s CCM. We strongly import VAT and duty but deferral may be although we are aware of some delays
recommend engaging before a possible in specific circumstances. as HMRC resources have been focused
payment becomes due and not on COVID-19
simply delaying payment of tax
due.
Where it is difficult to get Payments on account Practical considerations For more information
through to the helpline, a record
should be kept of attempts Taxpayers can defer their self-assessment • No interest or penalties will be Tom Evennett
made. payment on account due on 31 July 2020 applied to any tax that is deferred. tom.evennett@uk.ey.com
until 31 January 2021. The deferral is The deferral applies to all taxpayers
Tel: +44 (0) 20 7980 0890
optional. with an income tax liability to pay on
account
Time to pay Practical considerations For more information
All businesses in financial distress, and • The expectation is that there will Tony Bullock (Indirect taxes)
with outstanding tax liabilities, may be be a lighter touch applied to those tbullock@uk.ey.com
eligible to receive support with their sectors/industries already impacted
Tel: +44 (0) 20 7951 3408
tax affairs through HMRC’s Time To Pay (e.g., restaurants, tourism and
service. The arrangements will be agreed entertainment)
Jim Wilson (Tax Controversy and Risk
on a case-by-case basis. This is for all
• HMRC expects these to be exceptional Management)
taxes within HMRC’s jurisdiction, so will
as businesses should be returning to jwilson8@uk.ey.com
cover PAYE, Air Passenger Duty and
paying tax on time although that will Tel: +44 (0) 20 7951 5912
corporation tax.
clearly depend on circumstances
20 July 2020 COVID-19: UK Government measures and practical next steps15 Cash flow support: Cash tax management
The Government’s Tax payments Practical considerations For more information
announcements are not the
Review instalment payments for the Businesses should contact HMRC and Kerry Mckeown
only ways to manage cash tax.
current year if relevant and claim look to submit amended returns and kerry.mckeown@uk.ey.com
There are other tax related
repayments if appropriate. Review claim refunds of overpayments as soon
measures, which are not Tel: +44 (0) 20 7806 9450
payments already made in light of tax as possible.
specific to COVID-19, attributes to see if repayments can
to manage liquidity. They will need to model the impact of Katie Selvey-Clinton (Capital
be generated. In particular, consider
withholding taxes on any cross-border allowances)
revisiting capital allowances claims (and
flows and consider the tax impact of kselvey-clinton@uk.ey.com
disclaimers) for earlier periods.
changes to operating models or supply Tel: +44 (0) 20 7951 3723
chains.
Research and development tax Practical considerations For more information
credits Research and development expenditure Roxane Markarian
Where appropriate, businesses should credit (RDEC) claims can be reviewed and rmarkarian@uk.ey.com
be optimising and accelerating the repayments authorised separately from
Tel: +44 (0) 20 7951 2588
submission of R&D claims in order to a company’s overall tax affairs.
receive cash back as soon as possible. However, repayments will not be made
where there are other outstanding tax
debts (deferral of VAT does not create a
debt for these purposes).
VAT Practical considerations For more information
Look to recover VAT as quickly as possible Unlocking process and systems Chris Lewis
by streamlining processes or introducing limitations can improve ongoing VAT clewis1@uk.ey.com
accruals to create immediate cash flow recovery as well as an opportunity to
Tel: +44 (0) 1189 281411
benefits. Take advantage of reliefs where reclaim VAT not recovered in the past.
customers are delaying payment.
Ben Woodfield
ben.woodfield@uk.ey.com
Tel: +44 (0) 20 7197 1123
20 July 2020 COVID-19: UK Government measures and practical next steps16 Fixed costs: Business rates and property considerations
The Government has introduced Business rates Practical considerations For more information
a business rates holiday for
The Government has provided a list of • No actions need to be taken to claim the Alex White
retail, hospitality and leisure qualifying properties that is not exhaustive holiday, although local authorities may
businesses in England for alex.white1@uk.ey.com
but instead serves as guide for local have to reissue bills
the 2020 to 2021 tax year Tel: +44 (0) 20 7951 9350
authorities to draw comparison and apply • Those businesses that cannot benefit
alongside certain cash grants. relief as they see fit. The Government has from the holiday should explore other
however provided a list of properties they reliefs that already exist in the business
expressly consider to fall outside of the relief. rates system
Commercial rent payments Practical considerations For more information
The Government confirmed that commercial Once the forfeiture moratorium is lifted, Colette Withey
landlords will be prevented from exercising tenants will (absent other agreement) colette.withey@uk.ey.com
the right to take back the premises become immediately liable for the unpaid
Tel: +44 (0) 161 333 2830
(forfeiture) for non-payment of rent until rent (potentially up to 6 months’ arrears).
(at least) 30 September 2020, where This may make non-payment of rent
non-payment of rent is due to COVID-19. unattractive. Contractual rent concessions
Any current forfeiture proceedings cannot may be more attractive to both landlord
result in the tenant being asked to give up and tenant — for example rent reduction/
possession of premises prior to (at least) deferral, rent free periods or changes to
30 September 2020. the usual payment cycle i.e. quarterly to
monthly payments.
The Government has also temporarily
banned (i) the use of statutory demands Concessions need to be agreed and
(where made between 1 March 2020 documented (usually by side letter), being
and 30 September 2020) as the basis clear that the concession is temporary and
for a winding up petition presented after detailing when it will end. Some concessions
27 April, and (ii) winding up petitions may require lender or other third party (i.e.
presented from Monday 27 April through superior landlord) consent. Tenants should
to September 2020, unless there are also bear in mind that statutory demands
reasonable grounds to believe COVID-19 are not entirely prohibited (where not used
has not had a “financial effect” on the for winding up petitions) and a winding up
recipient of the petition or the non- petition will only be prohibited “if (and only
payment would have occurred anyway. if) the company’s financial position worsens
In each case the expiry deadline can in consequence of, or for reasons relating
be extended in line with the forfeiture to, COVID-19”.
moratorium. In addition, landlords will be
prevented from using Commercial Rent
Arrears Recovery (CRAR) unless they are
owed at least 189 days of unpaid rent.
20 July 2020 COVID-19: UK Government measures and practical next steps17 Grants and sector-specific measures
Grants are cash-payments for COVID-19 government grants Practical considerations For more information
organisations.
There are now three different grants Alex White
Some COVID-19 grants come available through the business rates alex.white1@uk.ey.com
from UK Government, some system:
Tel: +44 (0) 20 7951 9350
from devolved administrations • Small Business Grant Fund — grants up • Properties included in this scheme
and others from non-government to £10,000 are those which on 11 March 2020
bodies. were eligible for relief under the
Certain sectors (such as airlines Small Business Rate Relief Scheme
and airports) may ultimately (including those with a rateable value
need to have a support package between £12,000 and £15,000)
put together by the Government. • Retail, Hospitality and Leisure Grant — • Covers properties within these sectors
We also understand that existing grants up to £25,000 which on 11 March 2020 had a
grants will continue as usual. rateable value of less than £51,000
and would have been eligible for a
There are new grants for discount under the business rates
COVID-19 related activities and holiday (see earlier section) had that
on the next page we highlight scheme been in force for that date
a major new grant from UK
• Local Authority Discretionary Grant • To qualify for this businesses must be
Research and Innovation. Fund — grants up to £25,000 small, under 50 employees, and they
must also be able to demonstrate that
they have seen a significant drop of
income due to Coronavirus restriction
measures
20 July 2020 COVID-19: UK Government measures and practical next steps18 The Sustainable Innovation Fund: Round 1
Innovate UK, as part of UK Who is eligible? What does it cover? Practicalities
Research and Innovation, is
• Aid may be granted to organisations • COVID-19 has affected R&D across • These grants are a form of state
investing up to £55 million to
that were not in difficulty on 31 all sectors, and the aim of this aid under the COVID-19 Temporary
fund single and collaborative
December 2019, but faced difficulties competition is to help all sectors of Framework for the UK
research and development or entered into difficulty thereafter as the UK recover, grow and create new
projects as part of the • The project’s total eligible costs must
a result of the COVID-19 outbreak opportunities from the aftermath of
Sustainable Innovation Fund. be between £100,000 and £500,000
the global health pandemic
• Large companies are only eligible if
The aim of this competition is to • Each funded partner can claim a
they include at least one SME in the • The proposal must show evidence
help all sectors of the UK rebuild maximum of £175,000 against their
project consortium of key challenges as a direct
after the effects of COVID-19. eligible project costs. This amount
consequence of COVID-19, and how
• Applicants must also carry out the cannot exceed their cumulative
the project can help solve them
project activity in the UK and intend to aid total of £800,000 if they have
exploit the project results from or in • In addition, the proposal must received other funding as part of the
the UK consider its impact on climate change COVID-19 Temporary Framework
and/or environmental sustainability
• Projects must be ready to start by 1
• Innovate UK would also like applicants October 2020. They can last between
to address where necessary, equality, three and nine months
How is it accessed? diversity and inclusion in relation to
• Companies must complete an the project, the organisation(s) and
application form the approach to innovation
• The application will be reviewed by
up to five independent assessors.
The assessors are experts from both
business and academia
• Before the grant is confirmed,
applicants may be asked for more
information
20 July 2020 COVID-19: UK Government measures and practical next steps19 Global EY COVID-19 Response Tracker
Our Response Tracker The Response Tracker currently covers 136 jurisdictions around the globe
provides a snapshot of the
5/26/2020 Page 1 EY has produced a number
policy changes that have been of further trackers covering
the following topics:
announced in 136 jurisdictions
around the world in response to • Force Majeure
the COVID-19 crisis. • Global Mobility
Our associated COVID-19 global • Global Trade
stimulus tracking tool provides Considerations
a set of interactive dashboards
which allow businesses to • Immigration Policy
filter the information and a • Labour and Employment
workflow management facility Law
that enables allocation of tasks
• Tax Controversy
within the organisation.
• US State and Local
Taxes
• Transfer Pricing
These are all publicly
available on the EY website.
1/1
To download the latest Response Tracker visit:
ey.com/en_us/tax/how-covid-19-is-causing-
EY Tax COVID-19
governments-to-adopt-economic-stimulus--
Response Tracker
9 July 2020
For more information
Chris Sanger
csanger@uk.ey.com
Tel: +44 (0) 20 7951 0150
20 July 2020 COVID-19: UK Government measures and practical next steps20Contact
Chris Sanger Rob Walker Chris Lowe Luke Reeve Jon Morris David Ellis
Tax policy Lead on Government Capital and debt advisory Capital and debt advisory Liquidity management People advisory services
csanger@uk.ey.com stimulus clowe@uk.ey.com lreeve@uk.ey.com and restructuring dellis@uk.ey.com
+44 (0) 20 7951 0150 rwalker@uk.ey.com +44 (0) 7920 775642 +44 (0) 20 7951 6548 jmorris10@uk.ey.com +44 (0) 20 7980 0163
+44 (0) 118 928 1218 +44 (0) 20 7951 9869
Kerry McKeown Roxane Markarian Tony Bullock Colette Withey Rob Riley
Cash tax management Grants Indirect taxes Commercial law and Employment law
kerry.mckeown@uk.ey.com rmarkarian@uk.ey.com tbullock@uk.ey.com contracts rriley@ey.com
+44 (0) 20 7806 9450 +44 (0) 20 7951 2588 +44 (0) 20 7951 3408 colette.withey@uk.ey.com +44 (0) 20 7806 9572
+44 (0) 161 333 2830
20 July 2020 COVID-19: UK Government measures and practical next stepsEY | Assurance | Tax | Transactions | Advisory
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