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UK: Tax relief to support SMEs, response to coronavirus (COVID-19)

UK: Tax relief to support SMEs, response to coronavirus

The UK government as part of the budget announced measures to help small and medium enterprises (SMEs) in response to the coronavirus (COVID-19) pandemic. The Chancellor of the Exchequer announced that more details and further plans will be provided as the crisis continues, pledging an additional £330 billion to support businesses across the UK that are experiencing increased costs or financial disruption.

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HM Treasury also published guidance [PDF 181 KB] for businesses.


Business rates reliefs and grant funding from local authorities

The budget announced that business rates would temporarily be “scrapped” for certain business premises with a rateable value of less than £51,000. The government has now gone further and introduced a 12-month business rates holiday for all retail, hospitality, and leisure businesses in England for the 2020 to 2021 tax year. In addition, a £25,000 local authority grant would be provided to retail, hospitality, and leisure businesses operating from “smaller premises” with a rateable value between £15,000 and £51,000. Enquiries on eligibility for, or provision of, the reliefs need to be directed to the relevant local authority. Guidance for local authorities on the business rates holiday is expected to be published by 20 March 2020.

Businesses in receipt of small business rate relief (SBRR) or rural rate relief will be entitled to a £10,000 local authority small business grant. Businesses eligible for SBRR or rural rate relief will be contacted by the local authority—there is no need to apply. Funding for the scheme will be provided to local authorities by the government in early April 2020.

Similarly targeted relief measures are also being introduced in Scotland, Wales and Northern Ireland.
 

Business interruption loan scheme

A temporary coronavirus business interruption loan scheme is to be delivered by the British Business Bank to support businesses in accessing bank lending and overdrafts. The government would provide lenders a guarantee of 80%, free of charge, on each loan to foster confidence when lending to SMEs. This would be extended to cover loans up to £5 million (previously £1.2 million) and no interest would be due for the first six months. This scheme is expected to be available as of Monday, 23 March 2020. It is expected that the loan scheme would only be available for companies with a turnover of up to £41 million and is designed for small businesses with a “sound business proposal” but insufficient security to get a lender comfortable without the government guarantee. Eligible businesses would need to apply through one of 40 banks that are British Business Bank accredited lenders, which includes a number of the main high street banks.


COVID-19 helpline for support managing tax liabilities

HM Revenue & Customs (HMRC) has established a “time to pay” (TTP) service available for businesses and self-employed people in financial distress, to work with the taxpayers to deferred payments of tax (including corporation tax, value added tax (VAT) and pay-as-you-earn (PAYE)). TTP arrangements are agreed to on a case-by-case basis. In light of current circumstances, the TTP scheme has been scaled up and HMRC set up a dedicated COVID-19 helpline for advice and support on this. The planned IR35 changes have been postponed until April 2021.
 

Statutory sick pay

Proposed legislation would allow SMEs to reclaim statutory sick pay amounts paid for sickness absences due to COVID-19. The repayments will be available for employers with fewer than 250 employees as of 28 February 2020.

Employers will need to consider keeping records of staff absences for purposes of refund claims; there will be no need for employees to provide a doctor’s note.

 

For more information, contact a KPMG tax professional in the UK:

Phil Roper | +44 161 2464386 | phil.roper@kpmg.co.uk

Will Perret | +44 207 6943471 | william.perret@kpmg.co.uk

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