20/03/2020 by Andrew Brealey - Brealey and Newbury Accountants 0 Comments
Coronavirus Covid-19 Update
- Latest guidance on help and support from the Government during the Coronavirus crisis.
Government Help Packages Announced So Far:
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 Statutory Sick Pay relief package for SMEs
- a 12-month business rates holiday for all retail, hospitality and leisure 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
See the government website for more information here: https://www.gov.uk/government/publications/guidanc...
How to get the government’s £10,000 cash grant for small businesses:
The chancellor has announced an increase in the small business coronavirus cash grant, taking it from £3,000 to £10,000. Eligibility is still based around rate relief. Those who qualify for Small Business Rate Relief (SBBR) or Rural Rate Relief will be able to get the funding. Eligibility is still based around rate relief. Those who qualify for Small Business Rate Relief (SBBR) or Rural Rate Relief will be able to get the funding. The Department for Business, Energy & Industrial Strategy will be working with local authorities to outline the scheme and encourage local authorities to prepare. However, once up-and-running, your local authority will contact you rather than having to apply yourself. Grant money will not be available until early April, as stated on the government website. Guidance will be issued to local authorities by 1 April and they will write to businesses shortly thereafter with details of how to claim the grant.
How do I get the £25,000 grant?
The government is also helping those who do pay business rates. All retail, leisure and hospitality companies will be exempt from business rates for the 2020/2021 tax year.
A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
The government will also review the long-term future of business rates, a property tax which many say is unfair given the rise of online shopping and out-of-town retail parks. Any questions about the reliefs should be directed to your local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
However, the measures stopped short of more extreme moves such as a VAT cut or delays to paying tax on workers’ wages under PAYE and there was unhappiness that the measures do nothing to help the self-employed and freelance contractors.
Paul Johnson, director of the Institute for Fiscal Studies, told the Daily Telegraph the chancellor “will need to come back with more”. He called for cuts to national insurance contributions, a delay in hikes to the minimum wage to ease pressure on companies, and increased benefits under
Base Rate Cut
The Bank of England on Thursday unexpectedly cut interest rates to a record low 0.1% and announced plans to buy more UK bonds, the latest in a series of emergency actions triggered by the fast-escalating coronavirus crisis. The central bank’s Monetary Policy Committee held an extraordinary meeting on Thursday 19 March and decided unanimously to cut the headline interest rate by 15 basis points from 0.25% to 0.1%. The cut takes UK interest rates to an all-time record low, below even where they sat in the wake of the financial crisis. It also marks the second surprise interest rate cut from the Bank of England in as many weeks. Threadneedle Street cut interest rates from 0.75% to 0.25% just last Wednesday.
So what does this mean for you? Effectively, this is great news for those in debt but will hit savers hard. When a central bank cuts interest rates, it’s a way to stimulate the economy. It makes borrowing cheaper, thereby allowing people to have more pounds in their pocket and if there is a change in circumstance, allow them to pay debts off at a lower rate. It also encourages people to keep spending since the debt they incur will be cheaper to pay back. But for those who are trying to save — this is bad news. It means that the money you squirrel away will accrue a small amount of return.
Mortgages and loans
For those on the housing ladder, a cut in interest rates should see a reduction in some monthly mortgage payments — but it depends what agreement you have. If you are on a fixed rate mortgage, this means any changes to interest rates will not apply to you until that fixed-term is over. This also protects you from a rise in interest rates. For those on variable mortgages, any changes to the interest rate come into effect almost immediately. Variable rate mortgage can be an amount that has a combination of a fixed interest rate plus the base rate — which is now at an all time low of 0.1%. This means that this will lower your monthly payments. Tracker mortgages are those that track the interest rate movements so, again, a reduction in the interest rate will mean your payments are lower.
Meanwhile, all mortgage lenders will now provide three-month mortgage holidays for those that need them and renters have extra protection, including a landlord ban on evictions.
Any loans that are not purely fixed rate will see a reduction in monthly ayments. Some loans are a combination of a fixed rate plus the bank base rate. That means that with any reductions in the interest rate, those loan holders should see a reduction in payments from the next cycle.
For businesses, there are emergency measures in place.
Credit cards and overdrafts
Unfortunately for those with overdrafts and credit cards, the existing monthly ayments won’t change. This is due the fixed rate nature of interest payments. From April this year, many banks will be increasing their overdraft fees to around 40%. Currently, it’s too early from the Bank of England’s announcement to see if banks will amend or reduce their charges on overdrafts and credit cards to help consumers.
Savers are usually the hardest hit. A cut in interest rates is generally bad for those who are putting cash away for a rainy day or in a pension or a Individual Savings Account. The rate of return is likely to be lower for those opening up a new account and those with an existing account may see little or no return.
Pensions are a mixed bag. There is greater concern over pensions being affected due to the stock market movement than from the interest rate cut. A lot of pensions are linked to financial markets and instruments. For example, the pot of money may be linked to the stock market. However
stock markets are being hammered due to the coronavirus pandemic impact on the economy and therefore shares are sliding. This is likely to have the biggest impact on pensions. Pensions are a long-term play, so the health of the economy is more important element to consider when looking at these investments.
Where should you put your money?
When interest rates are low, paying off your debts is the most sensible way to move forward. If you have a choice of putting money into a savings pot or paying off a loan, it’s best to pay off debt. This is because it will be cheaper for you to do it, reduce your monthly outgoings, and safeguard you better if there is a greater downturn in the economy. If you have savings sitting in an account accruing little return or none at all, but you have debts in the thousands that accrues large interest payments each month — you’re losing money.
Beware of Scammers!
Police have warned the British public to be wary of coronavirus scammers after figures revealed £970,000 has been lost as a result of fraudsters claiming to be from the World Health Organisation or HMRC. Figures from Action Fraud on Friday revealed that there have been 105 reported cases of fraud since February 1 and cases have grown more frequent in the past few days, with 38 cases reported from March 14 to March 18 alone. The majority of reports relate to online shopping scams, after people reported that their orders of face masks, hand sanitizers and other products never arrived. The police body also revealed that over 200 reports were in relation to phishing emails about the coronavirus. These emails attempt to lure people into opening attachments which could allow fraudsters to steal people's personal information.
Fraudsters frequently pose as people from the WHO and the Centre for Disease Control and Prevention and claim that they can provide the victim with a list of active infections in their area. In order to access that information, the victim must either click a link which takes them to a credential-stealing page, or they have to make a donation to a Bitcoin account. Other methods include fraudsters sending investment scheme and trading advice with the intention to encourage victims to take financial advantage of the coronavirus crisis. The scammers also claim to be from HMRC offering a tax refund before redirecting victims to a website that harvests personal and financial details. These emails include the HMRC logo to add to their authenticity. Superintendent Sanjay Andersen, Head of the National Fraud Intelligence Bureau, said: 'Fraudsters will use any opportunity they can to take money from innocent people. This includes exploiting tragedies and global emergencies.'The majority of scams we are seeing relate to the online sale of protective items, and items that are in short supply across the country, due to the COVID-19 outbreak.
Coronavirus: how to apply for a three-month mortgage payment holiday
Homeowners and landlords can now apply for a three-month mortgage payment holiday by contacting their lender. The government’s new policy aims to ease the stresses facing borrowers during the coronavirus outbreak. Since the change was announced on Tuesday, there’s been some confusion about exactly who can apply and how the payment holidays will work.
What is a mortgage payment holiday?
A mortgage payment holiday is when your monthly mortgage repayments are paused for a set period of time. Under the government’s new policy, you can apply for a payment holiday of up to three months.
Do I qualify for a payment holiday?
Mortgage payment holidays of up to three months are available to all homeowners who are up to date on their mortgage payments. They’re also available to buy-to-let landlords whose tenants have been financially affected by the coronavirus. Landlords who take payment holidays are expected to pass on this relief to their tenants. Homeowners who are in arrears on their mortgage should contact their lender, who will review any changes to their circumstances and discuss their options.
Do I need to have the coronavirus?
You don’t need to have contracted or have been tested positive for the coronavirus to apply for a payment holiday. Payment holidays are available to any homeowners who are concerned about their ability to meet their mortgage repayments, for example due to a loss of work or other changes in their circumstances.
Will I pay more in interest?
Yes. You’ll still owe the bank the same capital amount as you do now, but interest will continue to accrue on this. This means it will take you longer and cost you a little more to clear your mortgage. With this in mind, homeowners who aren’t concerned about their ability to pay should continue with their repayments as normal.
Will I need to go through affordability tests?
No. Your lender will not require you to provide any documentation or undergo any affordability tests. Instead, homeowners will need to self-certify that their income has been directly or indirectly affected by the coronavirus. If you’re a landlord, you’ll need to self-certify that your tenant’s income has been affected by the outbreak.
What happens after the three months?
After three months, your lender will contact you to assess your circumstances and agree on a manageable way for you to make up the deferred payments. Lenders will provide a range of options, which may include extending your mortgage term or altering your monthly payments if it’s affordable to do so.
Alternatives to mortgage payment holidays
Payment holidays are just one option that lenders can offer, so it’s best to call your bank or building society and discuss what can be done. As we mentioned earlier, you don’t need to undergo an affordability assessment, but if you’re willing to do so then your bank could offer you more tailored support.
For example, some of the following options may be available:
- To move your mortgage to interest-only payments for a period
- To defer your interest payments for a period
- To extend your mortgage term (reducing your monthly payments)
- To add the deferred payments to the overall amount you owe and spread this over the remaining mortgage term
Will deferring my payments affect my credit score?
The trade body UK Finance, which represents banks and building societies, says mortgage providers will make ‘every effort’ to ensure payment holidays do not impact on your credit score. The credit referencing agency Experian say that banks shouldn’t register payment holidays as missed payments on your credit report, but ultimately that the responsibility lies with the individual lender.
Guidance for employers
Current government advice is that the overall risk to the public in the UK remains moderate.
What are my duties as an employer?
Employers have a duty under health and safety legislation to take steps to ensure the health, safety and welfare of all their employees, so far as reasonably practicable, including those who are particularly at risk for any reason. Employees also have a duty to take reasonable care of their own health and safety and that of people they work with. They must cooperate with their employer to enable it to comply with its duties under health and safety legislation. Employees who refuse to cooperate, or who recklessly risk their own health or that of others in the workplace, could be disciplined where this is appropriate. Where, for example, employees attend work but the employer reasonably believes the employee has symptoms that would require them to self-isolate in accordance with current government advice (i.e. where they have a new persistent cough and/or high temperature), it is likely that the employer has a duty of care towards other staff to require the employee displaying those symptoms to stay at home and self-isolate for a period of 7 days. Employees will be entitled to SSP in this scenario under new temporary SSP Regulations (see below). Alternatively, where employees are fit enough to carry out some work whilst self-isolating and it is practicable for them to do so, employees would be paid their normal wages for the period they are carrying out work.
Individuals in self-isolation must follow the published advice from Public Health bodies on how to self-isolate effectively. This includes, not having visitors to their home and requesting that friends, family or delivery drivers drop off deliveries at the doorstep.
Employers are advised to keep an eye on the current government advice and to refer employees to it where they may be concerned about their individual risk. The advice is reviewed by the government on a daily basis:
The government has produced guidance for employers, which can be accessed here:
What is the Government and Public Health Advice on Self-isolation?
Previous government advice was that individuals returning from category 1 areas/countries should self-isolate for a period of 14 days from their return even where symptomless, with those returning from a category 2 area being required to self-isolate for 14 days only where they develop symptoms of the coronavirus. This advice has been replaced by the current advice on self-isolation:
Anyone who develops a high temperature (37.8 degrees and above) and/or a new, continuous cough must self-isolate for 7 days, but if you live with others, you must self-isolate for 14 days. They must stay at home and avoid all but essential contact with others for 7 days, or 14 days in a family or shared home, from the point of displaying those symptoms, to slow the spread of infection.
Individuals do not need to call NHS 111 to go into self-isolation. Where their symptoms worsen during home isolation or are no better after 7 days, they should contact NHS 111 online at 111.nhs.uk. For individuals without internet access, they should call NHS 111. For a
medical emergency they should dial 999.
Additionally, the government has advised schools to cancel trips abroad and for people over 70 with pre-existing health conditions not to go on cruises.
In the coming weeks, the government will be introducing further social distancing measures for older and vulnerable people, asking them to self-isolate regardless of symptoms.
Do I have to pay Statutory Sick Pay if employees are required to self-isolate?
Employees who develop symptoms of the coronavirus or symptoms which require self-isolation will of course be unfit for work. They will be entitled to SSP subject to meeting the qualifying criteria. Temporary Reform of the SSP Rules
In response to the coronavirus outbreak, new Regulations known as The Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2000 came into force on 13 March 2020. These will remain in force for a period of 8 months. These Regulations amend the Statutory Sick Pay
(General) Regulations 1982 and provide that: Individuals who self-isolate to prevent infection or contamination with coronavirus disease in accordance with guidance published by Public Health England, NHS National Services Scotland or Public Health Wales (i.e. advice from the public health bodies in Great Britain) and are unable to work for that reason will be entitled to SSP.
In other words, this extends the current entitlement to SSP to those employees who are self-isolating for 7 days due in accordance with Public Health advice to having a fever and/or new persistent cough.
These Regulations have been passed in order to encourage self-isolation and to minimise the risks to public health arising from coronavirus disease.
It was announced in the Budget on 11 March 2020 that further reforms to the SSP rules will be introduced as follows, although it is not yet known when these will come into force:
The Government will reimburse small and medium employers (i.e. those employing fewer than 250 employees, as determined by the number of people they employed as of 28 February 2020) any statutory sick pay they pay to employees for the first 14 days of sickness as a result of
coronavirus. Under the new rules, employers should maintain records of staff absences, but should not require employees to provide a GP fit note. As the Temporary Threshold Scheme which previously permitted small businesses to reclaim SSP from the Government was abolished in 2014, the Government will set up a new repayment mechanism for employers for reclaiming SSP in due course.
For individuals who are not entitled to SSP, such as the self-employed and those that fall below the Lower Earnings Limit, a ‘new style’ Employment and Support Allowance through the welfare system will be payable for people directly affected by coronavirus or who are self-isolating according to government advice, from the first day of sickness or self-isolation.
Contractual Sick Pay
Employees that offer enhanced contractual sick pay over and above SSP rates, should consider whether or not they will revise their contractual sick pay eligibility criteria for contractual sick pay or exercise discretion to include employees who are self-isolating as a result of coronavirus but not unwell, or whether to pay SSP only in this circumstance. Employers considering amending their enhanced sick pay schemes as a financial measure (including on a temporary basis) in view of the likely increase in staff sickness levels due to coronavirus and the new Government guidance on self-isolation should bear in mind the following points:
Employers with discretionary sick pay schemes whereby the employer operates the SSP scheme but may exercise their discretion to pay more than SSP in any particular case must exercise their discretion fairly and reasonably and not arbitrarily or capriciously. In particular, to maintain mutual trust and confidence, the employer should ensure consistency in their decision making and must not discriminate against a particular employee because of their disability.
Employers with contractual (enhanced) sick pay schemes can only lawfully change the criteria for payment (including on a temporary basis during the coronavirus outbreak) with employees’ agreement, or in accordance with any contractual flexibility clause. This means that a failure to make a payment in accordance with the rules of the scheme would amount to a breach of contract and, depending on whether the breach is sufficiently serious or not, it may entitle the employee to claim constructive dismissal (in the latter case, subject to the employee having at least 2 years’ service, or 1 years’ service in Northern Ireland).
Should employees wear face masks to protect themselves from infection?
Employees are not recommended to wear facemasks (also known as surgical masks or respirators) to protect against the virus other than in health care settings or where protective face masks might help employees working in particularly vulnerable situations. Face masks are only recommended to be worn by symptomatic individuals (advised by a healthcare worker) to reduce the risk of transmitting the infection to other people. Public Health bodies recommend that the best way to reduce any risk of infection is good hygiene and avoiding direct or close contact
(closer than 2 metres) with any potentially infected person. Any member of staff who deals with members of the public from behind a full screen will be protected from airborne particles. Face masks play a very important role in clinical settings, such as hospitals but there’s very little evidence of widespread benefit from their use outside of these clinical settings. Facemasks must be worn correctly, changed frequently, removed properly and disposed of safely in order to be effective.
The advice from the World Health Organisation states that if you are healthy, you only need to wear a mask if you are taking care of a person with a suspected coronavirus infection.
Are employees entitled to pay if employers require them to stay away from work?
Employers may choose to go further than the advice from the Public Health bodies and, as a precautionary measure, ask require employees to stay away from work when they are not sick or are not self-isolating in accordance with current Public Health advice. In those cases, employers
will need to pay employees their normal salary for this absence. This is because the absence is at the employer’s request and is not sickness absence. Alternatively, employers may choose to ask employees to work from home if this is an option in which case, of course, they would receive their usual pay.
How should I respond if employees refuse to work?
Employees may be anxious about the risks of being exposed to the virus due to travelling to work on public transport or by attending the workplace. They may even refuse to attend work on this basis. Whilst their absence in this circumstance is likely to be unauthorized, again, unless there is clear evidence that the employee’s concerns are not genuinely held, the best approach would be to assuage employees’ anxieties by referring them to published advice from Public Health bodies. It is unlikely to be reasonable to treat absences from work in those cases as unauthorized or as a disciplinary matter unless the employer has reasonable grounds for believing, based on compelling evidence, that they are using the virus as an excuse not to attend work. Employers may choose to be cautious about permitting those employees to work from home or otherwise stay away from the workplace where they do not wish to set what employees may construe as “a precedent” by doing so; and where there is no good public health reason for them to stay away from the workplace.
What about employees who are unable to attend work due to school closures or due to dependents self-isolating?
The government has now moved to the “delay” phase of its action plan to help slow down the onset of an epidemic. The government announced that during this stage it may consider closing schools, encouraging greater home working and possibly reducing the number of large-scale
public gatherings. The government has not yet recommended the closure of schools or other measures. However, if schools are closed, this will impact on childcare arrangements and employees’ ability to attend work. In this scenario, it is also likely to be more difficult for employees
to find replacement childcare cover. Elder care arrangements may also be adversely affected. The government’s new guidance on self-isolation, which has been implemented by schools, will also have a potential impact on childcare where children are required to self-isolate for 7
days and to not attend school where they have a new, persistent cough, or a fever.
Section 57A of the Employment Rights Act 1996 gives employees the right to a reasonable amount of unpaid time off work because (amongst other reasons) of the unexpected disruption or termination of arrangements for the care of a dependant. This statutory provision may apply where employees have children they need to arrange childcare for because their child’s school is closed, or to arrange care for their child or another dependant if they’re sick, or need to go into isolation. An employee may complain to an Employment Tribunal where their employer has failed to permit them to take time off under this provision. Employees also have the right not to be subjected to any detriment for reasons relating to time off for dependants and any dismissal on these grounds is automatically unfair, regardless of the length of the employee’s employment.
As the statutory regime does not apply to planned time off to care for dependants, it is unlikely to apply where school closures are known about in advance (for example, it may only apply to the first couple of days of a school closure, whilst longer-term childcare arrangements are put in place). Also, the statutory right is to a “reasonable” amount of time off only, so it may not extend to a 14-day self-isolation period, or longer period of school closure. However, the Government announced at the Budget on 11 March 2020 that SSP will be extended to those caring for others who self-isolate as a result of coronavirus (presumably for up to 14 days), such that employers would treat this as sick leave. Details of this have not yet been published and the temporary reform to the SSP rules has not yet been enacted.
Where this is practicable, employers should be flexible by permitting affected employers to work from home, or to alter their working hours on a temporary basis in the event of school closures or a temporary breakdown in existing childcare arrangements or arrangements for care of
elderly dependants. Alternatively, the employer may consider agreeing with the employee agree a period of unpaid leave or paid annual leave to cover the time off work.
Can I use Lay Offs and Short Time Working?
Some businesses have been affected by a downturn in work caused, for example, by customers cancelling travel and hotel bookings, or by current or potential customers “social distancing” as a result of public anxiety around contracting the virus. At the Budget on 11 March 2020, the Government announced measures it will introduce to support businesses that experience increased costs or disruptions to their cashflow as a result of coronavirus, including a Coronavirus Business Interruption Loan Scheme and a dedicated HMRC helpline for those who need a deferral period on their tax liabilities.
Lay-offs and short time working can be put in place as a useful way of handling temporary work shortages without having to resort to redundancy. However, employers can only lawfully take this action to avoid potential unlawful deductions from wages claims or breach of contract claims where employees agree to being laid off or kept on short-time working, or it is provided for in the contract (e.g. the contract contains a “lay-off” and/or “short-time working” clause).
What about Variations of Contract?
Businesses affected by a downturn in work may also consider putting in place other temporary measures to avoid the need for redundancies, such as introducing a temporary reduction in pay, working hours, or removing/reducing certain contractual benefits. Employers will need to consult with staff to obtain their agreement to these measures in the absence of any relevant contractual flexibility clauses or short-time working clauses. Please refer, for example, to our template Letter Seeking Agreement To Vary Terms of Contract of Employment. On the other hand, there is likely to be a significant increase in workload for staff that are able to continue working during the coronavirus outbreak, particularly in certain sectors such as healthcare and social care. Employers need to consider what measures they can put in place to support those staff in helping them to manage increased workloads. In the absence of existing contractual overtime provisions, employers will need to seek staff agreement to working overtime.
What general measures can I take in the Workplace?
Most employers have already placed restrictions on work-related travel. Employers should continue to monitor the latest travel advice from the Foreign & Commonwealth Office as this advice is rapidly changing.
The UK government is not currently advising companies that working from home is to be encouraged beyond existing home working patterns, although some employers have put this in place as a risk control measure. In addition to informing staff of the new government requirements around self-isolation, the best way to protect employees and others from infections like coronavirus is to remind staff (such as through written notices displayed in the workplace) to wash hands frequently with soap and water for at least 20 seconds and to use an alcohol-based sanitiser gel where this is not available; as well as carrying tissues and using them to catch coughs and sneezes, and disposing of used tissues in the bin straight away.
Employers should ensure that soap and running water is readily available in the workplace. It is also good practice to make available supplies of alcohol-based sanitisers, particularly for mobile workers who may not always have access to soap and water. Employers should ensure that all potentially high-contact work areas, such as toilets, door handles and shared office equipment are regularly cleaned using household type detergents. Employers should remind employees of any existing risk assessments for reducing the risk of infection in the workplace and should ensure
that these are still relevant and sufficient.