Financial Support

The government has announced a variety of measures to support businesses during this pandemic. What measures are particularly important to employers in our sector?

The UK Government have also made available a Business Support Finder Tool that takes you through a step-by-step process to determine which of the various coronavirus funding support you may be eligible for.

Winter Economy Plan

The Chancellor has today made an announcement on how he intends to protect jobs over the winter period, following new measures to tackle the rising number of Covid-19 cases.

• Job Support Scheme – this will open form 1^st November for six months – it will aim to protect viable jobs in businesses who are facing lower demand levels due to the pandemic. To be eligible employees must work a minimum of 33 percent (1/3^rd) of their hours. For every hour not worked the employer and government will each pay one third of the employee’s usual pay. The government’s contribution will be capped at £697.92 per month. This will only be open for Small and Medium Sized (SME) companies. Larger employers can only apply if their turnover has gone down.
• Extension of Self Employment Support Income—this will be for viable sole traders who face reduced demand over the winter months and will cover 20% of average monthly trading profits via a government grant.
• More time to pay off Bounce Back and CBILS loans—those who have taken out ‘Bounce Back’ or CBILS loans will be given more time to make their repayments where needed and the application date for all Covid-19 loan schemes has been extended to 30^th November.
• Staged payment of deferred VAT – those businesses who deferred their VAT payments will no longer have to pay a lump sum at the end of March 2021. They will instead by able to split it into smaller interest free payments over the course of 11 months.

You can find out more details about these announcements on the government's Winter Economy Plan Policy Paper.

Coronavirus Job Retention Scheme

• The Job Retention Scheme is a temporary government programme to help employers who have been severely impacted by the COVID-19 pandemic, retain workers
• The current form of the scheme runs from 1 March until 31 July.
• From August, employers will have to pay employers National Insurance Contributions and pensions contributions for furloughed workers.
• From September, employers will have to cover 10% of a furlough worker’s salary and this will increase to 20% from October.
• The Job Retention Scheme will close from the end of October and the deadline to furlough any staff in 30 June.
• From 1 July employers will be able to bring back employees that have been previously been furloughed for any amount of time or shift pattern, while still being able to claim grant funds for the hours not worked.
• ​Under the current scheme, employers can furlough workers and apply for a grant that covers 80% of their usual monthly wage up to £2,500 a month
• Furloughed workers are those whose employers cannot cover staff costs due to COVID-19, and as such they have been asked to stop working but have not been made redundant.
• This scheme is applicable to:
• This scheme is open to all employers in the UK in the UK, including individuals (who pay staff through PAYE) and administrators
• Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment. ​
• Employers should submit information to HMRC about the employees that have been furloughed and their earnings through the online portal. To make a claim you will need:
  • a Government Gateway ID and password—if you don’t already have a gateway account apply online now by going to GOV.UK
  • to be enrolled for PAYE online—if you aren’t registered​, enrol at GOV.UK
  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number
  • calculation of the amount you are claiming (HMRC have right to retrospectively audit your claim)
  • if you have fewer than 100 furloughed staff, you will need to input the information directly into the system for each employee
  • if you have more than 100 furloughed staff you will be able to upload a file: .xls, .xlsx, .csv and .ods are acceptable formats
• Government have produced a step-by-step guide for employers on how to apply 
• If you want an agent to act for you, they need to be authorised to act on your behalf on PAYE matters and claim using their own ID and password. Please ensure that they have the information on the UK bank account that you want the grant to be paid into.
• The scheme will initially run from 1 March 2020 to 31 July 2020, with all UK businesses eligible, and will be extended in a slightly different format until 31 October 2020 (full details to be announced).
• Employers make a collective claim for the group of furloughed employees under the scheme. We believe that employers will submit the claim in increments of three weeks as this is the minimum length of time an employee can be furloughed for but it is anticipated that employers may need to make more than one claim throughout the period of furlough.
• ​Furloughed employees can take voluntary work if it does not provide services to or generate revenue for, or on behalf of your organisation.
• Furloughed employees are encouraged to undertake training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation.
• Any employees you place on furlough must be furloughed for a minimum period of three consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks.
• You should make your claim using the amounts in your payroll—either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed. If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.
• ​Holiday will continue to be accrued while the individual is furloughed.​

Latest details of the Coronavirus Job Retention Scheme are on the GOV.UK website.

From 1 July, businesses will be able to bring back furloughed employees to work part time. Companies will have the flexibility to decide on the hours and shift patters of their employees but the government will continue to pay 80% of salaries for the hours an employee does not work. From August, the level of government grant will gradually reduce, and businesses will be asked to contribute more. The scheme will remain open until the end of October. More information can be found on the government Job Retention Scheme website.

Coronavirus Business Interruption Loan Scheme (CBILS)

• The Coronavirus Business Interruption Loan Scheme was launched on the 23rd March. Details are  available through the British Business Bank. Interest and fees on the loans will be paid by the government for the first twelve months, making them interest free to customers.
• CBILS can provide facilities of up to £5m for smaller businesses with annual turnover of no more than £45m across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
• CBILS supports a wide range of business finance facilities, including term loans, overdrafts,
  Asset finance and invoice finance.
• CBILS are available through the British Business Bank’s 40+ accredited lenders.

Note a number of private lenders are also making funds available to small businesses impacted by COVID-19, including £2 billion from Lloyds Banking Group, £5 billion from NatWest and £7 billion from Barclays. 

Large businesses can now borrow up to £200m through government loan scheme (CLBILS)

From 26 May, large businesses will be able to borrow up to £200m through the Coronavirus Large Business Interruption Loan Scheme (CLBILS), an uplift from the previous limit of £50m. Those borrowing more than £50m will be subject to certain restrictions on dividend payments, senior pay and share buybacks for the period of the loan. More information on CLBILS can be found on the British Business Bank CLBILS page. 

COVID-19 Corporate Financing Facility for larger firms

The COVID-19 Corporate Financing Facility is designed to support liquidity among larger firms, helping them to bridge coronavirus disruption to their cash flows through the purchase of short-term debt in the form of commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.

Relevant factors for eligibility include whether the company:

• is a significant employer in the UK
• is headquartered in the UK
• is incorporated in the UK (including those with foreign-incorporated parent companies and with a genuine business in the UK);
• generates significant revenue in the UK
• serves many customers in the UK
• has several operating sites in the UK

Available from the Bank of England.

Support for businesses that pay little or no business rates

Additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs. Funding for the scheme will be provided to local authorities by the government in early April. No action is required, the local authority should action once up and running.

Statutory sick pay relief package

• Statutory sick pay relief package for SMEs. The Chancellor announced that businesses with fewer than 250 employees would be able to claim back from the government two weeks of SSP paid to staff affected by coronavirus.
• The Government are legislating for SSP to be paid from day one, rather than day four, of absence from work if the employee is absent from work due to sickness or need to stay at home due to COVID-19. Once the legislation has been passed, this will apply retrospectively from the 13th March. This legislation is being fast tracked through Parliament.
• Visit the Statutory Sick Pay (SSP) page for more information.
• Those not eligible for SSP—for example the self-employed or earning below the Lower Earnings Limit of £118 per week—and have COVID-19 or are advised to stay at home, can now more easily make a claim for Universal Credit or new style Employment and Support Allowance. 

SSP Rebate Scheme online service to be launched 26 May 2020

As of 26 May 2020, Small and medium sized companies, with fewer than 250 employees, will be able to apply to HMRC to cover the cost of Covid-19 related Statutory Sick Pay (SSP) claims. This will be available both for current employees and former employees for any eligible periods of sickness starting on or after 13 March. Those who wish to make a claim should have up-to-date records of the SSP payments they wish to include. Employers can make a claim via GOV.UK.

Tax Deferral Measures

• All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
• Businesses will not need to make a VAT payment during the period of 20 March 2020 to 30 June 2020. VAT refunds and reclaims will be paid by the government as normal.
• Taxpayers will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during this deferral period.
• For the self-employed, the second payment on account of income tax, which had been due on 31 July 2020, has been deferred until 31 January 2021.

Note: For VAT registered businesses that wish to take advantage of the deferral of any VAT payments between now and 30 June, HMRC have now confirmed that it will not automatically cancel collection of VAT payments by direct debit and so direct debits will need to be cancelled by the businesses. This needs to be done before the direct debit is due to be collected. Businesses will also need to remember to reinstate their direct debit mandate once the deferral is over and to make arrangements to pay the accumulated VAT owed by the end of the 2020/21 tax year. 

Bounce Back Loan Scheme

The Chancellor announced a new 100% Government underwritten ‘bounce back’ loans scheme that will launch on 4 May. There is very little detail so far, but this is what we know:

• SMEs will be able to borrow between £2,000 and £50,000 and access the cash within days.
• Loans will be interest free for the first twelve months, and businesses can apply online through a short and simple form.
• Loan terms will be up to ​six years. No repayments will be due during the first twelve months.
• The loan should reach businesses within days- providing immediate support to those that need it as easily as possible.
• Launch for applications on Monday 4 May. 
• You cannot apply if you’re already claiming under the CBILS but If you’ve already received a loan of up to £50,000 under CBILS you can arrange with you lender to transfer it to be a bounce back loan by 4 November 2020.

Eligibility

You can apply for a loan if your business:

• is based in the UK
• has been negatively affected by coronavirus
• was not an ‘undertaking in difficulty’ on 31 December 2019

Note there will be no viability test. Further updates on this scheme will be posted as they are made available.

New Trade Credit Insurance guarantee

The government have announced that they will temporarily guarantee business-to-business transactions that are currently supported by Trade Credit Insurance. This will help ensure that the majority of insurance coverage in the market will be maintained. The government hope this will give businesses confidence that they can trust they will be protected if a customer defaults on payment. The guarantee will provisionally last until the end of the year and will then be followed by a review of the Trade Credit Insurance market to ensure it can continue to support businesses in future.  More details are expected shortly.

IR 35 Implementation Delayed

IR 35 Off-payroll working rules reforms postponed until 2021.

MOT 3-Month Exemption

MOTs for lorries and trailers will be exempt from needing a MOT for 3 months from the 21st March 2020.

Chancellor’s Plan for Jobs

To help protect, retain and create jobs, the Chancellor made a ‘Summer Statement on Wednesday 8^th July. NFRC’s CEO James Talman commented on the Chancellor's plans. A summary of the measures announced can be found below:

• Job Retention Bonus—cash payment of £1,000 for every furlough employee who remains continuously employer until the end of January 2021.
• Kick Start Scheme—£2 billion fund to create hundreds of thousands of high-quality six-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.
• Apprenticeship support—payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021.
• Green Home Grant—will cover two-thirds of the cost of an energy efficiency upgrade to a property up to £5,000. This will be up £10,000 for the poorest households. Will be launching in September.
• Public Sector Decarbonisation Scheme—the government will invest £1 billion over the next year in a Public Sector Decarbonisation Scheme that will offer grants to public sector bodies, including schools and hospitals, to fund both energy efficiency and low carbon heat upgrades.
• Stamp Duty Land Tax cut—the government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.

New CLC guidance on surety

The Construction Leadership Council (CLC) has published new guidance on supporting SMEs to access surety. This document aims to provide companies with practical advice and considerations for discussions with brokers and providers when seeking bonds. It also includes recommendations on the information that should be collected and presented.

Construction Leadership Council publish Two Year ‘Roadmap to Recovery’

The Construction Leadership Council publish their ‘Roadmap to Recovery’ for the construction industry. This is based on three phases:

• Restart: increasing output, maximising employment and minimising disruption (0 – 3 months)
• Reset: driving demand, increasing productivity and strengthening capability in the supply chain (3 – 12 months)
• Reinvent: transforming the industry, delivering better value, collaboration and partnership (12 –24 months).

To implement this roadmap the CLC have created four working groups:

• Infrastructure
• Housing
• Domestic Repair and Maintenance
• Local, social and commercial construction  

The NFRC are a member of the Domestic Repair and Maintenance group and will also be feeding into the other groups.

One of the key asks of the ‘Restart’ phase is to delay Reverse Charge VAT by at least another year, and the NFRC signed a joint letter to the Chancellor last week to call for this.

VAT-free PPE

To benefit organisations that are not VAT registered, HM Government have announced that the purchase of PPE will be zero-rated for VAT for three months until 31 July 2020.

Under current UK VAT law, the standard rate of VAT (20%) applies to the sale of PPE. However, the EU Commission has recently indicated support for temporary VAT reliefs (including zero-rates) directly linked to the efforts being undertaken to mitigate the impacts of the coronavirus pandemic. This means the UK now has more scope to review the VAT treatment of these supplies.​

Coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS)

Announced by the Government on the 27^th March, this scheme provides a grant to the self-employed or those in a partnership worth 80% of an individual’s trading profits up to a maximum of £2,500 per month for the next three months. It was formally launched for applications on 13 May 2020.

Available to those who: -

• have submitted an Income Tax Self-Assessment tax return for the tax year 2018 – 19
• traded in the tax year 2019 – 20
• are trading when making the application, or would be except for COVID-19
• intend to continue to trade in the tax year 2020 – 21
• have lost trading/partnership trading profits due to COVID-19
• profits are less than £50,000 and more than half of income comes from self-employment.

• The grant is based is based on adding together the total trading profit for the ​three tax years (2016 to 2017, 2017 to 2018, 2018 to 2019) where applicable, divided by three to provide an average. This is then used to calculate a monthly amount.
• It will be up to a maximum of £2,500 per month for three months and paid directly into the individual’s bank account, in one instalment, within six working days of each claim. It will be extended if necessary.
• Self employed individuals will be invited to make their claim on a specified date between 13-18 May based on their Unique Tax Reference number. HMRC have an ‘online checker’ for those applying for the scheme to find out their date.
• HMRC will contact those who are registered as qualifying, to verify eligibility for the scheme and invite applications online. You can also check to see if you are eligible on GOV.UK.
• The scheme will be open for a second and final round of applications in August.
• The second grant will be paid in a lump sum, covering ​three months of average profits. This will be 70% of average profits up to £6,570, to align with the changes to the Job Retention Scheme.
• For more information please read HMRC’s guidance or speak to your tax agent. You can also reach HMRC on the HMRC webchat facility or call their COVID-19 helpline on 0800 024 1222.
• Beware of Scams! Access will be only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC it is highly likely to be a scam—do not part with any personal of financial information.

Anyone in short term financial difficulties, the Government advises to investigate:-

• Deferral of VAT and Income Tax payments
• Grants for businesses that pay little or no business rates
• Increased amounts of Universal Credit
• Business Interruption Loan Scheme

Guidance on Contracts

JCT Contracts

JCT has published an article which gives guidance on the impact of COVID-19 on ongoing projects and advises on contractual issues that may arise due to the pandemic. This information is relevant to construction projects in England and Wales only and apply to a variety of JCT contracts, some of the key points that are addressed are:

• Leaving site without providing the relevant notices could constitute a repudiatory breach of contract regardless of the circumstances.
• The contractor must be able to show it has constantly used best endeavours to prevent a delay to the works in order to obtain an extension of time.
• Works that are suspended longer than what is stated within the Contract Particulars, either party may give notice of termination of the contractor’s employment.

The full information can be viewed by following this link. https://corporate.jctltd.co.uk/coronavirus/

NEC Contracts

NEC has published an article explaining the ways in which NEC4 contracts address potential issues caused by COVID-19. Although the article generally discusses NEC4 Engineering and Construction Contracts, it explicitly states it similarly applies to other NEC contracts. Some of the key points that are addressed are:

 An early warning of the issue should have already been given by the Contractor or;

• An early warning of the issue should have already been given by the Project Manager.
• In severe cases, where the whole of the works has had to be stopped or suffers delay because of the virus, clause 19—prevention may apply.

The full information can be viewed by following this link. https://www.neccontract.com/About-NEC/NEC-Covid-19-Advice

Payments and Contracts

The Construction Leadership Council (CLC) have issues a statement of payments and contracts, urging clients to continue to pay suppliers at risk due to Covid19 until at least the end of June 2020.

Andy Mitchell, Chair of CLC said, "Our common enemy is Covid19, and we need to unite, and work collaboratively to resolve shared problems. We owe it to our sector and the country to take all steps necessary to ensure that the industry is in good health to support the recovery, when it comes.

It is everyone’s responsibility to keep money moving in the sector and vital that all businesses play their part by maintaining payment and by managing contracts responsibly."

Public Contracts

The Cabinet Office have updated their Procurement Policy Note (PPN) which sets out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after the current COVID-19, outbreak. Contracting authorities are advised to act immediately to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over.

This information is of vital importance to all members involved in public works.

Government Updates

We urge all employers to view COVID-19: support for businesses and sign up for updates.

Where do I seek guidance on setting out my business case for support?

The government gives guidance on producing a business plan. The Start Up Loans website provides Business Plan and Cash Flow downloadable templates. The Prince’s Trust also provide useful material.

What do I do if I feel that none of the Government’s measures cover my company’s circumstances caused by this emergency?

Search online for reputable sources of information which may provide a solution. Check if there is a groundswell of similar opinion and if any petition has been created to lobby government. Contact our helpline—we can advise if your situation is shared by other members and what we are doing to lobby on your behalf.

What support is available if my customer is delaying payment or won’t pay for completed work stating the reason is this emergency?

The client can only withhold or delay payment in line with the terms of the contract not due to the emergency.

See also above note on public contracts.

What conditions should I include in any new quotation?

Any quotation being issued or contracts for works being signed where the project needs to be commenced or undertaken during the COVID-19 outbreak, it would be prudent to include a clause that allows for delay or disruption for unknown viruses, or biological contamination.

We would also advise speaking to your client with regards to existing ongoing contracts and how you can work together through this outbreak to put into place an agreed procedure for any delay that may be incurred.

HM Government guide for employers

HM Government support for businesses