Although at the time of writing a charity sector specific support package has not yet been announced, operational charities can benefit from a range of government measures that have been introduced to help organisations and businesses navigate this difficult time.
We have briefly summarised the key measures and highlighted useful resources where you can find further information below.
The coronavirus business interruption loan scheme
Businesses are now able to apply for loans of up to £5 million, and the first 12 months will be interest free. The government provides a guarantee for 80% of the outstanding loan balance. The scheme has been available since Monday 23 March 2020 and all major banks are offering the scheme. However, only those charities that earn more than 50 percent of their income from trading will qualify for the scheme, which may not be very many as the definition of trading is not entirely clear. It has been confirmed that charities with trading subsidiaries will be eligible, as long as there is an inter-company guarantee from the trading entity to the charity.
VAT payments for all UK businesses will now be deferred for a three month period from 20 March 2020 to 30 June 2020. This will happen automatically, so businesses do not need to apply for the relief, however those who normally pay by direct debit should cancel the payment with their bank if unable to pay.
Sick pay refund measures
Small and medium-sized businesses and employers will be able to reclaim Statutory Sick Pay, paid for absences due to coronavirus. The refund will cover up to 2 weeks' Statutory Sick Pay per eligible employee. Employers should keep records of staff absences and Statutory Sick Pay payments, however the employee does not need to provide a GP letter in order to reclaim. To be eligible, businesses must be small or medium-sized, and have employed fewer than 250 employees as of 28 February 2020. To qualify as a medium-sized company, at least two of the following requirements must be met (and for these purposes, fewer than 250 employees is a necessity):
- Annual turnover must not be more than £36 million.
- Balance sheet total must not be more than £18 million.
- Average number of employees must not be more than 250.
Time to pay scheme
All businesses with outstanding tax liabilities may be eligible to receive support with their tax affairs through HMRC's Time to Pay Service. Businesses that have missed a tax payment, or might miss the next payment due to coronavirus, can contact HMRC's dedicated helpline on 0800 0159 559.
Expanded retail discount scheme
There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. This will apply to charity shops which have a business rates liability, sports grounds and clubs, museums and art galleries, sport and leisure facilities, stately homes and historic houses and theatres. Furthermore, those who are eligible for the scheme with a rateable value of less than £51,000 will also be eligible for cash grants per property. Properties with a rateable value of less that £15,000 will receive a grant of £10,000. Properties worth more than £15,000 but less than £51,000 will receive a grant of £25,000. However, this is subject to the state aid limit of €800,000 which may limit the value of reliefs for larger charities. Charities should monitor the state aid they receive to ensure they don't exceed the thresholds.
The job retention scheme
When the Government announced the possibilities of 'furloughs' on Friday 19 March 2020, they introduced an entirely new word into the vocabulary of the British workplace. The bare bones of the announcement was that the Government would reimburse 80% of furloughed workers' wage costs to a cap of £2,500 per calendar month, backdated to 1 March 2020. The scheme would exist for at least three months and be open to all employers with a PAYE scheme 'small or large, charitable or non-profit.' Details on the furlough scheme were scant, for understandable reasons, but here is what we know so far. If you would like to know more about the scheme, how you might implement it or what else you may need to consider, please get in touch with a member of our employment team.
The Charity Commission has published a guidance page on Coronavirus (Covid-19) Guidance for the Charity Sector. The page will be updated with responses to questions on an ongoing basis.
The Charity Tax Group is maintaining a very useful Coronavirus Information Hub with information on various sources of support that are available to charities, along with updates on the lobbying efforts on behalf of charities.