We’re sure everyone is finding this time extremely difficult from both a personal, and business perspective. This blog aims to assist in answering queries on the government support for businesses.
We will update this blog as the Chancellor announces further measures, so keep a close eye on this page for up to date information.
The Chancellor has announced economic intervention like never before and one of the most comprehensive in the world. So, where can we expect to see help in these troubling times?
- Coronavirus Job Retention Scheme
- Statutory Sick Pay (SSP)
- Deferred VAT Payments
- Deferred Income Tax Payments
- Universal Credit
- HMRC Time to Pay
- Business Rates Holidays & Cash Grants
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Mortgage & Rent Holiday
- Coronavirus Self-Employment Income Support Scheme
Coronavirus Job Retention Scheme
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
- Change the status of affected employees to ‘furloughed workers’ and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
- HMRC is working urgently to set up a system for reimbursement and will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
We are still waiting for some clarifications on how this will work but our understanding is that it will cover ‘all employment costs’ which would indicate that it will cover national insurance and the pension contributions.
Business owners will struggle to claim without closing the business, and therefore cannot be furloughed and as such be subject to the scheme.
If you’ve had to furlough staff, applications are open to claim your payments. Claim now.
Statutory Sick Pay (SSP)
If you are a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate – subject to meeting the minimum payroll requirements.
The government will refund £94 per week, up to £188 for your company. The government will also refund SSP for the staff of businesses with less than 25 employees for up to two weeks.
Deferred VAT Payments
Any businesses in need of short-term cash flow support may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically, and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
What does this mean?
- VAT returns should continue to be prepared, filed and submitted as normal.
- If you file VAT returns on a quarterly VAT stagger, ending February 2020, your VAT return is still due to be filed by 7 April 2020, however, your payment is optionally deferred.
- If you file VAT returns on a quarterly stagger ending March 2020, your VAT return is still due to be filed by 7 May 2020, however, your payment is optionally deferred.
- If you file VAT returns on a quarterly stagger ending April 2020, your VAT return is still due to be filed by 7 June 2020, however, your payment is optionally deferred.
- If you file VAT returns on a monthly basis, then your February 2020, March 2020 and April 2020 VAT returns should be filed as normal, however, payments for these returns are deferred.
- VAT periods ending May 2020 are filed as normal, the VAT return is filed as normal and payment for it is due, as normal, by 7 July 2020.
Deferred Income Tax Payments
Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
HMRC Time to Pay
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
For more information on this scheme click here.
Business Rates Holidays and Cash Grants
There will be no rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors – If you run a diversification within these sectors, this will apply to you. If your rateable value is between £15K and £51k, you’ll also receive a cash grant of up to £25,000 per property.
Businesses which receive small business rates relief or rural rate relief including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).
This will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
Coronavirus Business Interruption Loan Scheme
For small and medium-sized businesses, a new Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, will provide support to access a wide range of funding facilities including overdrafts, loans, asset finance and invoice finance.
The government will provide lenders with a partial guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. Businesses and banks will not be charged for this guarantee, and the scheme will support loans of up to £5 million in value. The first 12 months of these loans will be interest and fee-free, as the Government will cover these payments.
Businesses will be able to get finance under the scheme from a large number of providers, including the main high street banks, the scheme is now open for applications.
Eligibility for the scheme requires the business to be based in the UK with turnover of no more than £45 million per year. To check your eligibility, take a look at the checklist provided by the British Business Bank.
More information on the scheme can be found on the British Business Bank website.
Mortgage and Rent Holiday
Mortgage borrowers can apply for a three-month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for this entitlement. It is important to remember that borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Coronavirus Self-Employment Income Support Scheme
Self-employed workers who have suffered a loss of income due to Coronavirus may be entitled to a taxable grant worth 80% of average profits up to a cap of £2500 per month. The claim will be based on the average profit of the last three years accounts where applicable. To begin with, this will be available for three months in one lump-sum payment from June onwards.
Eligibility relies on the following:
- Over half of the claimant’s income must come from self-employment.
- Those eligible must have a trading profit of less than £50,000 in 2016-17, 2017-18 or 2018-19 period.
Unfortunately, those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.
If you’d like more information on this, please read our blog outlining the support for the self-employed and partners in a trading business.
For more information or advice on any of the schemes above, please do not hesitate to contact us.
The Chancellor has announced economic intervention like never before and one of the most comprehensive in the world. ”