In light of the Chancellor’s speech on Friday, we thought it would be useful to send another update with regards to the measures available to help businesses through this crisis. The measures they have proposed are unprecedented and although getting access to them still appears to be a bit slower than we need them to be, it is absolutely clear that the Government do not want businesses to fail.
Coronavirus Job Retention Scheme
Under this scheme, all UK employers will be able to access support to continue paying part of their employee’s salary for those employees that would otherwise have been paid off. In order to access the scheme, employees will have to be designated as “furloughed workers” and will have to be notified as such.
For all employees that have been placed on “furlough leave” rather than dismissed, the government will fund 80% of their wages, up to a maximum of £2,500 per month. The employee must have been on the payroll as at 1 March 2020 and the funding will be made available for an initial 3 month period from 1 March.
The initial expectation is that payments will be available from the end of April and these will have to be applied for via an online claim system. Details on how to apply and when exactly this will be available should follow soon.
Don’t forget to comply with the usual employment laws. Any changes to an employee’s contract, including placing them on “furlough leave” will still be protected under employment law so seek advice from your employment lawyer / HR advisor if you are unsure. If you don’t have access to either of these, remember that any clients with a tax enquiry insurance policy can phone the helpline free of charge.
Coronavirus Loan Interruption Scheme
A new temporary loan scheme should be launching this week and is primarily designed to support small and medium sized businesses to access bank lending and overdrafts. This was announced some weeks ago now but we finally have more information.
The Government will provide lenders with a guarantee of 80% on each loan to give further confidence in continuing to provide finance to British Businesses. The scheme will support loans of up to £5m in value available on repayment terms of up to 6 years with no fees or interest in the first year.
In order to be eligible for this scheme, the business must have turnover of no more than £45m per year and must meet the other “British Business Bank” eligibility criteria which seems to mainly stipulate
It’s important to remember that this is debt and not grant funding or non-repayable cash payments and whilst these loans will be critical to some businesses survival, the borrower still remains 100% liable for the debt. The backing from the Government will help credit departments to approve applications which may have otherwise declined, but it’s essential that the borrowing proposal would be considered viable by the lender were it not for the current pandemic. The lender also needs to have confidence that making the finance available will help the business to trade out of short / medium term difficulty.
This is the most complex of all the offerings the Government have announced, but has the potential to be the most advantageous. It’s important, just like all other major lending applications, that any facility is applied alongside a robust business plan. This business plan needs to show lenders that the business has made every effort to reduce it’s financial exposure and has considered the worst case scenario in the event that sales dry up in their entirety.
Subject to lender’s discretion, the scheme can be used for unsecured lending of up to £250,000.
More details can be found here:
If you would like to know more or think the loan will be useful to your business, please do get in touch with us and we can help you to prepare your business plan and apply for the funding.
Any VAT liabilities falling due between 20 March 2020 and 30 June 2020 have been deferred automatically. This is an automatic scheme and there is no application required.
Taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.
VAT refunds will still be processed as normal.
All income tax self-assessment payments falling due on 31 July 2020 have been automatically deferred until 31 January 2021.
Again, this is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
PAYE and Corporation Tax
Whilst there is nothing publicised about this as yet, we have had a fair degree of success with HMRC in delaying payments of PAYE and Corporation Tax falling due within the next few months. This is helpful for businesses to preserve cash flow by deferring the payment of PAYE and Corporation Tax until the economy begins to recover.
Support for Retail, Hospitality & Leisure sectors
Any business within the retail, hospitality or leisure sector as mentioned above, that has a property with a rateable value of less than £51,000, can apply for a cash grant of up to £25,000 depending on the value of the rateable property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a cash grant of £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a cash grant of £25,000.
Again, the local authorities are expected to contact you if you are eligible for this grant. If you want any further information or advice pertaining to this, please do get in touch with us.
Support for small businesses that pay little or no business rates
Any business that currently qualifies for small business rates relief or rural rate relief are able to claim a grant of £10,000.
This should be actioned in due course by your local council.
Business Rates Holiday
Any business within the retail, hospitality or leisure sectors in England will receive a business rates holiday for the 2020 to 2021 tax year.
These businesses include, but are not limited to;
- Drinking establishments
- Music venues
- Assembly venues
- Leisure venues
- Self-catering accommodation
This should be automatically applied to your next council tax bill in April 2020. If you are in any doubt, contact your issuing council to discuss whether or not you meet the criteria.
This holiday has now also been extended to nurseries which are based in England.
In addition, we have seen some support from local councils for struggling businesses in the form of delayed payment plans and other similar measures.
Statutory Sick Pay relief
Small and medium businesses will be able to recover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. This covers all employers with fewer than 250 employees.
The repayment mechanism for employers is due to be set up “over the coming months”. I know this is less than helpful in terms of target dates, but the refund will be there for the business at some point.
HMRC Time to Pay
HMRC have scaled up their Time to Pay offer to help all businesses and self-employed people in financial distress and with outstanding tax liabilities.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances.