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Coronavirus – Financial Support for Businesses

coronavirus business, coronavirus business support, coronavirus

6th April 2020 – 09:00

In response to the ongoing Coronavirus pandemic the UK government has announced a series of measures aimed at supporting businesses through what is likely to be a very difficult time for many sectors. The key measures that have been announced to date are outlined below.

Support for the self employed

Updated 27th March 2020 – 11:30

1. Coronavirus income support scheme

On 26 March 2020 the Chancellor announced measures to support self employed individuals. This scheme will allow eligible individuals to claim a taxable grant worth 80% of self-employment trading profits up to a maximum of £2,500 per month for the next 3 months.

There are strict eligibility criteria, to qualify for support you must:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19 – if you haven’t done so already you must do so by 23 April 2020:• have traded in the tax year 2019-20
  • be still trading when you apply, 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
  • Have self employed trading profits of less than £50,000 (either in 2018/19 as a standalone year, or on an average basis for the three years 2016/17, 2017/18 and 2018/19)
  • Generate more than half of your income from self-employment

Eligible applicants will be entitled to 80% of average profits for the tax years 2016/17, 2017/18 and 2018/19, up to a maximum payment of £2,500 per month.

At present it is not possible to apply for the support. HMRC are working on establishing a payment portal. There is no need to contact HMRC, eligible beneficiaries will be contacted in due course. Please bear in mind that when announcing this measure, the Chancellor stated that it probably be June 2020 before individuals receive payments.

Support for employers

Updated 6th April 2020 – 09:00

2. Coronavirus Job retention scheme

All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

The basic details are set out below, however we advise that you review the detailed government guidance before making any decisions on your workers.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage (3%). Employers can top up salaries, however this would be at the employer’s expense, including associated employer’s national insurance and pension contributions. Support will initially be available for the three month period from 1 March 2020 to 30 June 2020 but may be extended further.

  • Furloughed workers cannot undertake any work whatsoever during the period of furlough. There is no option to offer reduced working hours. It is not necessary to furlough all employees. The minimum furlough period is three weeks.
  • The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.• Eligible workers must have been on your PAYE payroll on 28 February 2020 (those recruited after this date cannot be furloughed under the scheme) and can be on any type of contract, including:
    • full-time employees
    • part-time employees
    • employees on agency contracts
    • employees on flexible or zero-hour contracts
  • The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
  • Employees already absent should be dealt with as follows:
    • Those on unpaid leave on 28 February 2020 cannot be included
    • Those on sick leave, or self-isolating, should be paid SSP until they are fit to return to work. They may be furloughed from the point they can return to work.
    • Those who are shielding under public health guidance can be furloughed.
  • Employees with multiple jobs can be furloughed by one or more employers.
  • Eligible costs for determining the 80% rate are to be benchmarked as follows:
    • Those paid a regular monthly amount should be based on February 2020 gross pay (excluding fees, commissions and bonuses)
    • Those with variable pay are more complex and the amount will depend on the duration of employment and pay over the previous 12 months.
  • Employers wishing to access the scheme should designate affected employees as ‘furloughed workers,’ and notify your 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
  • In some circumstances it may be possible for directors to be furloughed. The government website provides more details on when this may be applicable. We advise that directors consider the rules and seek advice if unsure before placing themselves on furlough.
  • Claims for payments will be made via an online portal. Employers will be required to submit details of employees that have been furloughed via this portal. HMRC are working urgently to set up a system for reimbursement. The current timescale for this to be available is the end of April 2020. Until the portal goes live, we advise that detailed records are retained. The maximum claim frequency will be once every three weeks.
  • All grants received will be taxable income for corporation / income tax purposes
  • Guidance for your employees is also available via the government website

3. Statutory Sick Pay

Employees with under 250 employees will get a 100% refund on SSP for up to 14 days per employee. The size of an employer will be determined by the number of people they employed as of 28 February 2020. Note that for absences commencing from 13 March onwards SSP can be paid from day 1 of absence (usually day 4).

The mechanism for reclaiming any SSP suffered has not yet been confirmed. We advise that you keep detailed records of any SSP that you pay so that you are able to reclaim once the reclaim process is established.

You may wish to consider obtaining evidence from your employees. Those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.

Loan Funding

Updated 3rd April 2020 – 13:30

4. A new Coronavirus Business Interruption Loan Scheme

Loans of up to £5 million will be available, over up to 6 years, with the government covering up to 80% of any losses, with no fees. The form of loans may include term debt, overdrafts, invoice finance and asset finance The government have stated that they will meet the first 12 months interest payments for any facility taken under the above scheme.

The funds will be managed by approved lenders this includes most of the high street banks. The best route to accessing these funds is to contact your existing bank. Expect to be asked for your most recent financial statements, up to date management accounts and forecast information.

Update 3 April 2020 – the Chancellor has announced that banks will no longer be required to exhaust all other financial support routes before lending via this scheme. In particular, applicants will no longer be required to demonstrate a lack of security to access the scheme. This should streamline the application process, resulting in a quicker timescale from application to receipt of funds. Also, all facilities of up to £250k will be advanced without any form of personal guarantee from directors. These changes are effective from 6 April 2020.

More information, including key terms and eligibility criteria are online.

5. A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) 

On 3 April the chancellor announced a new variation of the CBILS scheme targeting larger businesses. The fund is aimed at companies with annual turnover of between £45 million and £500 million. Loans of up to £25m will be available, with the government guaranteeing 80% of the loan. Loans under CLBILS will be offered at commercial rates of interest. Further details of the scheme will be announced later this month.

6. COVID-19 Corporate Financing Facility

This is a debt facility for larger firms – The Bank of England has announced a new lending facility to provide a quick and cost effective way to raise working capital via the purchase of short-term debt. This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. Further details, including on how to access this funding are available via the Bank of England website.

Support for retail, hospitality and leisure

Updated 31st March 2020 – 13:00

7. Business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

This will be automatically applied to the 2020/21 rates bill. Establishments which are predominantly used for the following will be eligible:

  • shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest & boarding premises and self-catering accommodation

8. £25k cash grant to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

This will be paid on a per property basis. The scheme will be administered by local authorities. Businesses which are eligible will be contacted directly by the local authority, however many councils are asking businesses to declare eligibility in order to accelerate the claim process.

If you believe that you are eligible we advise that you contact your local council directly ASAP. We have compiled a list of some of the councils we are familiar with  to expedite this process – just click here for more details.

9. £10k cash grant to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value of under £15,000.

This will be paid on a per property basis. The scheme will be administered by local authorities. Businesses which are eligible will be contacted directly by the local authority, however many councils are asking businesses to declare eligibility in order to accelerate the claim process.

If you believe that you are eligible we advise that you contact your local council directly ASAP.We have compiled a list of some of the councils we are familiar with  to expedite this process – just click here for more details.

Support for nursery businesses that pay business rates

10. Business rates holiday for nurseries in England for the 2020 to 2021 tax year.

To be eligible the nursery/pre-school must be occupied by providers on Ofsted’s Early Years Register and wholly or mainly used for the provision of the Early Years Foundation Stage. The relief will be automatically applied to the 2020/21 rates bill.

Support for businesses that pay little or no business rates

Updated 31st March 2020 – 13:00

11. £10k cash grant to 700,000 small businesses delivered by local authorities.

Businesses that benefit from small business rate relief or rural rate relief will be eligible. There is no need to apply for this funding, eligible businesses will be contacted by their local authority. Local authorities will be provided with funding in early April to deliver this support, however many councils are asking businesses to declare eligibility in order to accelerate the claim process.

If you believe that you are eligible we advise that you contact your local council directly ASAP. We have compiled a list of some of the councils we are familiar with  to expedite this process – just click here for more details.

HMRC deferrals

Updated 1st April 2020 – 11:30

12. VAT

No UK business will be required to pay VAT payments falling due in the period from the from 20 March 2020 until 30 June 2020 – All UK businesses are eligible. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.

Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. HMRC have advised that businesses should cancel direct debits as these may be taken automatically.

Also note that businesses participating in Making Tax Digital for VAT now have until 1 April 2021 (was 1 April 2020) to meet the requirement to have ‘digital links’ within their recordkeeping in light of the coronavirus pandemic.

13. HMRC have been instructed to increase leniency with regards to the granting of time to pay arrangements for taxation payments.

This could include agreeing extended payment terms for VAT, PAYE and corporation tax liabilities. A dedicated helpline has been setup for any businesses concerned about their ability to make future payments to HMRC- 0800 024 1222.

Insurance

14. Insurance claims

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. HOWEVER Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics. The Association of British Insurers have issued a useful Q&A guide which covers many of the insurance related matters that will impact businesses.

Protection for commercial tenants

Updated 25th March 2020 – 09:30

15. Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction.

These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is the option for the government to extend this period if needed. This is not a rental holiday. All commercial tenants will still be liable for the rent. If you think that you may be unable to make your rental payments during this period, we advise that you consult with your landlord at the earliest opportunity to agree a solution.

Accounts filing deadline

Updated 27th March 2020 – 11:30

16. Businesses will be given an additional 3 months to file accounts with Companies House to help companies avoid penalties as they deal with the impact of COVID-19.

This should be requested before your filing deadline falls due otherwise fines will be imposed for late submission. The extension is awarded automatically when selecting Covid-19 as the reason for the extension request. Apply online via Companies House.

Other Useful Information

  1. Landlords and tenants – Complete ban on evictions
  2. Scams – Coronavirus scams
  3. Business support groups – The Federation of Small Businesses / Confederation of British Industry / North East Chamber of Commerce
  4. Insolvency law updateChanges to insolvency procedures

In addition to all of the above, there is a business support helpline that can provide further information and advice to businesses 0300 456 3565.

Please note that whilst the above is accurate as of the date of publication the situation is very fluid and changes will inevitably occur. We advise that you consult with the government’s official guidance for the latest available information.

Every effort will be made to update the following information as new announcements are made and the situation evolves. However, please visit the relevant information sources provided to check the most current information before taking any action as a result of the information provided.
The information which is summarised herein does not constitute professional advice and is general in nature.
Please contact our team for further detail of how these initiatives could help you and your business.
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