In these unexpected times which are so clearly affecting businesses in a multitude of ways, at LWA we wanted to let you know of the numerous types of business support that have been made available by the Government, and to advise you of processes you can implement, as a result of the Covid-19 virus outbreak. The information from the Chancellor’s office has been updated on a regular basis, and there are certainly more details and additions to come over the next few weeks. As well as reading through the information below, it is suggested you keep regularly checking the following web page for further developments: government support for businesses
Coronavirus Job Retention Scheme
As a first in UK history, to minimise the impact of Coronavirus, the Government will allow employers of any size, to apply for a HMRC grant covering 80% of salaries (up to £2,500 per month) for those staff that aren’t working, but kept on payroll – rather than laying people off. Furthermore, employers will be able to backdate this to 1 March, and claim for employees that were laid off as a response to the outbreak after 28 February. Since Rishi Sunak’s announcement of the Job Retention Scheme with grants for companies furloughing staff during this period of uncertainty, there have been several additional details and notes released that you should be aware of:
- A standalone portal for reclaiming furlough grants is expected to be introduced around 21 April, to allow furlough grants to be reclaimed. The professional accountancy bodies have requested that tax agents be given access to this portal as well as employers.
- Employers will be able to use the portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 per month. Fees, commissions and bonuses are not included.
- Payments to the employee should be made via the PAYE system and will be subject to deductions for income tax and employee’s NICs.
- Employers can also claim associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions in addition to the monthly salary costs.
- An employee can be furloughed for a minimum of three weeks at a time and for a maximum of three months from 1 March, although the government might extend the scheme. The individual could remain furloughed even if the Coronavirus Job Retention Scheme is not extended, but then the employer would not have any grant funding to cover their wages.
- Directors can furlough themselves whilst continuing to undertake their ‘Statutory Obligations’.
Deferring VAT, Self-Assessment and Corporation Tax payments
If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:
- Defer the payment until a later date.
- Pay the VAT due as normal.
It does not cover payments for VAT MOSS or import VAT. HMRC has a set up a telephone helpline on 0800 0159 559 to support businesses and self-employed people concerned about not being able to pay their tax due to Coronavirus. They will discuss your specific circumstances to explore agreeing an instalment arrangement; suspending debt collection proceedings; cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately. If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the Coronavirus causes you difficulty in making payment by that date, then you may defer payment until 31 January 2021. This is an automatic offer with no applications required. Corporation Tax payments are also being deferred by HMRC through the above number on an individual basis. For all deferments listed no penalties or interest for late payment will be charged.
Self-employment Income Support Scheme
“You have not been forgotten, we will not leave you behind and we all stand together” – The Chancellor’s reassuring words for self-employed workers at the end of his speech announcing an almost parallel support package to PAYE workers. The gist of this unprecedented support includes:
- A taxable grant of up to 80% of average earnings for workers with up to £50,000 trading profit.
- There will be a cap of £2,500 per month for 3 months.
- There will be a rigorous process to eliminate any fraudulent opportunists including application forms to be completed and a review of the most recent three years’ tax returns.
- For those that have still not submitted their tax return for the last tax year, the Chancellor has extended the deadline without penalty to allow them to be able to benefit from this support package.
- The grant will be paid it is hoped from 1 June 2020 which will be a lump sum for the 3 months’ from 1 March.
Statutory Sick Pay Relief Package
The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020. The repayment will cover up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:
- Have Coronavirus.
- Cannot work because they are self-isolating at home.
Employees do not have to give you a doctor’s fit note for you to make a claim. SSP rates have also increased from £94.25 a week to £95.85 per week from 6 April.
One Year Business Rates Holiday for Eligible Businesses
A one year business rates holiday for retail, hospitality and leisure businesses in England has been announced for the 2020 to 2021 tax year. Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used as shops, restaurants, cafes, drinking establishments, cinemas and live music venues. Additionally properties used for assembly and leisure, hospitality, as hotels, guest & boarding premises or self-catering accommodation are also included. In addition to the above nurseries have also been added to the scheme. There is no action needed to access this support. However, local authorities may have to reissue your bill. They will do this as soon as possible.
Cash Grants for Retail, Hospitality and Leisure Businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors additional help with a cash grant of up to £25,000 per property. Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000. Properties with a rateable value between £15,000 and £51,000 may be eligible for a grant of £25,000. Enquiries should be directed to the relevant local authority.
Cash Grants for Small Businesses that pay little or no business rates
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. To benefit businesses must occupy property and be based in England, plus be in receipt of small business rate or rural rate relief as of 11 March. Enquiries should be directed to the relevant local authority.
Banks including HSBC, NatWest and Lloyds have put measures in place to support customers with mortgage payments in a number of ways. We spoke to HSBC who informed us of their process which includes an initial telephone conversation to ask how you’ve been affected by Coronavirus, and if you take the 3 month mortgage holiday, they have assured your credit score and future borrowings will not be affected. Banks are also offering to move to a low rate fixed mortgage if you’re currently on a tracker which might be worth considering.
There has been a complete ban on evictions and no tenant in either social or private accommodation will be forced out of their home during this difficult time. Furthermore, local housing allowance will be increased to cover a minimum 30% of market rents. Emergency legislation has been placed so that landlords will not be able to start proceedings to evict tenants for at least a three-month period. As a result of these measures, no tenants in private or social accommodation needs to be concerned about the threat of eviction. Recognising the additional pressures that Covid-19 may put on landlords, the three month mortgage payment holiday mentioned above will be extended to landlords whose tenants are experiencing financial difficulties which will alleviate the pressure on landlords, who will be concerned about meeting mortgage payments themselves, and will mean no unnecessary pressure is put on their tenants as a result. At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
Ban on Commercial Evictions
HMRC has announced that commercial tenants that cannot pay their rent due to Coronavirus will be given extra protection from eviction by landlords. Whilst conversations are already taking place about voluntary arrangements and payments, this latest announcement comes as the Government closes more businesses to prevent social contact, thus slowing down cashflow. If you’re self-employed and you rent an office, this may offer some respite.
The Coronavirus Business Interruption Loan Scheme (CBILS)
The Bank of England has cut interest rates to 0.1%, and banks have announced they will be relaxing requirements for overdraft extensions and loan applications. Set up as a temporary replacement for the Enterprise Finance Guarantee Scheme, the Government has made it possible for small firms with a turnover of less than £41m to apply for a loan of up to £5m with no interest due for the first 12 months. Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but they exclude the Principal Private Residence (PPR), and recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. To be eligible a business must be UK-based in its business activity, have an annual turnover of no more than £45 million, have a borrowing proposal which the lender would consider viable were it not for the current pandemic, and be able to self-certify that it has been adversely impacted by the Coronavirus pandemic. Please note certain industry sectors will not be eligible. If you need to apply for the Coronavirus Business Interruption Loan Scheme (CBILS), contact an accredited lender authorised by the British Business Bank.
Did you know that the Business Interruption Loan Scheme is available for self-employed workers as well? As long as you have a business bank account, an annual turnover of up to £45m and generate more than 50% of your turnover from trading activity you can apply under the scheme.
At LWA, we are assisting clients with cash flow forecasts for loan funding. For clients on Xero we can use Futrli to speed up the process from days into hours. If you would like cash flow forecasting support to assist your loan applications, please contact firstname.lastname@example.org or call 0161 905 1801.
If you’d like to find out more speak to a member of our experienced business support team in Warrington on 01925 830 830 or call our Manchester office on 0161 905 1801, who’ll be able to give you helpful advice in relation to your individual circumstances. www.lwaltd.com