Support for businesses
We have created this web page to act as an information point for all our clients – as measures are being regularly announced and details slowly start to become available, we hope this will help you to more easily keep up with developments and make sure you can access the support you need.
Coronavirus Business Interruption Loan Scheme (CBILS)
Available from Monday 23 March, this scheme will be of fundamental importance for businesses. Many of the other measures announced will take time to set up and for repayments to be made – so this is an essential form of finance to keep business going in the meantime.
To qualify, businesses must have a turnover of less than £45m.
The scheme provides government-backed loans to enable such businesses to borrow more easily and at competitive interest rates.
Each business can borrow up to £5m on repayment terms of up to 6 years, and the loans are interest- and fee-free for the first 12 months.
Businesses should contact lenders directly, and a list of accredited lenders will be maintained on the British Business Bank website. A borrowing proposal will be required showing that the business would be considered viable were it not for the current pandemic.
Following reports of businesses struggling to obtain finance under the scheme, the Chancellor has taken the following action to maximise the support available:
- Confirmed that all businesses affected by Covid-19 can access the scheme, not just those who are unable to secure regular commercial financing;
- Stopped lenders from requesting personal guarantees for loans under £250,000 – guarantees for loans above this amount will be limited; and
- Made operational changes to speed up the approval process.
Coronavirus Job Retention Scheme
All employers in the UK will be eligible for this scheme, which will enable employers to retain their staff even if they cannot currently afford to pay them due to the coronavirus pandemic.
In order to access the scheme, employers will need to:
- Designate affected employees as “furloughed workers”.
- Submit information to HMRC about the employees being furloughed and their earnings, through a new online portal (details to follow).
- HMRC will then reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per employee per month, in the form of a grant (not a loan).
Answers to some frequently asked questions on furloughing workers:
Which employees can be furloughed? Only employees who were on the payroll on 28 February 2020 are eligible. The scheme covers all types of contract; full-time, part-time, agency and flexible / zero-hour. It can also be used for employees made redundant since 28 February 2020 if they are rehired.
How do I furlough an employee? HMRC’s guidance states that you should discuss the possibility of furloughing with your staff and ensure that employment contracts are reviewed and amended if necessary to allow furloughing / pay reduction. If employees do not agree to be furloughed your other option is to consider redundancy. Your selection process should be fair and non-discriminatory. Employees must be furloughed for a minimum period of 3 weeks. In order to be eligible for the grant, you must write to your employee(s) confirming that they have been furloughed and keep a record of this communication.
For what period can the grants be claimed? The scheme is available from 1 March to 31 May 2020, although this will be extended if necessary.
Can a furloughed employee still do some work for me? No – furloughed workers are effectively on a leave of absence and cannot carry out employment duties. The purpose of the scheme is to fund the salaries of employees who are without work.
Can a furloughed employee do some voluntary work? Yes, but only if such work does not provide services to or generate revenue for, or on behalf of, your organisation.
What if an employee is sick or self-isolating, or “shielding”? Employees who are sick or self-isolating are eligible for Statutory Sick Pay. They can be furloughed after this period. Employees who are “shielding” can be furloughed.
What costs are covered by the grant? The costs included are regular gross wages, employer National Insurance and the minimum automatic enrolment employer pension contributions. Fees / commission / bonuses are excluded. For salaried employees, the 80% is calculated on their actual salary as of 28 February 2020. For employees whose pay varies, you can claim for the higher of the same month’s earnings from the previous year, or average earnings from the 2019-20 tax year (or pro-rata for those with less than a year’s service).
How much do I pay my furloughed workers? You only have to pay the amount you will be reimbursed (i.e. the 80% / £2,500) but you can top this up if you choose. PAYE and NI still apply and must be deducted and paid to HMRC as usual.
Does the scheme cover director-only companies? Yes, although such companies often pay minimal salaries and top up with dividends, so the claim may be minimal. Also, the directors cannot be working if they are furloughed.
How do I claim my grant? You will need to pay your employees and then make a claim through a new HMRC online portal – this is expected to be available by the end of April. You will be able to make a claim every 3 weeks. If you are experiencing immediate cash flow issues we recommend that you consider the Coronavirus Business Interruption Loan Scheme.
Can I move employees in and out of being furloughed? This is not clear yet but is likely to be the case to allow for flexibility or to cover workers who become sick.
Statutory Sick Pay (SSP)
Business with fewer than 250 employees (as at 28 February 2020) will be able to reclaim SSP from the government in relation to absences due to Covid-19 (illness or self-isolation) for up to 2 weeks per employee.
This will not be administered through the payroll, but a separate repayment mechanism will be set up.
For the time being, employers should maintain records of staff absences and payments of SSP in relation to Covid-19 so that the claim can be made as quickly as possible once the mechanism is available.
Self-employed Income Support Scheme
Self-employed people, including partners in a partnership, whose business profits have been adversely affected by the pandemic will receive taxable grants amounting to 80% of average monthly profits over the last three tax years, capped at £2,500 per month.
This will be for a period of three months from 1 March 2020 initially, but will be extended if necessary.
Self-employed workers can continue to do business and remain eligible for grants. They must be trading at the point the application is made and intend to continue trading in 2020-21.
The scheme is targeted at those who need it the most. So, it will only apply if:
- Trading profits do not exceed £50,000;
- The majority of the taxpayer’s income is from self-employment; and
- The taxpayer reported self-employment income on their 2018/19 tax return.
The first two conditions can be with reference to 2018/19 alone, or on average across the three years 2016/17 – 2018/19.
For those taxpayers without a three-year history of profits, the average will be taken of the data that is available, i.e. potentially one or two years.
However, there is no support for those recently self-employed who started in business after 5 April 2019 because they have not yet filed any tax returns so no data is available in “the system”. Those traders will have to rely on the previously announced enhancements to the welfare system or loan schemes.
The Chancellor is giving all workers who still have not filed their 2018/19 tax returns until 23 April 2020 to file, so that they can be eligible for the scheme. If you otherwise qualify for the scheme and have not filed your return for 2018/19 yet, please contact us urgently!
Workers can expect to be able to make their claims no later than 1 June 2020. HMRC will be writing to eligible taxpayers directly with an online application form to complete to make the claim – so now would be a very good time to make sure they have your up to date address details. Claims will be paid directly to bank accounts in one instalment.
Self-employed people can also access Universal Credit at a rate equivalent to SSP.
Business rates and grants
All businesses in the retail, hospitality and leisure sector will pay no business rates for 2020-21.
Nursery businesses in England will also have a rates holiday for 2020-21.
Businesses in the retail, hospitality and leisure sector with a rateable value of between £15,000 and £51,000 will be eligible for a cash grant of up to £25,000.
All businesses which qualify for small business rates relief will be eligible for grants of £10,000 and should be contacted directly by their local authority (no need to apply for this).
We understand that the above measures will be automatically delivered by Local Authorities, with no need for businesses to formally claim them.
VAT, income tax and other tax payments
Any VAT payments due between 20 March and 30 June 2020 need not be made, and businesses will have until 5 April 2021 to repay the accumulated liabilities. No interest or penalties will be levied. This applies automatically to all UK businesses. If you pay your VAT by Direct Debit you will need to cancel this or the money will be automatically taken! Don’t forget to reinstate the instruction after the deferral period.
Income tax payments on account due on 31 July 2020 are deferred until 31 January 2021 for all taxpayers. If you pay your tax by Direct Debit, you will need to cancel the instruction and then remember to reinstate it later.
We recommend that tax returns for 2019/20 are prepared as soon as possible after the tax year end so that future payments can be planned for, and any refunds due crystallised as soon as possible.
Finally, HMRC have a coronavirus helpline through which businesses can arrange extra time to pay any tax liabilities if they are in temporary financial distress as a result of the virus. Contact them before the liability becomes due on 0800 024 1222.
VAT filing deadlines are currently unchanged.
Companies House has said that applications can be made to extend accounts filing deadlines; but that requests for extensions should be made before the deadline date.
Three-month payment holidays can now be applied for with both mortgage lenders and landlords. No-one can be evicted or have their home repossessed over the next three months.