Coronavirus: Help for Business

The Chancellor Rishi Sunak has set out several packages to help support small business through the developing situation with Coronavirus (COVID-19).

These packages include several measures to support businesses:

A coronavirus job retention scheme

The headlines

  • Cover for 80% of wages up to a maximum of £2,500 per month
  • Wage costs backdated to 1st March 2020
  • Cover for 3 months initially but with scope to extend

This is open to everyone, to access the scheme you have to 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.  But what does “Furloughed” mean?  Simply put it is where an employee is allowed or forced to stop work temporarily.  This information needs to be submitted 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 will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. Once this is set up expect delays as it is sure to be busy.

Deferring VAT and income tax payments

The headlines

  • VAT payment deferred 3 months
  • Self Assessment tax payment due in July deferred to January

For all UK businesses the next VAT payments are deferred for 3 months, and for the self-employed income tax payments due in July 2020 are deferred (not cancelled!) until January 2021.  For VAT the deferral will apply from 20 March 2020 until June 2020.

Unlike the job retention scheme these processes will be automatic, you will not need to make a VAT payment during the period.  VAT refunds and reclaims will operate and be paid by government as normal.

Income tax payers will be given until the end of 2020/2021 tax year to pay any liabilities accumulated during the “deferred” period.

Self-assessment income tax payments due on 31st July 2020 will be deferred to 31 January 2021.  This is automatic and there will not be any interest charged for “late payment”

The “Time to Pay” offer to firms and individuals who are in temporary financial stress a result of COVID-19 and have outstanding tax liabilities.  These arrangements are agreed on a case by case basis and need to be discussed with HMRC who have a dedicated helpline 0800 0159 559.

Statutory Sick Pay relief package for SME’s

The headlines

  • Sick pay from day 1
  • Employers can reclaim SSP

Legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19 this applys to employers with fewer than 250 employees – the size of an employer will be determined by the number of people they employed as of 28 February 2020

Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria, see below) as a result of COVID-19

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, 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.

The scheme is in development and further details will be provided in due course once the legalisation has passed.

12-month business rates holiday for all retail, hospitality and leisure businesses in England

The headlines

  • No business rates for retails, hospitality and leisure businesses

Business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year is to be introduced. Businesses that currently received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if your business is based in England and your business is in the retail, hospitality and/or leisure sector so shops, restaurants, cafes, drinking establishments, cinemas, live music venues, premises for assembly and leisure such as hotels, guest & boarding premises and self-catering accommodation.

Properties that will benefit from the relief will be occupied buildings.

Again there is no action to take, it will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator. https://www.gov.uk/calculate-your-business-rates

Grant funding of £25,000 for retail, hospitality and leisure businesses

The headlines

  • Cash grant of up to £25,000 for businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property for property with a rateable value between £15,000 and £51,000.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

Businesses based in England, and your business is in the retail, hospitality and/or leisure sector so shops, restaurants, cafes, drinking establishments, cinemas, live music venues, premises for assembly and leisure such as hotels, guest & boarding premises and self-catering accommodation.

Properties that will benefit from the relief will be occupied buildings.

Again you do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Small business grant

The headlines

  • Cash grant of £10,000 for businesses

Support for 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 (SBBR), 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.

Again you do not need to do anything. Your local authority will write to you if you are eligible for this grant.

The Coronavirus Business Interruption Loan Scheme

The headlines

  • Access to loans and overdrafts up to £5 million

A new Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch this week to support primarily small and medium-sized businesses allowing access to bank lending and overdrafts.

The government is to provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

To be eligible your business has to be UK based, with turnover of no more than £45 million per year, and your business meets the other British Business Bank eligibility criteria. (See link below)

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.  https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all, so speak to your bank manager.

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