Government support for businesses during the Coronavirus outbreak
DISCLAIMER:- This page is designed to alert clients of Abacus Accountancy & Taxation Services Limited to government guidance as to who may qualify for financial support for businesses affected during the Coronavirus outbreak. It is not meant to be an exhaustive list of all support available, but guidance only. Abacus Accountancy & Taxation Services Limited offer no guarantee to non-clients of the accuracy of the information provided. This page will be updated routinely throughout the Coronavirus outbreak so please check for updates regularly.
While various measures have been announced it should be noted that the finer details of how the schemes will work are yet to be announced in some cases.
Here is a link to the government’s website regarding claims that can be made by small businesses
1 – BUSINESS RATES AND GRANTS
2 – JOB RETENTION SCHEME
3 – DEFERRAL OF VAT AND INCOME TAX PAYMENTS
4 – SELF EMPLOYED – GRANTS
5 – BUSINESS INTERRUPTION LOAN SCHEME
6 – SMALL LIMITED COMPANIES
7 – OTHERS
WARNING: We are being made aware of scams where clients are being targeted via email, text or phone calls purporting to be from HMRC. Please be aware of these and do not open any link or follow any advice given via them in these circumstances. HMRC should correspond via the post in regard to the support given to businesses.
1 - BUSINESS RATES AND GRANTS
Grants for businesses subject to business rates (even if full rate relief applies and no rates are paid)
The proposals include grants (non-repayable) to businesses who are subject to business rates, even if they do not pay rates because they have 100% small business rates relief. Proposals are as follows:
• a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
The grants will be classed as taxable income in the year that they are received.
Grants will automatically be processed by the local authorities.
UPDATE 08/04/20: We understand from some clients that in some cases the local authorities now have the funding available and that they are starting to process the grants. This may take time given the number of businesses affected and entitled to the grants.
2 - JOB RETENTION SCHEME
Support for businesses that employ staff who cannot work
IMPORTANT:- This only applies where the employees have stopped working and have been told that they are “furloughed” workers. Please advise us as soon as possible if your workers are classed as furloughed and from what date this applies.
• Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.
• This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per employee per month. This is to safeguard workers from being made redundant.
• The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but will be extended if necessary. HMRC will set out more details shortly.
Remember to let us know as soon as possible which employees are furloughed and from what date.
Claims only apply to those workers who have been told to stop working and told that they are furloughed workers.
Claims will be made by accessing a HMRC portal. However, this is not yet ready so claims cannot yet be made.
Rules of furloughing workers include agreeing with the workers that they are to be furloughed, confirming this to them in writing, and setting a minimum 3 consecutive weeks furlough period.
UPDATE 11/05/20: The HMRC portal is now open for claims. The scheme is only available to those businesses who had started and created a PAYE scheme by 28th February 2020. Employers who have told their workers that they are furloughed do not have to make up the 20% shortfall from the government grant, that is optional for the employer. A worker must be furloughed at least 3 consecutive weeks for an employer to qualify for a claim for their wage costs to be considered under the scheme. Directors can also be classed as furloughed workers.
You should agree with your workers that they are to be furloughed, and confirm this in writing to them. You should keep a record of this for five years.
More details of furloughed workers https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
3 - DEFERRAL OF VAT AND INCOME TAX PAYMENTS
Support for businesses through deferring VAT and Income Tax payments
For VAT, the deferral will apply 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.
• Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.
For income tax, some clients will be expecting to make a second payment on account as part of their income tax payments. They now have an option to defer that second payment, see below.
• For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021. (this is not compulsory, you can pay on time if you are able to do so)
• You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
• The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.
• This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until January 2021.
• HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.
Remember, you need to cancel your VAT direct debit if you wish to take advantage of his deferral.
This is a deferral only so you do not have to use this and can continue to pay your taxes by the usual payments dated if preferred.
UPDATE 08/04/20: The deferral option is automatic as long as you cancel your VAT direct debit in time and does not require any further action. You do not have to wait until 31st March 2021 next year to pay the deferred liability and you are free to chip away at it in the meantime.
4 - SELF EMPLOYED – GRANTS
You are not classed as self-employed if you operate your trade via a limited company. These are not repayable grants, but any grants will be classed as taxable income.
Who is eligible
You can apply if you’re a self-employed individual or a member of a partnership and you:
have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
• traded in the tax year 2019-20
• are 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
Additionally, your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
• having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
• having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
How much will you get
• You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
• 2016 to 2017
• 2017 to 2018
• 2018 to 2019
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
The government will pay the grant directly into your bank account, in one instalment.
It is anticipated that payments will not be made until June at the earliest.
UPDATE 11/05/20: You cannot apply for this scheme yet but you can now use the Gov.uk website to check your eligibility. We will update this page when applications can be made.
SOME CLIENTS HAVE REPORTED THAT THERE ARE SOME BOGUS SITES THAT REQUEST YOUR INFORMATION.
Please be wary of these and only use the Gov.uk website for your information.
You will need to register for your own Gateway User ID via the Gov.uk website. Follow the link above for information on this.
You are not classed as self-employed if you operate your trade via a limited company.
It is anticipated that these grants will not be available until June at the very earliest. The payments will be made in one lump sum. You will not be entitled to a grant if you commenced trading as a self-employed person after 5th April 2019, we recommend those that did make a claim via Universal Credit. HMRC will contact you regarding this scheme so nothing needs to be done until then.
5 – BUSINESS INTERRUPTION LOAN SCHEME
The temporary Coronavirus Business Interruption Loan Scheme supports SMEs (Small and Medium Enterprises) with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
Eligibility. You are eligible for the scheme if:
• your business is UK based, with turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria
How to access the scheme
The scheme is now open for applications. All major banks are offering this scheme.
You should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
A full list of the banks taking part in this scheme is available on this link
The government recently introduced backing for the “bounce back” loans which offer more generous terms, see here for details
6 – SMALL LIMITED COMPANIES
There is nothing specific in the proposals yet for owners of small limited companies who are unable to trade, aside from their wage costs being partially met by the government (see 2 - JOB RETENTION SCHEME). We will update this section if and when additional support becomes available to you.
UPDATE 08/04/20: An online petition has been created to pressurise the government into giving additional financial help to small businesses that otherwise do not qualify for grants due to their limited company status.
7 - OTHERS
There are many more proposals available to businesses and employees, too many to list here, so please refresh the link below regularly to be kept up to date with developments.