There has been significant measures put in place to date by the government to support businesses and individuals through the coronavirus crisis. There are links to the relevant pages and a summary of the advice for businesses (as sourced from the ICAEW) is below.
The information below is correct as 29 April 2020, however the situation and advice from government is updated regularly, so please check the government links below as well for the latest information and more details on how the measures will operate in practice.
HMRC and government advice
Job Retention Scheme
Under the Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 if employees were inactive from then, and the portal is now open for claims. The scheme will continue at least until June, and can include workers who were in employment on 19 March if HMRC were notified through an RTI submission they were on the payroll by that date.
To claim under the scheme employers will need to:
- designate affected employees as ‘furloughed workers’, and notify 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; and
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. Employees will need to be furloughed for at least three weeks.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Self-Employment Income Support Scheme
The government will pay self-employed people adversely affected by coronavirus a taxable grant worth 80% of their average monthly trading profit over the last three years, up to £2,500 per month, for at least three months (in line with the employed scheme).
The scheme will apply to people who have filed a 2018/19 tax return before 23 April 2020. It will not apply to anyone who started trading in 2019/20 so those that have started a new business in the last 12 months. The scheme will be open to those with trading profits of £50,000 or less, or their average profits were less than £50,000 over the last three tax years to April 19, and who make the majority of their income from self-employment. Those who trade through a limited company and pay themselves a salary and dividends are not covered, but they can apply for the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
HMRC will contact self-employed people eligible to receive financial support by the beginning of June. Using an online form, they can then apply directly to HMRC for the grant, they will need to demonstrate their business has been adversely affected by the coronavirus restrictions. The tax authority will pay the grant straight into their bank accounts. Self-employed individuals may still need to access other measures such as the Coronavirus Business Interruption Loan Scheme and mortgage holidays to help them until they receive their grants.
VAT Deferral Scheme
Businesses do not have to make any payments of VAT due until the end of June 2020. They then have until 31 March 2021 to settle liabilities. The deferral happens automatically, businesses do not have to apply. VAT refunds and reclaims happen as normal.
Income Tax Payments
Income Tax Self-Assessment payments on account due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
Government Supported Loan Schemes
Business Interruption Loan Scheme
The government backed loans are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
The loans are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
No interest will be charged for the first 12 months.
Bounce Back Loan Scheme
On the 27th April. The government announced further support for businesses that want to borrow up to £50,000. The Bounce Back Loan scheme will launch on 4 May and will help small and medium-sized businesses to borrow between £2,000 and £50,000.
The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
Loan terms will be for up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
Coronavirus Future Fund
This scheme will launch in May 2020. The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme
Business Rate Holidays and Cash Grants
No rates are payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors. In those sectors, if your rateable value is between £15K and £51k, you’ll also receive a cash grant of up to £25,000 per property.
Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).
The rates holiday and cash grants will be administered by local authorities.
Sick Pay (SSP) and Benefits
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
If you’re a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
The government will refund £94 per week, maximum £188, to your company.
It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.
Other Support Measures and HMRC helpline
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
If businesses have any other loans or HP agreements it is worth contacting the provider to see if repayments can be reduced or delayed in the short term without penalties.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Businesses that have cover for both pandemics and government-ordered closure should be covered. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres, etc., is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.