Covid-19: What you need to know

Grant Funding Schemes

In response to the COVID-19 pandemic, the Government announced there would be support for small businesses, and businesses in the retail, hospitality and leisure sectors. This support will take the form of two grant funding schemes: the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund. 700,000 businesses in England who are currently eligible for the Small Business Rate Relief (SBBR) or Rural Rate Relief can benefit from this emergency funding. This will be a one-off Coronavirus grant worth up to £10,000 to help meet business costs.

HOW TO APPLY

Although Government announced that local authorities will contact you if you are eligible and stated ‘you don’t need to do anything’, you can apply online if you think that you are eligible.

Job Retention Scheme

The Government has announced a new scheme called “Coronavirus Job Retention Scheme”. Under this Scheme, all UK employers may be able to access support to continue paying part of the salary for those employees that would otherwise have been made redundant during this crisis. To access the scheme employers will have to do the following:

• 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
• submit information 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)

The Government issued further clarification about this scheme on 4 April – Read the guidance.

What does ‘Furlough’ mean?

Furlough is not a term that many people in the UK will be familiar with. It generally means a temporary leave of absence from work. This can be due to economic conditions affecting a particular company or the country as a whole. Until now, the expression has not applied to UK employment law.

Due to the COVID-19 pandemic, Furlough leave has been introduced by the UK government as a means to keep employees on the payroll without them required to work. This is different to being laid off without pay or being made redundant.

Self Employed Income Support Scheme

If you are self-employed or a member of a partnership you may be entitled to claim a taxable grant worth 80% of your trading profits, up to a maximum of £2,500 per month for the next 3 months. To qualify you should have trading profits in 2018/19 of less than £50,000 and more than half of your income.

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. Those who started trading on or after 6 April 2019 are not eligible for this grant. It is also likely, but not confirmed, that people who earn the majority of their income from furnished holiday lettings will not qualify for this grant.

HMRC will contact those taxpayers who are eligible for this grant and will invite them to apply for the payment online. It is not clear how this contact will be made, possibly by letter, but certainly not by email or text message. Beware of scams offering money from HMRC and asking for bank details to be confirmed by clicking a link in an email or replying to a text.

It is not yet possible to apply for this funding but as soon as details are available on how to do this, we will publish them. In the meantime, read the Government guidance here.

VAT Deferment Scheme

There will be a VAT payment deferral for 3 months. The deferral will apply to VAT payments due from 20 March 2020 to 30 June 2020. This will apply to all UK businesses.

• If you are a VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you can pay the VAT as normal or defer it under this temporary scheme.
• In order to use this deferral scheme, the direct debit must be cancelled. You can do it by using your HMRC VAT portal or by contacting your bank.
• The VAT deferred due to COVID-19, must be paid to HMRC on or before 31 March 2021.
• You will still need to submit your VAT returns to HMRC on time.
• This deferment scheme does not apply to VAT MOSS payments.
• HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.
• HMRC will continue to process VAT reclaims and refunds as normal during this time.
• VAT payments due following the end of the deferral period will have to be paid as normal.

This is an automatic offer with no applications required.

Deferring Income Tax payments (self employed)

If you are self-employed, Income Tax Self-Assessment, payments 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.

Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme (CBILS) is available to businesses with turnover under £45 million and allows them to access government-backed loans of up to £5 million.

The scheme has been introduced to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance. As well as loans, there are many other types of finance supported by the programme, depending on the provider.

The Government will cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments but the business will remain liable for the repayment of the capital.

The scheme has now been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the COVID-19 crisis can access the funding they need.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme.

New scheme features include:

• No personal guarantees for facilities under £250k: personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
• Personal guarantees for facilities above £250k: personal guarantees may still be required, at a lender’s discretion, but 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.
• A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
• Security: for all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.

The expanded scheme became operational with lenders on Monday 6th April 2020.

Click here to visit the CBILS website for more information, including a list of accredited lenders and their finance options.

Coronavirus Large Business Interruption Loan Scheme

The Government announced a new initiative to support businesses with turnover between £45 million and £500 million.

This scheme will allow these large businesses to borrow up to £25 million and these loans will largely be guaranteed by the Government.

Statutory Sick Pay relief package

The government is supporting SME’s and employers to cope with the extra costs of paying COVID-19 related Statutory Sick Pay (SSP) by refunding eligible SSP costs. This will enable staff to get Statutory Sick Pay (SSP) from the first day they self-isolate and cannot work, rather than waiting 3 days.

The eligibility criteria for the scheme will be as follows:

• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
• employers with fewer than 250 employees will be eligible – 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) 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
• eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Insurance

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.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

The likelihood is that many businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

HMRC – ‘Time to pay’ details

All businesses and self-employed people who find themselves in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HRMC’s ‘Time to Pay’ service. Arrangements will be agreed on a case-by-case basis. HMRC 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

Please note that HMRC have issued a helpline for businesses who have concerns and worries about complying with their tax obligations due to the Coronavirus pandemic. Visit the HMRC page here for more details or call HMRC on 0800 0159 559

HMRC have stated that this helpline can be used to:

• Agree instalment arrangements
• Suspend debt collection proceedings
• Avoid penalties and interest

Key workers

If your work is critical to the COVID-19 response, or you work in one of the critical sectors listed in the Government’s publication, and you cannot keep your child safe at home then your children will be prioritised for education provision. Check here to see the qualifying ‘key workers’.

Business Rate Relief for Retail, Hospitality and Leisure Businesses

If you pay business rates you may be eligible for a 12 month business rates holiday. Government announced that it will not charge business rates for companies in the retail, leisure and hospitality sectors in the year 2020/21. There will be no rateable value limit on the relief.

Read the updated guidance here.

Businesses operating in these sectors may also qualify for a £25,000 grant where they have a business rateable value of between £15,000 and £51,000.