COVID-19 – Options Available For Businesses

In response to the disruption caused by COVID-19 the Chancellor has set out a number of measures to support businesses. We touch upon some of the measures being implemented and outline the requirements which businesses must meet to access such measures.

1. Coronavirus Job Retention Scheme

This scheme is intended to prevent redundancies by giving all UK employers reimbursement for 80% of their employees’ wages, up to £2,500 per month. Employees must stop working but will be retained on the payroll and remain employees. Please see our articles on ‘How to access Government support’ and our ‘update on the Coronavirus job retention scheme’ for information.

2. Deferral of VAT payments

UK VAT registered businesses which have VAT payments due between 20 March 2020 and 30 June 2020 can choose to pay the VAT as normal or defer the payment until a later date. Businesses will not incur interest or penalties from HMRC on the deferred amounts. VAT returns still need to be submitted to HMRC on time and any deferred VAT needs to be paid on or before 31 March 2021. You should ensure any direct debits are cancelled. Any VAT payments due after the deferral period should be paid as usual.

3. Deferral of Income Tax Self-Assessment payments

Second self-assessment payments due on 31st July 2020 can be deferred until 31st January 2021. The deferment is optional and is not limited to those who are self-employed. Like VAT deferrals no applications to HMRC are needed. Penalties and interest will not be charged if payments are deferred.

4. Statutory Sick Pay (SSP) relief packages – small and medium sized businesses (SMEs)

This applies to UK based businesses which are small or medium-sized and as of 28th February 2020 employ less than 250 employees. This scheme will allow up to two weeks’ SSP paid per eligible employee because of Covid-19 absence to be reclaimed (currently £94.25 per week rising from 6th April 2020 to £95.85). You should maintain records of staff absences and payments. SSP is payable from the first day of coronavirus related absence. A GP fit note is not required from employees (usually required for more than 7 days absence). However, if employers require fit notes then those with symptoms can obtain an isolation note from NHS 111 online and those who live with someone can get an isolation note from the NHS website. The scheme is being developed and further details are awaited.

5. Coronavirus Business Interruption Loan Scheme – SMEs

The scheme gives access to a variety of facilities including loans, overdrafts, invoice finance and asset finance for up to 6 years with a value of up to £5 million. The government will cover the first 12 months of interest payments and any lender fees. The government will guarantee 80% on each loan subject to any lender caps as an incentive for lenders. The scheme is accessible via the British Business Bank and 40 commercial lenders including the high-street banks.

Criteria which must be met by businesses includes:

  • must be UK based
  • have a turnover of no more than £45 million per annum
  • have a borrowing proposal which would be viable if it weren’t for the Covid-19 pandemic and the lender considers that the business will be able to trade out short and medium-term difficulty.

There are some sectors which are exempt such as insurers (but not brokers), banks and public-sector organisations. Further details are available here.

There has though been recent media coverage that lenders are requiring additional personal guarantees from business owners allowing lenders to pursue personal assets (excluding main homes). It’s now been agreed by the big four banks (Barclays, HSBC, Lloyds and Royal Bank of Scotland) that they will not take personal guarantees for lending below £250,000. There has also been criticism as to the interest rates being less than attractive. You should ensure that any lending terms are fully considered and seek independent legal advice so you understand the terms of the lending.

6. 12 month business rates holiday – retails, hospitality, leisure and nursery.

Retail Hospitality and Leisure:

Business rates holiday for businesses in England for 2020/2021 tax year. To be eligible

(a) Business is based in England
(b) Business is in the retail, hospitality and/or leisure sector.

Properties that will benefit will be occupied properties that are wholly or mainly used as:

(a) Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
(b) For assembly and leisure
(c) Hospitality, hotels, guest & boarding premises or self-catering accommodation.

There is further guidance available from HMRC and a business rates calculator available here.

No action is required to access the scheme although local authorities may need to reissue bills to provide this service.

Nurseries:

Business rates holiday for nurseries in England for 2020/2021 tax year.

Properties that will benefit from the relief will be those who are:

(a) Occupied by providers on Ofsted’s Early Years Register
(b) Wholly or mainly used for provision of the Early Years Foundation Stage.

No action is required to access the scheme although local authorities may need to reissue bills to provide this service.

7. £10,000 one off business grant funding – small businesses in England

This funding is available from local authorities for businesses which receive small business rate relief, rural rate relief and tapered relief. To be eligible businesses must occupy property and receive the rates specified as at 11 March. Local authorities are in the process of contacting eligible businesses and they should be contacted with any queries.

8. £25,000 grant funding – retail, hospitality and leisure

This funding is available for retail, hospitality and leisure businesses which have property with a rateable value between £15,000 and £51,000. Businesses need to be based in England in the relevant sectors and the business needs to have property with a rateable value less than £51,000. Local authorities are dealing with these grants and contacting those eligible.

Grants are available as follows:

  • Rateable value up to £15,000 – grant of £10,000
  • Rateable between £15,000 and less than £51,000 – grant of £25,000.

9. HMRC Time to Pay Scheme

Any businesses and self-employed people who have outstanding tax liabilities and are in financial distress may be eligible to receive support with tax payments. These are assessed on a case by case basis and you should contact HMRC on 0800 0159 559.

10. Self-Employment Income Support Scheme

This scheme supports individuals who are self-employed, including partners in partnerships who have lost income due to COVID-19. The scheme allows taxable grants to be claimed worth up to 80% of trading profits, up to £2,500 per month for the next three months.

[has anyone done a self-employed scheme update? If so, refer here. If not, further details and eligibility criteria here

11. Other

  • There is a corporate financing facility available for large companies provided by the Bank of England. There is specific eligibility set out on the Bank of England website
  • You should also check your insurance policies to see whether unspecified diseases or pandemics are covered and contact you insurance policy provider.
  • You should make sure you understand the penalties and enforcement measures in place particularly if your business remains open or operational in some way. Please see ‘Coronavirus and the new enforcement powers’
  • There are also various measures in place to assist tenants and landlords (commercial and individuals) with rent holidays and some of these are detailed here ‘Commercial landlord and tenant’ and ‘News for residential landlords’ In particular, it should be noted that tenants will still be liable for rent.
  • Some banks are reaching out to customers to see if they can assist particularly with debts such as credit card repayments.

The measures being implemented are very much ‘works in progress’ and the finer details are being raised. If you are looking to consider any of these measures you should keep up to date with information provided on the gov.uk website which is being updated with details. If you would like to discuss anything in relation to your business and the schemes available to you or if you need assistance with contracts, suppliers, customers etc then please contact us using the ‘question box’ on our website or at commercialdept@woodfines.co.uk

-Anastasia Whitlock

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