Coronavirus business support measures explained

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Coronavirus business support measures explained

Updated 26th March – addition of Help for the self-employed

Updated 26th March – addition of Ban on evictions for commercial tenants

Updated 25th March – addition of 3 month extension for filing business accounts

On Friday 20th March 2020 The Chancellor Rishi Sunak announced measures to help UK businesses and individuals due to the impact of Coronavirus (Covid-19). We have put together our commentary on those measures announced and will be updating this post as and when more information becomes available. Please check www.gov.uk for the very latest.

Whilst many of support schemes are mainly applicable to those businesses with property (e.g. shops, offices, hotels etc) the sections that could be relevant for contractors and freelancers are the deferral of VAT liability, Other Tax Payments (Time to Pay), support for businesses who are paying sick pay to employees.

Contents

Coronavirus Job Retention Scheme

A generous initiative that will allow an employer to “furlough” a worker between 1 March 2020 and 31 May 2020 (although Rishi Sunak has announced this will be extended if needed). This is designed to help employers pay 80% of the salary of those employees that would otherwise have been made redundant during and because of this crisis. This is subject to a cap of £2,500 per month per employee.

Who is eligible?

All UK businesses are eligible including some Limited Company Contractors. The HMRC guidance says:

“Those who pay themselves a salary and dividends through their own company are not covered by the<self-employment> scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.” You can read more about Furloughing as a Limited Company Contractor here.

Furthermore, public sector clients are encouraged to furlough their contractor staff if need be:

“If Contingent Workers are unable to work due to COVID-19, for example, due to sickness, self-isolation, or the temporary closure of offices, they should be paid at 80% of their pay rate up to a maximum of £2,500 per month.”

What will you need to do?

  • Designate employees as “furloughed workers” and notify your employees of this change.
  • 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)

How will the wages payment be calculated?

We don’t yet know on what basis the wages will be calculated for this but we would anticipate this will be based on the February 2020 wages amount.

Hopefully this scheme will ensure that many people who may otherwise have lost their job can continue to earn through this period.

Help for the self-employed

Self-employed workers will be able to apply for a taxable grant of the lower of 80% of average of the last 3 years monthly trading profits or £2,500 a month (whichever is lowest) to help them cope with the financial impact of coronavirus.

Who is eligible?

To be eligible you must have:

  • filed a tax return for the year ended 5 April 2019
  • Had trading profits of less than £50,000
  • Made most of your income through self employment

What will you need to do?

  • Those eligible will be invited to apply by HMRC
  • You’ll complete a simple online form
  • Payment expected to be made at the beginning of June 2020 and backdated to March
  • Self employed can access a business interruption loan in the mean time

Ban on evictions for commercial tenants

Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction. These measures will mean no business will be forced out of their premises if they miss a payment in the next 3 months (April, May and June).

Who is eligible?

All UK businesses renting commercial premises are eligible

What will you need to do?

Discuss with your landlord initially to see if a voluntary arrangement involving rent deferral

In any event, there now exists a legislative backstop to prevent evictions due to lack rent payment

3 month extension for filing business accounts

From 25 March 2020, businesses will be able to apply for a 3-month extension for filing their accounts.

Who is eligible?

All UK businesses are eligible

What will you need to do?

  • Apply online here – it will take around 15 minutes
  • Those citing issues around COVID-19 will be automatically and immediately granted an extension

Deferral of VAT liability

In order to help UK businesses with cash flow over the next few months it has been announced that they can defer VAT payments for three months from 20.03.2020 until 30.06.2020.

Who is eligible?
All UK VAT registered businesses are eligible.

What will you need to do?

  • This is an automatic offer with nothing for you to do in order to claim.
  • Direct Debits – cancel your direct debit with the bank
  • You will still be required to file your VAT return
  • Taxpayers will be given until March 2021
  • VAT refunds and reclaims will still be paid as usual

Deferral of Income Tax payment

A measure to help self employed defer a Self Assessment payment on account from July 2020 to January 2021.

Who is eligible?

All self assessment payers can defer these payments, including directors of ltd companies such as contractors.

What will you need to do?

  • This is an automatic offer with nothing you need to do to take advantage of this. Just don’t make the payment if you are self employed.
  • No penalties of interest for late payment will be charged in the deferral period

Other Tax payments (HMRC Time to Pay)

This is a scale up of an existing scheme (Time to Pay) for businesses and individuals in financial distress. The help offered here is available on a case by case basis and tailored to individual circumstances.

Who is eligible?

Anybody who pays tax to the UK Government and has outstanding tax bills.

What will you need to do?

  • If you have missed a tax payment or are worried you will miss your next one due to Covid-19 then call HMRC’s dedicated helpline: 0800 0159 559.
  • It is always better to talk to HMRC rather than ignoring a tax debt.

Support for businesses who are paying sick pay to employees

In the past SSP (Statutory Sick Pay) has not been recoverable by an employer from UK Government. It was announced that temporary legislation will be put in place to allow employers to reclaim SSP for the first 2 weeks for employees off work due to Covid-19.

Who is eligible?

UK based employers with fewer than 250 employees at 28 February 2020.

What will you need to do?

  • 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.
  • Employees can get £94.25 per week SSP
  • Includes quarantined individuals
  • Paid from day 1 rather than day 4 if due to Covid-19
  • Applies retrospectively from 13 March 2020
  • Directors of ltd companies with less than 250 employees can pay themselves two weeks SSP (£94.25 per week) if they earn at least £118 per week.
  • Self employed are not eligible for SSP but can claim Universal Credit or Employment and Support Allowance payable from day 1 of sickness rather than day 8. The earnings floor has been removed.

Support for retail, hospitality and leisure businesses that pay business rates

A business rates holiday for all businesses in the retail, hospitality and leisure industry. So no business rates to pay for April 2020 to March 2021.

Who is eligible?

A business based in England that is in the retail, hospitality and/or leisure industry. This includes shops, restaurants, cafes, drinking establishments, cinemas and live music venues, for assembly and leisure and hotels, guest & boarding premises and self-catered accommodation.

What will you need to do?

  • This will happen automatically and eligible businesses will have their bills reduced to zero.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in that sector with cash grants of up to £25,000 per property. Businesses with a rateable value of under £15,000 will receive a £10,000 grant. Businesses with a rateable value of £15,001 to £51,000 a grant of £25,000 will be received.

Who is eligible?

A business based in England that is in the retail, hospitality and/or leisure industry. This includes shops, restaurants, cafes, drinking establishments, cinemas and live music venues, for assembly and leisure and hotels, guest & boarding premises and self-catered accommodation.

What will you need to do?

You do not need to do anything. Your local authority will write to you if you are eligible.

Support for nursery businesses that pay business rates

A business rates holiday will be introduced for all nursery businesses. So no businesses rates payable for April 2020 to March 2021.

Who is eligible?

English based nurseries that are on Ofsted Early Years Register.

What will you need to do?

This will be an automatic reduction in business rates for eligible businesses and you should receive a new bill from your local authority.

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.

Who is eligible?

A business based in England that occupies property and already receives small business rate relief or rural rate relief.

What will you need to do?

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

Coronavirus Business Interruption Loan Scheme

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

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) 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.

Who is eligible?

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

What will you need to do?

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from early next week commencing 23 March.

Insurance

Most businesses are unlikely to be covered but businesses that do have cover for both pandemics and government-ordered closure should be covered, as 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 are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

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