Coronavirus or COVID-19 – now one of the biggest economic emergencies of modern times – continues to take its toll on the world as the UK adapts to a new normality in order to ‘flatten the curve’. With stricter measures enforced by the day so as to halt the trajectory of the virus, the impact of social distancing, self-isolation and a nationwide lockdown has shaken the economy to its core, with many businesses forced to cease trade within the past week alone. Yet while the future has never felt more uncertain, help has been made available for both businesses and the self-employed to hold fast these next few months – increasing the chances of recovery once the very worst is over.
“We are working round the clock to do whatever it takes to protect our people and businesses” – Rishi Sunak, Chancellor of the Exchequer
Available as of this week (March 23rd), the following government-backed proposals will offer ‘temporary, timely and targeted’ support to SMEs throughout the Coronavirus crisis. While we have outlined the next steps for each different element of support, please remember we are working very hard to support all of our clients and we welcome calls or emails if you have a query. If you don’t have a business adviser or accountant, we are also happy to take on new clients at this challenging time.
Coronavirus Interruption Loan Scheme
The government-owned British Business Bank’s Coronavirus Interruption Loan Scheme is now accepting UK-based applicants with a turnover of no more than £45m. Designed to support firms with access to finance worth up to £5m (for up to 6 years), the government will also make a Business Interruption Payment for the first year so as to cover upfront costs; in addition, it will further encourage lenders to support SMEs with a guarantee of 80% per loan, pre-lender cap-dependent.
Next steps: Click here to view the full list of certified finance providers (including all major banks) to discuss your business plan.
Coronavirus Job Retention Scheme
In a bid to support UK businesses in avoiding the ‘unnecessary’ route of redundancies, the Coronavirus Job Retention Scheme will enable HMRC to reimburse up to 80% of an employee’s wage (with a cap of £2,500 per person, per month) when declared a ‘furloughed worker’. A furloughed worker is classed as one who has been asked to stop work (not made redundant) because their employer cannot cover costs due to coronavirus, and they must not undertake any work while furloughed. The employer may choose to pay the remaining 20% of the worker’s wages.
Next steps: Employers wishing to access the scheme must contact HMRC with a designated list of furloughed workers via an online portal (soon to be confirmed). Workers affected by this action must also be notified as to their change in employment status.
VAT and Income Tax Deferral
All UK businesses will see VAT payments automatically deferred for 3 months under this new measure, with self-employed workers also benefiting from postponed Income Tax Payments via the Self Assessment System – now due January 2021 instead of July 2020. While VAT refunds and reclaims will be issued as normal, businesses will have until the end of the 2020/2021 tax year to settle accumulated liabilities.
Next steps: This is an automatic measure, but businesses will need to cancel their direct debit in sufficient time for HMRC to process this change. For self-employed individuals facing financial difficulties, the Time to Pay offer can also support in overcoming any tax liabilities.
Business Rates Holiday (Retail, Hospitality, Leisure and Nursery)
Retail, hospitality, leisure and nursery businesses including shops, restaurants, cafes, drinking establishments, cinemas, live music venues, hotels, guest and boarding premises, self-catered accommodation, places of leisure and assembly, and nurseries based in England will receive a business rates holiday for the 2020/2021 tax year.
Next steps: SMEs can use this business rates calculator to estimate the saving, which will automatically apply to the April 2020 council tax bill. For nursery eligibility, businesses must be occupied by providers on Ofsted’s Early Years Register, for the provision of the Early Years Foundation Stage.
Retail and Hospitality Grant Scheme
Businesses based in England in the retail, hospitality and leisure sectors – with properties of a rateable value between £15,001 and £51,000 – will be eligible for a cash grant of £25,000 under this scheme. For smaller businesses within these sectors, those with a rateable value of £15,000 and under will also be eligible for a £10,000 grant.
Next steps: Any business eligible for the above grant(s) will be contacted automatically by their local authority. Queries regarding the grant should be passed on to your local authority.
Small Business Grant Scheme
For those SMEs paying reduced business rates (or none at all) due to small business rate relief (SBRR), rural rate relief (RRR) or tapered relief, the Small Business Grant Scheme will provide one-off payments of £10,000 to cover everyday business costs.
Next steps: If eligible, small businesses will be automatically contacted by their local authority regarding this grant. It’s worth noting that this is only available to businesses occupying a property.
HMRC ‘Time to Pay’ Scheme
For businesses and self-employed workers paying tax to the UK government, the Time to Pay service supports those in ‘financial distress’ as a result of outstanding tax liabilities. These will be assessed on a case-by-case basis and are dependent on the claimant’s unique circumstances/liabilities.
Next steps: For businesses concerned about missing their tax payment due to the COVID-19 outbreak, HMRC can be reached on this dedicated helpline: 0800 0159 559.
Finally – as previously highlighted in our Budget 2020 article – Statutory Sick Pay (SSP) can now be reclaimed by SMEs in support of absent employees (whether self-isolating or hospitalised) as a result of COVID-19 for up to two weeks. Under the new criteria, those with a workforce of 250 employees or less (as of February 28th 2020) will be eligible, with the government working to launch a repayment mechanism in the coming months. Should evidence be required to cover those employees claiming SSP with physical symptoms, an isolation note can be obtained from the NHS website. For self-isolating employees living with an individual with symptoms, this can be attained via NHS 111 online.
Adams Moore continues to provide support for SMEs through this unprecedented time, and at present remain business as usual. For further guidance regarding the above measures or any future services required, please don’t hesitate to contact the team.