Help for Businesses & Self-employed During Covid
Lisa Oliver, Associate at LHP, 21 March 2020
We want to ensure you are kept up to date with the latest guidance and information from the government, and we will do what we can to provide you with any updates and information, as and when we receive it. On the Friday, Rishi Sunak announced additional measures to help smaller businesses and the self-employed affected by COVID-19. These are summarised below.
Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise been laid off during the crisis. All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. All UK businesses are eligible and in order to access the scheme, you will need to:
- 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)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
A big worry for small businesses has been the looming VAT payments, which will be due by 7 April, 7 May or 7 June, depending on when your VAT quarter falls.
All business in all sectors are eligible for this, and this is an automatic offer with no applications required. Businesses will not need to make a VAT payment for the period to 30 June 2020. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. For any businesses who are usually in a repayment position, be reassured that VAT repayments will be paid by the government as normal. There is a real incentive therefore to get these VAT returns in as soon as possible.
Income tax payments
Income tax payments on account due by 31 July 2020 for the self-employed will be deferred until 31 January 2021. This will be automatic, so no applications required and there will be no interest or penalties.
Statutory Sick Pay (SSP)
Small-and medium-sized businesses and employers will be able to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because 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. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 and those who live with someone that has symptoms can get a note from the NHS website.
You are eligible for the scheme if:
- your business is UK based
- your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch on Monday 23rd March 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 also cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million.
Support for businesses that pay business rates
The Welsh Government is matching the support offered by the UK government to give a business rates “holiday” for a year for those in the retail, leisure and hospitality businesses.
A business rates retail holiday for retail, hospitality and leisure businesses will be introduced for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £12,001 and £51,000.
There will also be a £10,000 grant to all businesses eligible for Small Business Rates Relief with a rateable value of £12,000 or less.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.
Businesses that 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.
Cash flow and accounting information
Whilst the majority of the above assist with short term cash flow issues, it is important to note that this will have knock on effects on future cash flows. Never has there been a more opportune time to get up to date and understand your business needs.
Whilst there has been a VAT repayment holiday, it is really important VAT returns are still prepared on time and submitted, so the business can prepare for these payments later in the year.
If you are due a VAT repayment, then it is even more important to submit your VAT return as soon as possible as this will aid cashflow by ensuring your VAT refund is received in a timely manner.
LHP can continue to help you and assist with utilising your management information. If you are already using a cloud accounting software, we can work with you to look at future cash flow and tailor reports for you to use.
If you are not currently using a cloud based system, then there has never been a better time to get this sorted. We will still be working remotely and can help you to understand this by providing online training and assistance whilst you get to grips with it.
Please do get in touch, we can also offer online video conference catch up sessions to chat through the options available for your business specifically, or just o have a quick catch up over a virtual drink!