COVID-19 Business Support Measures

Victoria Scally News

 Last updated: 6th January 2021

Businesses all over the country are encountering real, painful problems due to the disruption of COVID-19 aka Coronavirus.

The support announcements and COVID-19 business finance measures have been coming thick and fast.

This blog will be updated as more news appears.

The main source of information from the government is located here.

For video guides as the news comes, follow us on YouTube, and view our playlist HERE.

If you haven’t already, we suggest bookmarking the above link, and check back often.

There have been a few additional announcements reflected in this blog:

Broadly the support that is currently being offered is:

‘Lockdown 3.0’ Business Rate Grants

The first support announcement is already here.

If you are in the retail, hospitality and leisure businesses, the grants could be worth up to £9,000 per property. This is to help ‘through to the spring’.

The grants are between £4000 – £9000 depending on the ‘rateable’ value of your property.

For those without property, or not in those industries, there are due to be some other funds being made available to local councils to distribute.

Right now on local councils websites (the place where you will claim this) there are no further detail or news. We’d advise subscribing to their newsletters for updates.

As soon as more news comes we will keep you up to date.

‘Bounce Back’ Business Loans

The loan scheme enables business that have been adversely affected by COVID19 to obtain a six year loan, at a low government fixed interest rate of 2.5% a year.

In year 1 you pay no interest, or repayments.

You then pay the loan in the next five years.

There are no personal guarantees on the loan for limited company directors, and for individuals no recovery action can be take over a principal private residence or main vehicle.

The loan is from £2,000 to £50,000, but a maximum of 25% of your turnover.

You can’t have this if you have already received a loan under the Coronavirus Business Interruption Loan Scheme.

UPDATE: During the Chancellor’s ‘Winter Economy Plan’ announcement, further tweaks were made:

  • You can now extend the term of the loan from 6 to 10 years.
  • Businesses will also have the option to temporarily move to interest only payments for up to 6 months. They can use this option 3 times.
  • Business can pause their repayments entirely for up to six months (you can only use this one, and only after the first 6 payments).
  • How this is practically done has not yet been announced at the time of writing – more as it comes.

From week commencing 9/11 it is expected you will be able to ‘top up’ the loan, if you took less than the maximum. This will be done via your bank.

The application process per bank varies, but this is normally done by logging into your online banking. Barclays for example, you log in and go to the loans section, and the invitation to apply is there. More detail on the loans in these videos:

 

Living off a Bounce Back Loan

Taking Your Loan Straight Out of Your Company

Bounce Back Loans Got Cheaper (Winter Economy Plan Update)

 

 

Support for the Self Employed (this does not cover limited company directors)

Self-employed Income Support Scheme (SEISS)

During the Chancellor’s ‘Winter Economy Plan’ announcement, he added to the below:

  • A third grant has been announced for eligible self employed people.
  • The criteria remains the same, which means if you sadly weren’t eligible for the other grants, you won’t be for this one either. Details on the eligibility in our BLOG HERE.
  • The grant will be for 20% [UPDATE – now 55%) of average monthly trading profits.
  • It will be paid out in a single instalment covering 3 months profits for November 2020 to January 2021.
  • It will be capped at £1875 [Update – now £5160 max].
  • It is expected that you will be able to apply online from 30/11/20.

A fourth grant has been announced for the 3 months covering February 2021 to April 2021. The level of this grant has not been set yet.

The original grant details are:

ANNOUNCEMENT 29th May: The Scheme will be extended with a second grant, worth up to 70% of average monthly trading profits, capped at £6,570. Applications will open in August. More info in OUR BLOG.

  • You can claim a grant of 80% of average monthly trading profits for last 3 years; max £2500 per month. You can claim for 3 months initially.
  • This is for people with the majority (more than half) of their income from self-employment (based on their tax return).
  • This is not claimable if you have average trading profits over £50,000.
  • You must have filed a 2018/19 tax return, have traded in this tax year and be looking to continue next year.
  • If you are late filing your 2019 tax return, you cannot claim the grant. You still need to submit your tax return however!
  • HMRC will write to you to tell you how to apply online. There is no action needed to be eligible.
  • To see if you are eligible you can check on HMRC’s new tool HERE.
  • This will be paid directly into your bank account in one lump sum.
  • This help won’t work if you didn’t do a tax return for 18/19, for example because you became self employed after 6th April 19.
  • There is an online application process that launched on the 13th of May – HMRC are contacting individuals with a specific date from when they can access it. Completing the eligibility tool is the easiest way to start you on the process to claim to grant. The first grant has now closed (13th July 2020).
  • Currently accountants cannot apply for this for you.
  • Money is expected to be paid around 6 working days from application.
HMRC Guidance is HERE.
HMRC Guidance on the second grant is HERE.
HMRC’s FAQ on different circumstances is HERE.
Videos:

Support for businesses through the Coronavirus Business Interruption Loan Scheme

There are potentially cheap loans, overdrafts and invoice finance facilities being offered by the British Business Bank.

They initially were quite restrictive in terms of which businesses can apply for them but this is slowly changing.

They are for £25,000 upwards.

On the 3rd April, the Chancellor has said now that personal guarantees from directors will not be needed for loans up to £250,000. Over this, a guarantee is likely to be needed but only for 20% of the loan (the bit the government isn’t guaranteeing).

There has also been a removal of the need to have effectively been declined for a normal (usually more expensive) loan before you could apply.

Having spoken to some local banks, it appears if your need is under £25,000, you may need to use the normal methods (overdrafts, loans etc) or a Bounce Back Loan.

During the Chancellor’s ‘Winter Economy Plan’ announcement, he added:

  • The government intends to allow lenders of CBILS to extend the term of the loan to up to 10 years.
  • There are no practical details on this at the time of writing.

In order to apply for these, guidance is HERE.

Support for businesses paying tax via the ‘Time to Pay’ service

If you have outstanding liabilities with HMRC you can request further time to pay on 0800 0159 559.
Several clients have used this service and have had great responses.

This seems currently the best way of instantly making yourself more cash-secure, if you have say a corporation tax or PAYE payment due shortly. The rest of the measures are not quick cash flow fixes at this time.

For VAT, you can defer some payments (see below).

Support for VAT payments

HMRC were supporting business by deferring Valued Added Tax (VAT) payments for 3 months.

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020. This was automatic, you did not need to call. The payment will become due on 31st March 2021.

During the Chancellor’s ‘Winter Economy Plan’ announcement, he added:

  • You now have the ability to spread this payment due in March 2021 over 11 equal instalments, over the 20/21 year.
  • Businesses will need to opt in this time. Details on how to do this will be put in place in early 2021.

Support for Employers to pay employees (and Limited Company Directors)

Under the Coronavirus Job Retention Scheme (a.k.a the Furlough Scheme), 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 lockdowns.

The Chancellor announced that the scheme was coming to an end on 31st October, but as part of the ‘Lockdown 2.0’ announcement, has extended the scheme further ‘to December’. Details HERE.

July will allow employees to be part time Furloughed. More details on Flexible Furlough HERE.

The scheme was due to be replaced by the ‘Job Support Scheme’. More details on the Job Support Scheme HERE (Blog to follow)

HMRC will reimburse 80% of ‘furloughed’ (basically laid off) workers wage costs, up to a cap of £2,500 per month. National Insurance and pension contributions paid by the employer on this amount will not be claimable under the current extended scheme. See the links below on how to calculate this.

In order to use the scheme you will need to tell employees they’ve been ‘furloughed’ and then apply for the payment through a new HMRC portal. The current claim portal is awaiting release for the extension.

This claim portal is to be used on or around the date you prepare your payroll. It was possible to do this up to 14 days in advance, but the latest extension may need to be funded by you until the claim is possible.

The money will be paid into a UK bank account 6 days from successful claim. We are seeing this has  been quicker at current (around 4 days). All monies received must be paid to employees and no fees can be deducted by the employer.

Directors

As of the 4th of April, HMRC have said directors can furlough. They have said on ‘full’ furlough you may perform any duties required to fulfil your statutory duties (say filing accounts, returns etc), but no more ‘than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.’

With the introduction of the flexible furlough rules this has been less of an issue.

For a director on say a tax efficient salary of around £8500 a year, this is worth approximately £565 a month.

Furlough Bonus

In the Chancellor’s Summer Statement it was announced that you will be able to claim a £1000 (per employee) bonus for team members who were furlough and then brought back, still on the books as of 31st January. Video with details HERE.

HMRC Guidance

HMRC guidance/details HERE.

HMRC Flexible Furlough guidance HERE

Furlough pay calculator HERE.

How to work out your 80% furlough guidance HERE.

Childcare Providers

If you are a childcare provider, recent HMRC guidance has given some instances where your claim maybe restricted. You should review the guidance HERE.

Support for businesses who are paying sick pay

If you have employees off sick due to self isolation, you can pay them sick pay from day one.

This is reclaimable so there is no cost to you as an employer.

Currently there is no way to offset or claim the repayment; more details are due in the coming months.

If you are cash strapped, one option would to be reduce your PAYE amount by this amount in anticipation of the repayment mechanism.

This is how this type of reclaim used to work previously. If you don’t hand over any PAYE then unfortunately at this time there may be a cashflow strain.

**you may still have debt collection action in the intervening period if you choose not to pay your PAYE**

Kickstart Scheme / up to £2000 Apprenticeship Employer Payments

As part of the government’s ‘A Plan for Jobs’, employers can get an additional payment for taking on eligible apprentices.

If the apprentice is aged 16-24, they will get £2000. If they are 25 and over it will be £1500.

This is in addition to the usual £1000 available for under 19s.

The scheme applies from 1st August.

It was also announced the ‘Summer Statement’ that employers can use the new ‘Kickstart Scheme’ to take on young apprentices (aged 16-24).

For eligible apprentices, the scheme will fund 25 hours a week for a new apprentice (at min wage) for 6 months. This appears to be for those aged 16 – 24 and in receipt of universal credit.

The Kickstart Scheme needs to be applied for through a local service, unless you can take 30 roles yourself.

Details on the scheme and how to apply for them can be read in our blog.

Support for the self-employed who need to pay tax in July

Income Tax payments due in July 2020 are deferred to January 2021. This is really good as it means if you’ve had a big dip in trade, and get your tax return prepared, there is a possibility of not even having to pay the full amount of that payment on 31st January.

We would recommend getting your 19/20 tax return prepared shortly after April to see how this plays out.

During the Chancellor’s ‘Winter Economy Plan’ announcement, he added:

  • The government will give more time to pay taxes due from your tax return in January 2021.
  • Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s ‘Self-Service Time to Pay Facility’ to secure a plan to pay over an additional 12 months.
  • This means that Self-Assessment liabilities originally due in July 2020 will not need to be paid in full until January 2022, as they were part of the original deferral.

Support for businesses that pay business rates

If you are required to close by the lockdown rules, you could be eligible for a grant from your local council.

  • For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
  • For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
  • For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

Currently many councils do not have the application forms live, more details as they come, but follow your local council for updates.

But I don’t fit into any of the above?

At this time there is no further announced support for businesses that don’t fit into the above, other than the Universal Credit system.

Please check back here for regular and further updates as they are announced.

 

 

 

 

 

Historic Announcements and Reliefs for Reference

Support for Employers to pay employees (and Limited Company Directors) – ‘FURLOUGH’ ARCHIVE

Under the Coronavirus Job Retention Scheme, 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. You needed previously a PAYE scheme on or before 19th March (this date was updated 15/4).

ANNOUNCEMENT 29th May: The Chancellor announced a Furlough Extension (until October), and a tweak that from 1st July will allow employees to be part time Furloughed.

The scheme will end in October and will be replaced by the ‘Job Support Scheme’.

More details on Flexible Furlough HERE.

More details on the Job Support Scheme HERE (Blog to follow)

In order to claim for a particular employee, they needed to be on the payroll before 19th of march AND have had a ‘RTI’ submission sent to HMRC (this was added by HMRC to the guidance 15/4). This is normally done around the time a payroll is prepared, so for monthly paid employees it is unlikely anyone starting after 29th February would been eligible. It is more likely a weekly paid employee starting early march will benefit from this change.

HMRC will reimburse 80% of ‘furloughed’ (basically laid off) workers wage costs, up to a cap of £2,500 per month. National Insurance and pension contributions paid by the employer on this amount will be claimable in addition to this. See the links below on how to calculate this.

In order to use the scheme you will need to tell employees they’ve been ‘furloughed’ and then apply for the payment through a new HMRC portal (launched 20th April).

This claim portal is to be used on or around the date you prepare your payroll. It is possible to do this up to 14 days in advance.

Furloughed employees cannot carry out any work for the company during this time, until 1st July. They may attend training. The must be furloughed by a minimum of 3 weeks.

The money will be paid into a UK bank account 6 days from successful claim. We are seeing this has  been quicker at current (around 4 days). All monies received must be paid to employees and no fees can be deducted by the employer.

Claims can be backdated to 1st March and amounts are based on salaries as in their last pay period prior to 19 March 2020. It was previously stated salaries as at 28th February, and the guidance allows this basis still for the first claim. If their salary varies there is further guidance in the HMRC details below.

If you are on an annual payroll scheme (this is often used with directors by many accountants [not us]) that is operating for the first time in the 19/20 year, or you submitted your first monthly payroll data in March, after the 19th, then currently you will be unable to apply for furlough support. The portal will give you an error message.

If you have more than one job you can be furloughed on each. You can carry out another job while on furlough, presuming your employment contract doesn’t restrict you.

Directors

As of the 4th of April, HMRC have said directors can furlough. They have said you may perform any duties required to fulfil your statutory duties (say filing accounts, returns etc), but no more ‘than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.’

For a director on say a tax efficient salary of around £8500 a year, this is worth approximately £565 a month.

From July 1st, if you are still on Furlough, you can become ‘part time’ furlough. Details on this are expected on 12th June.

In the Chancellor’s Summer Statement it was announced that you will be able to claim a £1000 (per employee) bonus for team members who were furlough and then brought back, still on the books as of 31st January. Further details to follow.

 

Support for businesses that pay little or no business rates

If you pay little or no business rates as you receive small business rates relief, you should receive a one off grant of £10,000.

There is no need to apply, you will be contacted by your local authority in April. Many of these letters have already arrived with businesses and have been asked to apply online.

You needed to be registered for rates/Small Business Rate Relief as at 11th March 2020 to be eligible.

Please make sure your business name is correct on your rates bill.

Claim per business is 1 per eligible site.

This will be automatically calculated by your local authority.

Details are now available HERE

Support for businesses that pay business rates

If you are in the retail, hospitality and/or leisure sector you will have no business rates to pay now. You receive 100% relief in 20/21.

This 100% relief has been extended as of the 18th March to Nursery’s on Ofsted’s Early Years Register.

If you are in the retail, hospitality or leisure industry and have a premises with a ‘rateable value’ (find this on your business rates bill) of over £15,000, you will also receive a £25,000 grant. You had to be registered for rates as of 11th March for this to work.

Claim per business is 1 per eligible site.

Please make sure your business name is correct on your rates bill.

This will be automatically calculated by your local authority. There are no timescales currently, but according to the local authority guidance they will receive the money on 1st April.

Details are now available HERE

Video on Limited Company Support:

 

Video update for 21st March:

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