The UK government has announced measures to support companies affected by the Coronavirus COVID-19 pandemic, learn what the measures are and how you can get assistance.
Many countries in the world have announced drastic stimulus measures to keep companies afloat and help people stay employed. In the UK, the government has also announced a string of measures. Quite a few of these announcements are made in a hurry with an attempt to abate fear first, while the exact processes are being worked out. As a result, the announcements have caused confusion among business owners. In this article, we aim to discuss what we know so far.
Government to pay up to 80% of wages
Known as Coronavirus job retention scheme, this measure is applicable to all UK employers who would otherwise have to lay off their workers during this crisis. A few important points are:
- The government plans to have the grant available by the end of April, although the grant can be backdated to March.
- You (the employer) must first classify the affected employees as furloughed workers and inform your employees accordingly.
- Once the government portal is made available, you can submit the information of your furloughed employees and their wages.
- HMRC will then reimburse 80% of wages of these furloughed workers, up to a cap of £2,500 per month.
Coronavirus Business Interruption Loan Scheme
You probably have heard from small business owners who are worried that they have to shut their business down because they do not have enough short-term cash flow to keep it going. If you are in this situation, explore the temporary Coronavirus Business Interruption Loan Scheme first.
- There are 40 accredited lenders (including major banks) offering this scheme.
- You can access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
- While you must repay the loans, the government will cover the first 12 months of interest payments and any lender-levied fees to help small businesses.
- To be eligible, you must be a UK-based business with a turnover of less than £45 million per year. Your business must also meet the other British Business Bank eligible criteria.
- To apply, talk to your bank now. Alternatively, talk to one of the accredited lenders available on the British Business Bank website.
This is an automatic offer with no applications required. If your business is VAT-registered, you can defer VAT from 20 March 2020 to 30 June 2020, meaning you do not need to make a VAT payment during this period. This is applicable to all UK businesses. Please note that it doesn’t mean you don’t have to pay VAT, you are simply delaying the payment.
Deferring Income Tax payments
This is an automatic offer with no applications required. If you are self-employed, your Income Tax Self-Assessment payments (originally due on 31 July 2020) will be deferred to 31 January 2021. No penalties for late payment will be charged during the deferral period.
Statutory Sick Pay relief
Applicable to UK-based small and medium-sized businesses (with fewer than 250 employees as of 28 February 2020), this relief covers up to 2 weeks’ Statutory Sick Pay (SSP) per eligible employee who has been off work because of COVID-19. How it works is that you (the employer) will have to reclaim expenditure for any employee who claimed SSP as a result of COVID-19. The process to which you can reclaim is still being developed.
Small business grand funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
If you own a small business that pays little or no business rates, your local authority will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
- Your business must already receive Small Business Rate Relief and/or Rural Rate Relief.
- Your local authority will write to you if you are eligible for this grant.
- This will only happen when your local authority has received the money from the government, which is likely to be after 1 April 2020.
A 12-month business rates holiday for all retail, hospitality, leisure businesses in England
If your business is in the retail, hospitality and/or leisure sector, your next council tax (April 2020) should automatically exclude the business rate charge and it should continue to the 2021 tax year. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
Grants for retail, hospitality and leisure businesses
If your business is in the retail, hospitality and/or leisure sector, you can get a cash grant.
- For businesses in these sectors with a property that has a rateable value of £15,000 and under, you can get a £10,000 cash grant.
- For businesses in these sectors with a property that has a rateable value between £15,000 and £51,000, you can get a £25,000 cash grant.
- Your local authority will write to you if you are eligible for this grant once they have received the money from the government. Any questions, contact your local authority accordingly.
Support for nurseries
Nurseries that pay business rates will be eligible for a business rate holiday, which your local authority will re-issue your bill to exclude the business rate charge. Nurseries that will benefit from the relief are:
- Occupied by providers on Ofsted’s Early Years Register
- Wholly or mainly used for the provision of the Early Years Foundation Stage
Time to Pay Scheme
If you have unpaid taxes and your business is struggling due to COVID-19, you can call HMRC on 0800 0159 559 to discuss a payment plan. Please note that HMRC will review each case independently. If you are worried about a future payment, please call HMRC nearer the time.
For more information, check out this gov.uk page. Alternatively, email us on firstname.lastname@example.org if you are worried about VAT, bad debt, and the cash-flow in your business. We are London’s small business accountants and have helped countless entrepreneurs and small business owners to get their finances right. We can help you too.
This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.