With the pace of the Covid-19 pandemic accelerating in the UK, new Chancellor Rishi Sunak has introduced a raft of measures designed to help businesses, their employees and the self-employed. Here’s the lowdown on the latest government support schemes. Clearly, we are living in unprecedented times. What follows is our understanding of the current measures, and we will do our very best to keep our clients updated on any future changes the Chancellor announces.
Self-employed
After initially suggesting the self employed would have to rely on Universal Credit, the Chancellor later announced The Coronavirus Self Employed Income Support Scheme, which will allow those eligible to receive 80% of their average earnings over the last three years, up to a maximum of £2,500 per month. The scheme will be available from the start of June.
Although this was welcomed by both the unions and the Federation for Small Business, there remain plenty of cracks that self-employed people can fall through. To give just one example, someone who has taken advantage of capital allowances to invest heavily in plant and machinery and thereby shown a loss in two of the last three years.
Businesses
Wages and Salaries
The Coronavirus Job Retention Scheme is designed to help businesses pay wages. The measure is backdated to 1st March 2020 and allows businesses to apply for grants up to £2,500 a month, to cover 80% of the wages of those ‘retained but not working.’ In order to access the grant, businesses must furlough employees – meaning they remained employed but on paid leave until business recovers.
Employees should be notified of this change (which is still subject to existing employment law and could be open to negotiation) and then submit information about the furloughed employees to HMRC through an online portal. At the time of writing, HMRC are reported to be ‘working urgently’ to set up a system for reimbursing employers.
VAT and Corporation Tax
VAT for all businesses will automatically be deferred until the end of June. VAT refunds and reclaims will be paid as normal during this period. Individual taxpayers will be given until the end of the 20/21 tax year to pay any liabilities that have accumulated during the current deferral period.
HMRC have also ‘scaled up’ their time-to-pay offer for companies and individuals who are in temporary difficulties due to the Covid-19 outbreak. This applies to VAT, Corporation Tax and income tax liabilities and can be discussed on this hotline: 0800 0159 559.
Income Tax
If you are liable to make payments under income tax self-assessment, any payments due on 31st July 2020 can be deferred until 31st January 2021. This automatically applies to everyone who is self-employed and no interest or penalties for late payment will be charged during the deferral period.
However, all tax will need to be paid eventually, so bear this in mind. HMRC are suggesting you should complete your 19/20 tax return as quickly as possible after 5th April 2020. If you need time to pay, we suggest taking action sooner rather than later.
Business Interruption Loan Scheme
This scheme is designed to give lenders further confidence in lending to SMEs, with the Government providing lenders with a guarantee of 80% of each loan. The Government will not charge businesses or banks for this guarantee, which will support loans of up to £5m in value. The loans will be interest free for 12 months. Contact your bank directly, or via this dedicated website which contains more information on both eligibility and restrictions.
Business Rates Grants
There will be three different grants available for businesses who pay business rates:
- Business rates holiday for retail, leisure and hospitality businesses
Businesses that received the retail discount in the 19/20 tax year will be re-billed as quickly as possible by their local authority. You are eligible for this business rate holiday if a) your business is based in England b) your business is in the retail, leisure or hospitality sector and c) it is wholly or mainly used as a shop, restaurant, pub, café, leisure or live music venue. Hotels, guest houses and self-catering accommodation also qualify. You do not need to take any action, the holiday will be applied to your council tax bill for April 2020. If you have already received this, your local authority will re-issue the bill as soon as they can.
- Cash grants for retail, leisure and hospitality businesses
The Retail and Hospitality Grant Scheme provides businesses in this sector with a cash grant of up to £25,000 per property. Businesses with a rateable value under £15,000 will receive a grant of £10,000, while businesses with a rateable value up to £51,000 will receive the higher grant of £25,000. If you are eligible, your local authority will write to you.
- Support for businesses that pay low or no business rates
Finally in this section, the Government will provide Small Business Grant Scheme funding for small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will be a one-off grant of £10,000 to help businesses meet their ongoing business costs. Businesses are eligible if they are based in England, occupy premises and already receive SBRR or RRR.
