Coronavirus support for businesses

1  VAT PAYMENT HOLIDAY

On 21st March, Chancellor Rishi Sunak announced that The Government will be supporting businesses by allowing them to defer VAT payments for three months.  

The deferral will apply for payments that would normally arise from 20th March 2020 to 30th June 2020, for VAT periods ending February, March and April 2020.

Businesses will be given until April 2021 to pay any liabilities that have accumulated during the deferral period. No penalties or interest will be charged in the deferral period. 

Importantly, HM Revenue and Customs will continue to pay VAT refunds as normal.

What you should do now

The VAT payment holiday will be applied automatically with no application process required. However, you must still file your VAT return as normal as it’s just the payment that is deferred. 

If payments are collected by Direct Debit, businesses are advised to cancel to avoid collection during the holiday period.

Please note – payments due after 30th June will need to be paid as normal

2  CORONAVIRUS JOB RETENTION SCHEME – FURLOUGHED EMPLOYEES

Chancellor Rishi Sunak has pledged that the Government will help businesses financially affected by the coronavirus by paying the wages and safeguarding millions of workers. 

Mr Sunak explained that these “unprecedented measures for unprecedented times” would see HM Revenue and Customs (HMRC) reimburse 80% of workers wage costs, up to a cap of £2,500 per month.

The wage protection scheme will cover the cost of wages, which is related to gross pay, and be backdated to 1st March 2020 (if furloughed from this date) and will initially run for three months but will be extended by the Government if it considers this necessary.  

What you should do now

  • Designate affected employees as ‘furloughed’ workers and notify employees of this change in writing. Employees CANNOT work whilst on furlough leave
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC have intimated this will be available towards the end of April

3  CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME

The Coronavirus Business Interruption Loan Scheme (CBILS) is now available to businesses who need help following disruption to their cashflow as a result of the coronavirus outbreak.

CBILS key features

  • The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years
  • The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender
  • No fee for smaller businesses. Lenders will pay a fee to access the scheme
  • The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments
  • Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
  • At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so
  • The borrower always remains 100% liable for the debt

Is my business eligible for CBILS?

Smaller businesses from any sector can apply for the full amount of the facility. However, to be eligible for a facility under CBILS, any small or medium sized business must:

  • Be UK-based in its business activity, with annual turnover of no more than £45m
  • Have a borrowing proposal which, were it not for the current COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty

What you should do now

Talk to your Relationship Manager at your own bank as this is available via them.

4  BUSINESS RATES AND CASH GRANTS IN SCOTLAND

Economy Secretary Fiona Hyslop has outlined the actions being taken by the Scottish Government to support business during this time:

  • A full year’s 100% non-domestic rates relief for retail, hospitality and tourism
  • £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
  • £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
  • 1.6% relief for all properties, effectively freezing the poundage rate next year.
  • Urging local authorities to relax planning rules to allow pubs and restaurants to operate temporarily as takeaways
  • Extending the go live date for the deposit return scheme to July 2022
  • Halting the introduction of the Visitor Levy Bill

What you should do now

HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. You can now call them on 08000 241222. Opening hours are from 8am to 4pm Monday to Friday.

https://www.gov.scot/news/gbp-1-billion-business-support-fund-opens/

5 – TIME TO PAY ARRANGEMENT FOR PAYE PAYMENTS

All businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.  To be eligible, your business must pay tax to the UK Government and have outstanding tax liabilities.

What you should do now

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

6  SSP RELIEF SCHEME

SSP payments will be paid to employees from day 1 if ill due to COVID-19 up to a maximum of 2 weeks.  Businesses must be UK based and is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

 

CORONAVIRUS SUPPORT – SELF-EMPLOYED

1  SELF EMPLOYED INCOME SUPPORT SCHEME

Chancellor of the Exchequer, Rishi Sunak, has announced “one of the most significant economic interventions” from a UK Government with a much-needed Self-Employed Income Support Scheme, protecting the nation’s five-million-strong army of self-employed professionals. The scheme will also apply to members of partnerships.

This scheme will give self-employed individuals a taxable grant worth 80% of average monthly profits, up to £2,500 a month. Payments are expected to be available by the beginning of June as 1 lump sum instalment covering March to May 2020.

The calculations will be based on individuals’ self-assessment tax returns for the last three tax years, where possible, to obtain a fair and reasonable average.

Those with only one year of trading history will have their income based solely on their most recent self-assessment tax return.  If no tax return lodged, individuals are being urged to apply for Universal Credit.

The scheme will be open to all individuals with trading profits up to £50,000 in tax year 2018/19 or an average trading profit of less than £50,000 from earlier tax years, 2016/17, 2017/18 and 2018/19, and where those individuals derive more than half of their income in these periods from self-employment. 

What you should do now

HMRC will identify and contact eligible individuals in the coming days.

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

2  SELF ASSESSMENT TAX RETURNS 18/19 STILL TO BE LODGED

The Chancellor also provided a lifeline for taxpayers that missed the 31st January 2020 deadline for 2018/19 self-assessment tax returns, with taxpayers given a new deadline of 23rd April 2020.

What you should do now

Arrange for your self-assessment tax return to be lodged without further delay.

3  DELAYS TO INCOME TAX DUE VIA SELF-ASSESSMENT

Payments on account for self-assessment taxpayers due on 31st July 2020 have been delayed until 31st January 2021.

4  DIRECTORS OF LIMITED COMPANIES

The Self-Employed Income Support Scheme applies only to the self-employed or members of a partnership, not directors of limited companies.

HMRC has stated that if you are a director of your own company and are paid through PAYE, then you may be able to get support using the Job Retention Scheme instead. This, however, only covers the salary that you take from your limited company and will not include any dividends that you may receive. 

What you should do now

Speak to your Accountant for advice.

5  MORTGAGE HOLIDAY

If you are experiencing financial difficulties meeting your mortgage repayments because of COVID-19, you may be entitled to a mortgage or rental holiday for 3 months. This includes if you are a landlord whose tenants are experiencing financial difficulties because of COVID-19. If you are a tenant experiencing financial difficulties because of COVID-19, the government will ensure you do not face the threat of eviction for at least 3 months:

  • the government has agreed with mortgage lenders that they will offer repayment holidays of 3 months to households in financial difficulty due to COVID-19
  • this will also apply to landlords whose tenants are experiencing financial difficulties because of COVID-19
  • the offer of a payment holiday can be made available to customers who are up to date with payments and not already in arrears
  • emergency legislation will be taken forward so that landlords will not be able to start proceedings to evict tenants for at least a 3 month period. This applies to private and social renters
  • at the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances

What you should do now

Speak to your lender.

6  PERSONAL LOANS OR CREDIT CARD BILLS

If you are experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19, you should read the following information:

  • the Financial Conduct Authority (FCA) called on lenders to use flexibility built into their rules to support consumers, taking into account customers’ individual circumstances. Many major lenders have already made statements to this effect
  • if you are experiencing difficulties paying back loans or credit card bills because of COVID-19, you should talk to your lender
  • if you agree a payment holiday with your lender, they should record these in such a way that will not impact on your credit score

What you should do now

Speak to your lender.

5  LODGING YOUR 19/20 TAX RETURN EARLY

With the COVID-19 pandemic locking down most of the world, your annual income tax return for the 2019/20 tax year will probably be one of the last things from your mind.

However, under these strange circumstances, the earlier your return is lodged, the earlier you will receive a refund if applicable. 

What you should do now

Speak to your Bookkeeper or Accountant .

HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. You can now call them on 08000 241222. Opening hours are from 8am to 4pm Monday to Friday.

https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

https://www.gov.uk/guidance/coronavirus-covid-19-information-for-individuals-and-businesses-in-scotland

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