COVID-19: Government Support for Business

In today’s blog, here at Tulip Thistle Accountancy, we are outlining the Government Support Package available for Businesses in the current COVID-19 (Coronavirus) crisis.

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The package of measures to support businesses includes:

  • Coronavirus Job Retention Scheme: 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. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month
  • Deferring VAT and Income Tax payments:
    • VAT
      • the deferral will apply from 20 March 2020 until 30 June 2020.
      • All UK businesses are eligible.
      • This is an automatic offer with no applications required.  Any liabilities that have accumulated during the deferral period need to be settled by the end of the 2020 to 2021 tax year. VAT refunds and reclaims will be paid by the government as normal
    • Income Tax
      • For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021
      • If you are self-employed you are eligible. This is an automatic offer with no applications required.
      • No penalties or interest for late payment will be charged in the deferral period.
  • A Statutory Sick Pay (SSP) relief package for Small and Medium Enterprises (SMEs): applies to small-and medium-sized businesses and employers
    • This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
    • Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
    • Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result 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 online and those who live with someone that has symptoms can get a note from the NHS website
    • Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
    • The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
  • For Scotland the following Non-Domestic Rates package has been announced:
    • 1.6% rates relief for all properties across Scotland, effectively reversing the planned below inflation uplift in the poundage from 1 April 2020
    • Retail, hospitality and leisure businesses will get 100% rates relief. To get this relief, a property has to be occupied.
    • Grants: Retail, hospitality and leisure businesses with a rateable value between £18,000 and up to and including £51,000 will be able to apply for a one-off grant of £25,000.
    • Support for business that pay little or no business rates:
      • A one-off grant of £10,000 will also be available to small businesses who get:
        • Small Business Bonus Scheme relief
        • Rural Relief
    • attached website provides further detail on Non-domestic Rates & Grant support packages: Scottish Government Rates Support for Businesses
  • The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
    • A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch this week to support 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 not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
    • You are eligible for the scheme if:
      • your business is UK based, with turnover of no more than £45 million per year
      • your business meets the other British Business Bank eligibility criteria
  • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • HMRC Time To Pay Scheme:
    • All businesses and self-employed people 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. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.
    • 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. If you’re worried about a future payment, please call them nearer the time

Here is a link providing further detail on the above schemes, including details on eligibility and how to apply etc.

Guidance to Employers and Business

In addition from a more personal financial perspective, here is some other relevant information:

Most self-employed people will not be entitled to Statutory Sick Pay (similarly those earning below the Lower Earnings Limit of £118 per week are also not eligible). If you have COVID-19 or are advised to self-isolate, you can now more easily make a claim for Universal Credit (UC) or new style Employment and Support Allowance. If you are self-employed and receiving Universal Credit and you have COVID-19 or are advised to self-isolate, the requirements of the Minimum Income Floor will be temporarily relaxed. This change took effect on 13 March and will last for the duration of the outbreak, to ensure that self-employed UC claimants will receive support.

If you need to claim Universal Credit but have COVID-19 or are self-isolating, you will now be able to claim and to access advance payments upfront without needing to attend a Job-centre Plus.

If you are eligible for new style Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to self-isolate.

For more information on how to claim, please visit Universal Credit and Employment & Support Allowance

Financial Difficulties

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
  • customers who are concerned about their current financial situation should contact their lender at the earliest possible opportunity to discuss if this is a suitable option for them
  • 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

If you are experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19, please 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

Attached link provides further information

Support for those affected by COVID-19

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What should I do next?

It goes without saying that you should follow all Government guidelines for you, your family, co-workers, employees, customer and community interaction.

From a business perspective I would recommend the following steps:

  1. Work out your total expenses for the next three months (including salaries/wages)
  2. Identify your estimated sales over the next three months (if any)
  3. Using 1 & 2 as well as you current bank balances, work our your Cash position
  4. Get your team involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues
  5. Agree extended payment terms with suppliers in advance
  6. Review your debtors list and contact your customers to get information on when you will be paid
  7. Talk to your bank if you have loans or an overdraft
  8. Apply (if necessary) for Government and Bank Support
  9. Above all maintain relationships with your customers & suppliers and try to come to an arrangement which is manageable for both parties

This is a time of great uncertainty and the situation is changing daily but help is available & by taking action now to work out where your business is, you can plan for the future and get clear on the next steps for your business.

Until the next time!

Contact us

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Charles Donkers (ACMA), Tulip Thistle Accountancy

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