Financial Support for Businesses
Coronavirus (COVID-19) – support for business
The Chancellor of the Exchequer has announced a £330 billion package of support for businesses through this period, in close co-ordination with the Bank of England. This includes, business grants, loans to mortgage delays, postponement of IR35 tax reforms and no business rates.
The full text of the Chancellor’s speech on COVID-19 financial support measures can be read here.
Statutory Sick Pay for businesses with fewer than 250 employees
In the Budget, the Chancellor announced that legislation will be brought forward to allow businesses with fewer than 250 employees to reclaim up to 14 days’ Statutory Sick Pay paid for sickness absence due to COVID-19.
The Government have announced:
- A 12 month business rates holiday for all retail, hospitality and leisure businesses in England (More information can be found here)
- Small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief (More information can be found here)
- A 12 month business rates holiday for childcare providers for 2020/21 where premises are wholly or mainly used for the provision of the Early Years Foundation Stage (Check your eligibility here)
- Grant funding available of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 or £10,000 for a rateable value below £15,000.
- An additional £617 million in business rates grants for businesses not covered by previous schemes. These include businesses that operate from shared office spaces, bed and breakfasts that pay council tax rather than business rates, as well as market traders. (More information can be found here)
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch Monday 23rd March to support businesses to access bank lending and overdrafts. These loans will be available up to £5m with NO interest for the first 12 months and the Government will guarantee 80% of the value of the loan. (More information can be found here)
Bounce Back loans are also available for smaller businesses offering 25% of turnover up to £50,000 with NO interest for the first 12 months and the Government will guaranteed 100% of the value of the loan. These loans are designed to be simple to apply for and banks are aiming to transfer funds within 24 hours of approval. (More information can be found here)
As of May 12th, £8 billion worth of Bounce Back Loans and £6 billion worth of Business Interruption Loans has been approved.
VAT will be deferred for the next three months until the end of the financial year. This equates to an injection of over £30 billion of cash to businesses to help businesses pay people and keep them in work. (More information can be found here)
Job Retention Scheme
For the first time ever the Government will help pay people’s wages by offering grants to employers who promise to retain their staff covering most of their wages. The Government will place no limit on these grants. Any employer in the country – large, small, charitable or for profit – who promises to retain their staff, can apply for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off. Government grants will cover 80 per cent of the salary of retained workers up to a total of £2,500 a month which is above the median income. The cost of wages will be backdated to 1st March and will be open initially for at least three months. The scheme will be extended for longer if necessary. (Apply for support through the Job Retention Scheme here.)
Self-Employed Income Support Scheme
The Government will pay self-employed people a grant worth 80 per cent of their average monthly profits over the last three years, up to £2,500 a month for three months although it will be extended if necessary. The scheme will cover three months of an individual’s typical profits so an individual could receive up to £7,500. HMRC will use the average annual profits from eligible individuals’ tax returns for 2016-17, 2017-18 and 2018-19 to determine the size of the grant for each person. The grants are subject to Income Tax and National Insurance so will then be reportable on future Income Tax Self- Assessment tax returns.
Self-employed people who are eligible will be contacted by HMRC directly, asked to fill out a simple online form, and HMRC will pay the grant directly into their bank account. We expect people to access the scheme by the beginning of June. HMRC will also ask people to demonstrate that the majority of their income comes from self-employment, and, to minimise fraud, only those who are already in self-employment, and who have a tax return for 2019, will be able to apply.
The scheme will only be open to those with trading profits up to £50,000. That means 95 per cent of people who are majority self-employed will be eligible for the scheme.
To qualify they must:
– have lost trading profits/partnership trading profits due to COVID-19;
– have filed a tax return for 2018-19 as self-employed or a member of a trading partnership, although the Treasury will make special provision for those who have not filed their return for 2018-19;
– have trading profits of less than £50,000 across three years and more than half of total income comes from self-employment.
An owner-manager’s legal responsibilities as a company director do not disqualify them from being furloughed under the scheme if they would otherwise qualify because they receive a salary through PAYE and meet the other scheme criteria. A salaried owner-manager can continue to act as a director and fulfil their statutory and administrative obligations such as filing accounts, and will still be considered to be furloughed under the scheme if that is all they are doing. This is because the scheme is providing support for those needing to furlough when the business is unable to provide services to their customers during the COVID-19 outbreak. If you are furloughed you are not able to carry out any other works, including operating your company’s payroll. If you do, you cannot be furloughed. However, you are able to furlough for a minimum period of 3 weeks, so for example if you operate a monthly payroll or need to raise invoices, you could, perhaps, furlough yourself for 3 weeks, return to do the payroll or invoices for one week and then furlough yourself again for 3 weeks. You would need to check with your accountant that this is acceptable within the scheme.
Businesses and self-employed people in financial distress may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. The agency has also set up a phone helpline which you can reach at 0800 0159 559.
Further information about financial support for businesses can be found on the Government website here.
Further information about financial support for employers can be found here.