23rd March 2020
There are a number of reliefs, grants and loans available to business and individuals following the latest round of announcements. This is a summary of where we are and what can be done to utilise them.
- Coronavirus Job Retention Scheme.
- Deferring VAT and Income Tax payments.
- Statutory Sick Pay relief package for small and medium sized businesses (SMEs).
- 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England.
- Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief.
- Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.
- Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank.
- HMRC Time to Pay Scheme.
1. The 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.
Designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. They expect this to be up and running by the end of April but claims can be backdated to the date the employee was furloughed going back as far as 1st March.
HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
2. Deferring VAT and Income Tax payments
VAT will be deferred for periods from 20 March 2020 until 30 June 2020, this deferral will happen automatically, no application is required. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
VAT returns still need to be completed and submitted on time.
Income Tax Self-Assessment payments due on the 31 July 2020 will be automatically deferred until the 31 January 2021.
3. Paying sick pay to employees
Small-and medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 covering 2 weeks’ SSP per eligible employee.
The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
4. Business rates holiday
A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
This will be applied automatically to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
5. £10k grant fund
For businesses in the retail, hospitality and leisure sectors with a rateable value of under £15k there is a £10k grant available. Your local authority should write to you if you qualify and they are the ones to contact if you need to check your eligibility.
6. £25k grant fund
For businesses in the retail, hospitality and leisure sectors with a rateable value of £15k to £51k there is a £25k grant available. Your local authority should write to you if you qualify and they are the ones to contact if you need to check your eligibility.
7. Coronavirus Business Interruption Loan Scheme
The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years.
The government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
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 scheme is now open for applications. To apply, you should talk to your bank or finance provider.
All major banks are offering this scheme. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
8. Time to Pay service
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.
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.
Staying in touch
Please feel free to contact your usual Easterbrook Eaton contact(s) via email or by calling the office on 01395 516658 (Sidmouth) or 01404 815646 (OSM).