With a large number of businesses in the UK now shut in accordance with government guidelines to help manage the Covid-19 pandemic I wanted to summarise the measures currently in place to help businesses.
We are still waiting for more details on all the different options so for up to date advice the best place to look is the government website here – https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
Here’s what we know for now:
Job Retention Scheme
The government will reimburse employers 80% of the pay for any employees that would otherwise be laid off. The employee must be furloughed and will not be allowed to do any work while using the scheme.
HMRC will be setting up a portal to administer this. In the mean time you will need to write to any employees letting them know that you intend to use the scheme. Please let me know if you would like a template letter for this.
It is not yet clear whether Directors will be able to use the scheme.
The employee would need to have been in your employment at 28 February 2020 to be eligible.
The funding is not likely to come through from HMRC until the end of April, but can be backdated to 1st March where applicable.
Deferring VAT and Income tax payments
VAT payments due between 20 March and 30 June are being deferred. Payment will be due by the end of the tax year (5 April 2021). You do not need to apply for the scheme, but if you currently pay by Direct Debit this will need to be cancelled.
The July 2020 income tax payment on account has been deferred to 31 January 2021. It now applies to everyone, not just the self employed. You don’t need to apply, it will be automatic. If you are able to pay you should.
Support with sick pay for employees
HMRC will refund up to 2 week SSP (statutory sick pay) per eligible employee off work because of Covid-19 for businesses with less than 250 employees. The system to issue these refunds is still being developed.
Business rates
There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/21 tax year. You don’t need to do anything, the local authority should reissue your bill if you are eligible.
Nursey businesses will also have a business rates holiday for the 2020/21 tax year.
Grants
Businesses in the retail, hospitality and leisure sectors will be eligible for a grant of up to £25,000. These are being administered by the local authority and apply to businesses with a property registered for business rates. If the property has a rateable value of up to £15,000 the grant will be £10,000 and if the rateable value is between £15,000 and £51,000 the grant will be £25,000.
Businesses registered for business rates currently claiming small business rate relief of rural rate relief will be eligible for a grant of £10,000. Your local authority should write to you if you are eligible.
Business Interruption Loan Scheme
The government will provide lenders with a guarantee of 80% on each loan to encourage lenders to provide finance to small and medium sized businesses. The application will be through your business bank. The government will cover the first 12 months interest payments and any lender-levied fees.
Time to Pay your tax liability
If you are struggling to pay any tax liabilities due because of Covid-19 you can call HMRC on 0800 0159 559 to arrange a time to pay arrangement.
Insurance
If you have business interruption insurance, check the terms and conditions to see whether you will be eligible to claim.
Tenants
Whilst rent will still be due to landlords, the government are ensuring that tenants will not be evicted due to missed payments up until 30 June.
Universal Credit
Until further measures are announced for the self employed you should apply for universal credit if you are expecting to struggle financially. There are currently long waits to get through, but it gets backdated to the date you apply, so the sooner you do it the better. The amount you get will depend on your personal circumstances. If you have a partner still earning or savings you may not be eligible based on the current rules.
Mortgage holidays
If you won’t be able to pay your mortgage you can ask your bank for a mortgage holiday. You will still be accruing interest. Some banks have set up online systems for this. Given a large number of people applying for this, some banks are struggling to cope with the number of calls they are receiving.
What can we do while we wait to find out more?
Despite this being the most generous package of financial support ever offered by the government, there will still be people who fall through the cracks and don’t have enough support. If you are in this situation the best thing to do for now is discuss your situation with anyone you are likely to owe money to and see if they can give you a break with payments. I’ve heard of software companies offering payment breaks of 3 months to help freelancers through this time and council tax being deferred.
Having a cash flow forecast for your business is always a good idea, but it’s even more important at times like this. I have provided a free downloadable template on my website here – https://www.hasslefreeaccountsandtax.com/downloads/ but please let me know if you would like any help.
Try to get your bookkeeping as up to date as possible, in case those figures are needed to prove your income for any of the schemes available.
Companies House will be allowing companies to extend their companies house filing deadlines for up to 3 months if they have been affected by the pandemic, however you should still do everything you can to comply with normal deadlines.
If anyone would like to have a chat about what they need to do you can book in an online meeting with me here https://www.hasslefreeaccountsandtax.com/book-a-meeting/. I will be open as usual throughout the pandemic, but am currently dealing with a large number of queries and therefore prioritising urgent deadlines and businesses struggling through the pandemic.
Take care of your health first and stay home whenever possible.