In these unprecedented times, the impact of the Coronavirus will inevitably cause financial uncertainty, and place significant pressure on many businesses and individuals on a global scale. To help support our clients during this critical period, we have issued a number of updates detailing information about the support available for you and your business.

 

If you have any queries relating to any of this information, please get in touch.

The information on this page was last updated on April 9th 2020.


For employers

SME finance

There are concerns regarding how to finance businesses during these difficult and unprecedented times from both a lender and borrower perspective, however it is vital to know there are still options out there viable for those in need of financial relief.

  • Refinancing
    Provides businesses with the opportunity to reorganise financial obligations by replacing or restructuring existing debt, essentially improving financial position
  • Time to Pay
    For businesses that are genuinely struggling to pay their tax liabilities due to cash-flow difficulties, HMRC can allow extra time to pay, subject to meeting specific criteria. More can be found here.
  • Bridging Finance
    A short-term loan that is often arranged within a short time frame to essentially ‘bridge’ the gap between a payment falling due and funds being received or the main source of finance becoming available
  • Fundraising
    Obtaining funding is one way to transform your business’s financial position. From bank lending to grants and asset finance, there are many options available to you and your business, which we can help to secure. Further information can be found here.

This list is not exhaustive, and eligibility depends entirely on the individual circumstances of the business in hand.

Find out more here.

Coronavirus Business Interruption Loan Scheme

Status: Active now 

Announced by the Chancellor during the 2020 Budget, the Coronavirus Business Interruption Loan Scheme (CBILS) is now open for applications and can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

Delivered by the British Business Bank, through 40+ accredited lenders and partners, the Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

Find out more here.

HMRC Time-to-Pay service

Status: Active now.

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. HMRC have set up a dedicated phone helpline to support businesses and self-employed people who are concerned about paying their tax due to coronavirus to get practical help and advice. Up to 2,000 experienced call handlers are available to support businesses and individuals when needed.

Find out more here

Deferring VAT payments

Status: Automatic offer with no applications required.

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to defer the payment until 31 March 2021. VAT refunds and reclaims will be paid by the Government as normal.

Whilst VAT payments are being deferred, you should still aim to file your VAT return on time. If you make your payments on account or by direct debit, we are advising that you contact your bank to temporarily stop the payments as HMRC can not be relied upon.

Deferring Income Tax payments

Status: Automatic offer with no applications required.

After some initial confusion, the Government have advised that all taxpayers under self-assessment will be entitled to a deferment of their 31 July 2020 payment on account until 31 January 2021. The original guidance indicated that this deferment only applied to self-employed individuals.

There will be no requirement to apply for this deferment as it will be automatic, while no penalties or interest will arise in respect of the payment on account during the period to 31 January 2021.

Where individuals do have the funds to make the 31 July 2020 payment by the usual date, they can still make this payment. It may be beneficial to cashflow in the long term, if short term cashflow support isn’t required, because there is no indication that the usual amount payable in January 2021 will be reduced in any way. As such any deferment may significantly increase the amount payable in January 2021.

With this in mind, there may be individuals who have already had a reduction in income for the 2019/20 tax year prior to the difficulties encountered as a result of the floods and COVID-19, but would still prefer to make their payment on account in July 2020 to avoid further cashflow issues down the road.

As such there may be scope to reduce the second payment on account which is due by 31 July 2020 towards the tax liability for 2019/20. We would therefore encourage these individuals to provide us with the information to enable us to prepare their tax returns as soon as possible after the end of the tax year on 5 April 2020.

We would then be able to prepare tax returns before the 31 July 2020 payment becomes due and therefore reduce this payment on account as appropriate.

Filing accounts with Companies House

Companies House have now confirmed businesses may file their accounts up to three months late if affected by COVID-19, to provide some much-needed breathing space in a time where many businesses are facing intense pressure and uncertainty.

There is one caveat – to benefit from the delay, businesses must act before their original filing deadline. If you do not apply for the extension and your accounts are filed late, an automatic penalty will still be imposed.

You are able to apply for an extension online or via post – more information can be found on the Governments website, which you can access by clicking here. Each appeal will be treated on a case-by-case basis under existing poor health policies.

The same extension will apply to submission of the corporation tax return. Under FA 1998, Sch. 18, para. 19(b), a company is not liable to a flat rate penalty for late submission of a tax return if the return is delivered no later than the last day for the delivery of those accounts to the registrar of companies.

Please note: this only protects the company from the fixed penalty. The tax-geared penalty will arise 18 months after the return period, if any tax remains unpaid at the 18-month date.

Find out more here.

IR35 tax reforms postponed until 2021

The extension of the IR35 Off Payroll rules into the Private Sector has been postponed until 6th April 2021.

Whilst for many businesses this will be a welcome development, for others who have already spent a lot of time, money and effort preparing for the changes, there will be an understandable sense of frustration. It is important to recognise that this development is a postponement of the new regime, not a cancellation. The internal processes, that organisations have developed to manage the implementation of the requirements of the IR35 Off Payroll Legislation, will still be required from 6th April 2021. Preparing now, and being aware of the new rules that will impact on ongoing contracts with intermediaries that may still be in place after the 5th April 2021, will save a lot of time going forward.

Find out more here.

Coronavirus Job Retention Scheme

HMRC have announced that the furlough grant portal will be launched on 20 April 2020. All claims under the grant are to be made via this new online portal and not by phone. The furlough grant is an online service.

Under 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. This scheme is available to all employers, there are no requirements.

The Government will fund 80% of furloughed workers wage costs, up to a cap of £2,500 per month, plus the associated Employer NIC and minimum Employer Auto-Enrolment Pension contributions. For full time and part time employees, the employee’s actual salary before tax, as of 28 February 2020, should be used to calculate the 80%. Fees, commission and bonuses should not be included in the calculation. Employers can use this grant scheme at any time during this period.

It is at the employer’s discretion whether to fund the difference of the 20%. The Government statement states that only 80% of employment costs will be funded via the grant scheme. Employer’s National Insurance Contributions and minimum employer Automatic Enrolment Pension Contributions on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

The affected workers will need to be designated as ‘furloughed workers’, and will need to be notified of this change to their employment status, in accordance with existing employment law. Employers will also need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal, which we will keep you updated about as more information is released.

The scheme is available for 3 months from 1st March 2020, and will be extended if necessary.

To apply, employers must:

  • Designate affected employees as ‘furloughed workers’ and notify 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; and
  • 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.

An employee furlough is a mandatory suspension from work and furloughed employees are banned from doing any work on behalf of their employer.

PAYE and NIC will continue to apply as normal on payments to furloughed employees. A grant receipt is taxable income for the business but salary expenses will be offset.

Someone already let go can be brought back and the termination in effect reversed.

National Living Wage/National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Find out more about what you’ll need to make a claim, contractual changes, what happens when the Government ends the scheme, the tax treatment and other important information regarding the Coronavirus Job Retention grant here. 

Find out more from a HR perspective here.

Statutory Sick Pay relief package for SMEs

Small-and medium-sized businesses with fewer than 250 employees can reclaim up to two weeks’ Statutory Sick Pay (SSP) per eligible employee paid for sickness absence due to COVID-19. The rate of SSP is £94.25 for the 19-20 tax year and £95.85 for the 20-21 tax year.

The repayment will cover up to 2 weeks starting from the first day of sickness, starting on or after 13 March 2020, if an employee is unable to work because they have coronavirus or cannot work because they are self-isolating at home. A doctor’s fit note from employees is not required to make a claim.

Employers must keep records of all the statutory sick payments that they want to claim from HMRC for at least 3 years.

Please note: The online service to claim SSP is not currently available to use.  HMRC will announce when the online service is set up, and we will continue to provide updates.

Find out more here.

Grant for recipients of small business rate relief

A one-off cash grant of £10,000 is available for small businesses who are already receiving small business rate relief (generally, businesses with one property with a rateable value < £15,000) and/or rural rate relief, based in England, and occupying property.

The cash grants will be administered by local authorities. Eligible businesses will be contacted by their local authority, though some local authorities have decided to operate an applications process. To speed up the availability of support, Nottingham City Council has asked businesses to provide some brief details to apply for the business support grant by filling out the online form here.

Retail, hospitality and leisure businesses – grants and rate relief

All businesses in the retail, hospitality and leisure sector based in England are eligible for:

  • No rates payable for the 2020-2021 tax year.
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.
  • Grant funding of £10,000 for businesses in these sectors with a rateable value of under £15,000.

There is no action required to apply as the rates relief will apply 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. Your local authority will write to you if you are eligible for a grant.

Business rates holiday for nursery businesses

No rates payable for the 2020-2021 tax year for:

  • occupied by providers on Ofsted’s Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage

There is no action required as the rates relief will apply 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.

Support for Derby businesses

A £47 million financial support and relief package has been announced by Derby City Council, to support the city’s businesses through the current pandemic.

Grants of either £10,000 or £25,000 are available to the almost 4,000 eligible businesses, who will be contacted by the council in the coming week.

Find out more here.

Update on furlough payments available for directors

HMRC have now confirmed that directors, office holders and other non-employed workers can be included in the claims under the furlough grant. However, this is only possible for salary that, prior to 28 February 2020 was included on payroll and subjected to PAYE tax//NIC deductions.

Any income received in other forms, i.e. dividends, is excluded from the furlough scheme.

It has been confirmed that in addition to employees, the furlough grant can be claimed for the following groups, if they are paid via PAYE:

  • office holders (including company directors and directors of Personal Service Companies (PSCs))
  • salaried members of Limited Liability Partnerships (LLPs)

Find out more here.

Access to furlough payments for IR35 Off Payroll workers in public sector

HMRC have now confirmed that the furlough grant scheme is available to the IR35 Off Payroll workers providing services to the public sector clients, if they are unable to continue to provide their services due to Covid-19. This includes those operating out of PSCs, PAYE agencies, and umbrella companies.

If an IR35 worker is not able to provide services due to Covid-19, they should alert their supplier (PSC/agency/umbrella company) explaining why they are unable to work. The supplier then discusses with the end user the possibility of using the furlough grant scheme. The decision on whether to operate under the furlough grant scheme lies with the end user/supplier, not the individual IR35 worker.

HMRC are expecting to be able to release the portal, under which furlough grant claims can be made, by the end of April 2020. The grant scheme is available initially for 3 months from 1 March to 31 May 2020. Under the furlough grant scheme, IR35 workers should be paid 80% of their pay rate up to a maximum of £2,500 per month. This can be backdated to 1 March if the services were not able to be provided from that point due to Covid-19.

Find out more here.

For the self-employed

Self-employed Support Scheme

The Chancellor announced a new self-employed support scheme which gives self-employed workers a taxable grant of up to 80% of average monthly earnings.

Describing it as one of the most generous packages in the world, the support package for self-employed people will run for a minimum of 3 months and will cover 80% of average earnings over the past three years earnings (up to £2,500 per month).

This applies to those who are a self-employed individual or a member of a partnership and:

  • Had a trading profit of less than £50,000 for 2018-19 (or an average trading profit of less than £50,000 over the 3 years from 2016-17 to 2018-19)
  • Earned the majority (more than 50%) of their income from self-employment for 2018-19 (the same averaging alternative as above can apply)
  • Have submitted a tax return for 2018/19
  •  Traded in the year 2019-20
  • Are trading when they apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-19

If you started trading between 2016 and 2019, HMRC will only use those years for which you filed a self-assessment tax return.

How to apply:

You cannot apply for this scheme yet.

HMRC will contact you directly to invite you to apply for the support and it is expected that this grant will be available to be accessed from the beginning of June. Please note that it is being advised that you should not contact HMRC yet. We will be able to provide you with support to make the applications once you have been contacted by HMRC.

Unfortunately, we are aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, please do not respond. HMRC will never contact you out of the blue to ask for these details. 

Further details:

Self-employed individuals who have not yet submitted their tax returns have 4 weeks from 26 March 2020 to submit their tax return and still be eligible for this support. As such they have until 23 April 2020 to submit their tax returns and should act now.

The self-employed are still able to apply for Universal Credit (up to £1,800 per month) and business interruption loans in the interim until the above funding becomes available.

The Government have advised that self-employed individuals will also be entitled to a deferment of their July 2020 payment on account to January 2021. Guidance currently indicates they will not be required to apply for this deferment as it will be automatic. 

Where individuals do have the funds to make the 31 July 2020 payment by the usual date, they can still make this payment. It may be beneficial to cashflow in the long term, if short term cashflow support isn’t required, because there is no indication that the usual amount payable in January 2021 will be reduced in any way. As such any deferment may significantly increase the amount payable in January 2021.

For charities

Chancellor announces aid for charities

During the daily Coronavirus update on 8th April, Chancellor Rishi Sunak announced £750m of funding to help keep struggling charities afloat. Direct cash grants will ensure charities can continue to provide vital services during this time of financial uncertainty.

£370m will go to small local charities, who work with vulnerable people, including those delivering food and essential medicines. This financial support will be provided through the National Lottery.

£360m will be allocated to charities, providing essential front-line services such as St John’s Ambulance, and the Citizens Advice Bureau. Up to £200m of these grants will go to support hospices.

The aim is for charities to receive money in the coming weeks. The application system for the National Lottery Community Fund grant pot is expected to be operational within a similar period of time.

The Chancellor has also stated that the Government will match public donations to the BBC’s Big Night In charity appeal on April 23rd, with at least £20m going to the National Emergencies Trust appeal.