Patricia Grant Bcom CA
Stephen Grant BCom CA
Karen Szotek BSc ACCA
The following is a summary of the main sources of financial assistance available to help businesses through the Covid-19 crisis as of 27 March 2020. We will try to keep this page up to date with new developments as they occur.
If you are VAT registered you will be due to pay VAT at the beginning of April, May or June. You do not have to make these payments although you will be expected to make up the shortfall by March 2021. You must submit your VAT return in the normal way within the usual timescale. You do not have to do anything else, just don’t make any payment. If you have a direct debit set up then you may need to cancel this with your bank and restart in time for the next quarter.
Grants may be available directly from your local authority. Small businesses eligible for small business rates relief can apply for a grant of £10,000. For businesses in the hospitality/leisure sector the grant is £25,000 if their rateable values are between £18,001 and 50,999. Go to your local council website to make an application.
Where an employee is sick or in self-isolation as a result of exposure to Covid-19 then SSP is payable from the first day of absence with no “waiting days”. The government will reimburse employers for the first 2 weeks of SSP in this instance. This reimbursement will be claimed through a new online portal which will be available in a few weeks. In the meantime, good records of SSP paid in these circumstances must be kept.
A grant of 80% of employment costs will be paid to employers in respect of furloughed employees. Furloughed members of staff must not work for the employer during the period of the furlough. All UK businesses are eligible “whether small or large, charitable or non-profit”. The scheme is backdated to 1 March 2020 although employers will only be entitled to apply for a grant for the actual period of furlough. Only employees on the payroll at 29 February can be furloughed. The minimum period of furlough is 3 weeks. Grants will usually be based on the actual pay of the employee as at 28 February with special provisions for those whose earnings vary. Pay for this purpose includes employer NI and minimum employer pension contributions but does not include commission or bonuses.
Employers will have to formally advise staff that they are to be furloughed and the staff are entitled to refuse. The government guidance states that the employer must pay at least 80% of pay during the furlough but there is still some confusion over the effect of this on individual employment contracts if no right of furlough or lay-off is included. Employers can choose to make up the difference between the grant and full pay. Both the employee payments and the grant receipts are taxable in the usual way. Payroll will be operated in the normal fashion, on the normal timetable, including RTI submissions. It would be wise to record “furlough” pay under a separate pay category on the payroll so that claims are easy to facilitate and readily evidenced.
Grant claims under this scheme will, in due course, be made through a new online portal. This will not be available for some time and businesses with cash flow difficulties may need to avail themselves of the loan facilities offered under the CBILS (below).
The Coronavirus Business Interruption Loan Scheme (CBILS) is available to small businesses through a variety of lenders including the high street banks. Application for assistance should be made directly to lender and can be for loans, overdrafts or other finance facilities.
If you completed a tax return for 2018-19 and are due to pay an instalment of income tax on 31 July 2020 you may now delay this until 31 January 2021. Again, this is an automatic entitlement and you don’t need to do anything. It is optional so if you are able to make the payment you may choose to do so.
A grant will be provided to support self-employed individuals or partnerships, worth 80% of their profits up to a maximum of £2,500 per month. Like the JRS, the scheme will be open initially for a period of 3 months up to the end of May. Profits will be calculated by reference to your profits in the last 3 years of trading as declared on your tax returns. If you have been trading for less than 3 years then the shorter period will be used as long as you have at least submitted a tax return for 2018 / 19 showing your self-employed income.
You will only be eligible if you have lost trading profits due to Covid-19. You will not be eligible if your average income exceeds £50,000 per annum or if self-employment is not your main source of income (ie >50%).
HMRC are developing the scheme and will contact eligible individuals once the scheme is operational. You should not try to contact them at the moment. It is expected that the first payments will be made in June. The grant will be taxable as income from self-employment.
Exceptionally, the self-employed can currently claim the basic level of Universal Credit. It appears that application will need to be made through gov.uk and you are likely to be entitled to £94 per week. This is the area of support over which there is the greatest uncertainty and further announcements are expected.
The Scottish government have announced that all business will receive a 1.6% rate rebate in 2020 / 21 effectively eliminating the planned increase for the year. Hospitality businesses will be entitled to a 100% rebate matching the arrangements south of the border.