It’s already clear that the economic impact of the coronavirus outbreak will be felt long after the pandemic has passed, with the UK government unveiling a package of financial support for businesses on a level never seen before.
At Parker Andrews, we recognise that the most important thing for businesses in this time of crisis is to know how and where to get the support they need. With that in mind, here is a rundown of the various schemes the government has put in place to help businesses through the coming months.
Coronavirus Job Retention Scheme
In an unprecedented move, the government is helping businesses pay the wages of any employees who have been asked to stop working but are remaining on a company’s payroll, otherwise known as ‘furloughed’ workers.
Under the Coronavirus Job Retention Scheme, HMRC will reimburse 80% of employees’ wages, up to £2,500 per month, to protect workers from being made redundant. The scheme covers the cost of wages backdated to 1 March and is initially open to businesses for three months, but this will be extended if necessary.
The government’s official guidance provides further information on the scheme, including eligibility criteria. The online service allowing businesses to make a claim is expected to be launched by the end of April.
Coronavirus Business Interruption Loans
Through the temporary Coronavirus Business Interruption Loan Scheme, UK-based SMEs can apply for loans, overdrafts, invoice finance and asset finance of up to £5 million, and for up to six years. Backed by the government-owned British Business Bank, the scheme will be delivered by 40 accredited lenders, including all major banks.
The government will provide lenders with an 80% guarantee on every loan, and will also make a Business Interruption Payment to cover the first 12 months of interest payments and fees, ensuring small businesses can benefit from no upfront costs and lower initial repayments.
To apply for a loan through the scheme, businesses simply need to contact one of the 40 accredited finance providers, as listed on the British Bank Website.
Support for larger companies is available through the Covid Corporate Financing Facility. The scheme is now open for applications, with eligibility criteria outlined on the Bank of England website.
Self-Employed Income Support Scheme
On 26 March, Chancellor of the Exchequer, Rishi Sunak, revealed the measures being taken to support the self-employed during the Coronavirus outbreak.
The Self-Employed Income Support Scheme (SEISS) is available to individuals such as plumbers, electricians and hairdressers – as well as members of partnerships – who have lost income as a result of the pandemic. It provides a taxable grant worth 80% of average trading profits for the past three years, up to a maximum of £2,500 per month for three months, this may be extended depending on Government advice.
HMRC will contact anyone who is eligible for the scheme when it is launched, inviting them to apply online.
Business rates support for retail, hospitality and leisure businesses
The government has set out a package of support for all the pubs, restaurants, cafes, shops, hotels and other businesses in the retail, leisure and hospitality sectors that have had to close their doors as a result of the COVID-19 outbreak.
As well as a business rates holiday for the 2020 to 2021 tax year, cash grants of up to £25,000 per property will be available through the Retail and Hospitality Grant Scheme. The grants are available to businesses in England with a rateable value of up to £51,000. An additional Small Business Grant Scheme is offering a one-off grant of £10,000 to small businesses that already benefit from rate relief.
Similar schemes have also been introduced in Wales, Scotland and Northern Ireland, with the hope that businesses in the retail, hospitality and leisure sectors aren’t forced to close permanently because of the crisis.
Support for businesses paying sick pay to employees
The government has brought forward legislation allowing SMEs with fewer than 250 employees to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The refund will cover up to two weeks SSP per eligible employee who has been off work as a result of contracting the virus.
Businesses will be eligible for the scheme as soon as the legislation comes into force. The government is to work with employers over the coming months to set up the repayment mechanism as soon as possible.
VAT and Income Tax deferrals
Businesses that have a VAT payment due between 20 March 2020 and 30 June 2020 have the option of deferring their payment for three months, with further support available through HMRC’s Time to Pay service.
Income Tax payments due on 31 July 2020 may be deferred until 31 January 2021. Any business is eligible for deferment (not just the self-employed), and there will be no penalties or interest for late payment.
We are here to help
If you require any advice, or simply wish to discuss your options with a member of our team, please don’t hesitate to get in touch. While the current situation is unprecedented, we are very familiar with the challenges it presents, whether for a sole trader or a larger company.
We would also strongly advise all companies to read the government’s official guidance on what they can do to prevent the spread of COVID-19.