SUMMARY OF GOVERNMENT SUPPORT TO BUSINESS: COVID-19
The last seven days have been like no other in the history of UK business. The uncertainty for businesses, employees and the self-employed, as a result of COVID-19, has put their very future at risk.
The UK Government has responded with an unprecedented level of support to protect businesses and individuals. This support has been released on a daily and increasing basis.
As a small business we have found it difficult to collate all the support available and we are sure many other businesses are having the same problems. We have studied the announcements from the Government and have produced this document as our summary of the practical help available to businesses.
Our business is built on the principles of supporting our staff, our clients and the local community. We are distributing this document to help businesses and individuals to understand the support that may be available for them. We are not qualified to provide detailed financial advice, but we hope you find this document useful. If it helps just one business to steer its way through these difficult times, it will be worthwhile.
1. GRANTS AND RELIEFS
The support available in this section is available and will not need to be repaid in the future.
1.1 BUSINESS RATES HOLIDAYS
• No business rates are payable for 2020-21 tax year for any business in the retail, hospitality or leisure sectors
• If you are in the retail, hospitality or leisure sectors and your rateable value is between £15,000 and £51,000 you will receive a cash grant of up to £25,000 per property.
• Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000. This has increased from the £3,000 announced in the Budget on 11th March 2020.
• The business rates holiday and the cash grants will be administered by Local Authorities. They are to be delivered automatically with businesses not needing to apply for them. Although no firm date has been given, it is expected the cash grants will be paid by the Local Authorities direct to the qualifying businesses in early April 2020
1.2 CORONAVIRUS JOB RETENTION SCHEME
The Government has agreed to give a grant that will cover 80% of the salary of PAYE employees who would otherwise have been laid off due to the economic impact of COVID-19. The Government is, by agreeing to pay 80% of the salaries of employees who would have been laid off, encouraging employers to retain staff so they can be come back to work once the worst of the COVID-19 has passed.
The scheme is open to any employer in the UK. The scheme will cover the cost of wages backdated to 1st March 2020. The scheme is due to be open before the end of April 2020 and will continue for at least three months. To qualify a worker must have been in employment with a business on 28th February 2020.
To make a claim under the scheme employers will need to:
• Designate affected employees as “furloughed workers” and notify the employees of this change; and
• Submit information to HMRC about the employees that have been furloughed and their earnings. A new online portal is being setup by HMRC for this purpose. HMRC are to detail any further information they require.
• HMRC will reimburse 80% of furloughed workers wage costs up to a cap of £2,500 per month.
• Employers can decide to fund the 20% shortfall of a furloughed worker’s pay, but this is purely voluntary.
As this scheme was only announced on 20th March 2020 and there is currently no HMRC system available to facilitate payments to employers, we are expecting it to be operational by the end of April 2020 at the earliest.
2. BUSINESS AND INDIVIDUALS WORKING CAPITAL SUPPORT
The support detailed below will assist businesses and individuals to improve their working capital position by delaying payments, but the liability deferred will need to be repaid in the future.
2.1 HMRC TIME TO PAY
HMRC has a Time to Pay scheme to assist businesses or individuals in temporary financial distress to delay the payment of outstanding tax liabilities. It has set up a dedicated COVID-19 helpline to talk to any business or individual having difficulty in paying its outstanding tax liabilities as a result of COVID-19. The Government has stressed HMRC will be supportive of requests from businesses or individuals for payment holidays or deferred payment arrangements. No interest or penalties are to be charged on such deferred arrangements.
The dedicated COVID-19 helpline is 0800 0159 559. Any business or individual contacting HMRC on this number may take a while to be connected due to the volume of work and the shortage of HMRC staff available.
2.2 VAT PAYMENTS
The Government are supporting businesses and individuals registered for VAT by allowing them not to pay the next quarter’s VAT when it is due. This will apply for a business or individual’s next quarter of VAT up to 30th June 2020. The VAT due for the deferred quarter, and any future agreed deferred quarter that may be introduced, shall be paid by 5th April 2021.
2.3 CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
• The Government has agreed to support loans to businesses, made by banks under this scheme, by providing a guarantee for 80% of the loan made. The Government are guaranteeing to pay 80% of the loan if the borrower is unable to repay the loan to the bank.
• The funds are being provided by the British Business Bank through all banks that partner with them. All major UK banks partner with the British Business Bank.
• The loans under this scheme are available for UK-based businesses with a turnover of less than £45 million. The maximum loan under the scheme is £5 million.
• No interest will be charged for the first twelve months
• The borrower remains liable for 100% of the debt. The Government guarantee will only be called on by the Bank when it has exhausted all normal collection routes from the Borrower, such as if the Borrower is liquidated.
2.4 COVID-19 CORPORATE FINANCING SCHEME
The Bank of England has set up a scheme to finance working capital for larger businesses “making a material contribution to the UK economy”. The Bank of England will purchase sterling denominated commercial paper from these larger businesses. Companies must be able to demonstrate they were in sound financial health prior to the impact of COVID-19.
Commercial paper is unsecured, short-term debt instruments issued by the Company. The scheme will operate for at least twelve months.
3. BUSINESS OTHERS
3.1 INSURANCE CLAIMS
All businesses and individuals should check the terms and conditions of their insurance policies, under the business interruption heading, to see if they are covered for pandemics and government-ordered closures. As insurance policies differ significantly, we would advise all businesses and individuals to check their policies and contact their provider.
3.2 STATUTORY SICK PAY
All employees who are unfit for work are entitled to SSP in the amount of £94.25 per week. SSP will be paid from day 1 rather than previously day 4. This applies to all sickness after 13th March 2020.
SSP can be claimed by Directors of companies that have fewer than 250 employees who need to self-isolate.
The Government will refund SSP for staff of a business with less than 250 employees for up to two weeks.
4. SUPPORT FOR INDIVIDUALS AND SELF-EMPLOYED
4.1 INCOME TAX PAYMENTS FOR SELF EMPLOYED
Income tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
Income tax self-assessment payments due on 31st July 2020 will be deferred until 31st January 2021. This will be implemented automatically so no applications are required. No penalties or interest for late payment will be charged in the deferral period.
4.2 UNIVERSAL CREDIT FOR THE SELF EMPLOYED
Self-employed workers can now access full universal credit at a rate equivalent to Statutory Sick Pay.
5. PROPERTY SUPPORT
OWNERS AND LANDLORDS
• Mortgage borrowers can apply for a three-month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday.
• Borrowers still owe the amounts they do not pay as a result of the repayment holiday.
• Interest will continue to be charged on the full amount borrowers owe.
• Tenants can apply for a three-month payment holiday from their landlord.
• Tenants still owe the amounts they do not pay as a result of the repayment holiday.
• No Tenant can be evicted from their home, or have their home repossessed, over the next three months.
The above summary of the support available to businesses, individuals and the self-employed has been written on our understanding of the recent changes. It is a fast-changing situation which we believe we have accurately summarised.
We hope this summary is useful in explaining the support available and how to access it. Obviously, as events are changing, so will the Government support available.
We sincerely hope all our businesses can come through this COVID-19 shock and still be viable.
From everyone at Prospect Connect, we wish you all the success during this challenging time in business. Be positive, believe, keep prospecting, capitalise on your prospective customers availability as they adapt to working from home and keep building those valuable business relationships that will flourish once we overcome these challenging circumstances.