Throughout the duration of the coronavirus crisis, the Government have introduced many measures of support for businesses and the self-employed. This time, part 3 of our Pandemic Protection Plan focuses on what is available and how you can make best use of it to ensure the safety of your business.
You can read more about this, or watch our video below!
The Government needs the economy to survive this and has promised a lot of support. Our summary is correct as at 2 April, but it’s worth keeping an eye on updates from official Government advice here.
The Coronavirus Job Retention Scheme
The Government will fund 80% of the wages of any employees that you need to “furlough”. This is to protect employees who you would have laid off otherwise.
The support is capped at £2,500 per worker per month and is initially available for up to 3 months from March to May. The Chancellor will reassess at that point.
The £2,500 is the gross pay. The Government will also fund Employers NI and Pension contributions.
To be “furloughed”, your employee does need to be off work, ie the funding does not apply to anyone who continues to work in your business. You should also take HR advice.
The funding is only available for employees who were on your payroll at 29 February, but it can potentially be backdated to 1 March.
Small Business Grant Funding
If you are a small business and claim Small Business Rate Relief, there will be a one-off £10,000 grant from the Government payable in April 2020.
This grant will be administered by your Local Authority. Your Local Authority will write to you if you are eligible, but you will have to submit an online form to claim. These forms went live on most Local Authority websites on 31 March, so take a look.
Retail, Leisure and Hospitality Grant Funding and Rates Relief
If you have a business in the retail, leisure and hospitality sector, there will be a 100% discount on business rates from April 2020 to March 2021.
If your property has a rateable value below £15,000, you will be eligible for a £10,000 grant in April 2020.
There will be a £25,000 grant for premises with a rateable value between £15,000 and £51,000.
These grants will be per property, ie you can receive more than one grant. However, these are instead of (not as well as) the Small Business Grant Funding.
Again, these reliefs will be administered by your Local Authority.
Support for the Self-Employed
The Government will fund 80% of your net trading income for a period of 3 months from March to May 2020. This is capped at £2,500 per month and will be paid in June 2020.
This will be based on your average monthly profits in the past three years based on your personal tax returns. If you haven’t filed three years, HMRC will use the years you have filed.
To be eligible, you must meet all these criteria:
Owners of Limited Companies are not included in this scheme.
There is minimal paperwork to fill in – the Government will work out who is eligible, and the amount of grant, based on submitted tax returns. They’ll contact you and there will then be a simple online form to complete
You can continue to work while getting the grant.
Coronavirus Business Interruption Loan Scheme
There is a loan scheme that was launched on 23 March to support loans up to £5m.
The Government will provide lenders with a guarantee of up to 80% of the loan and not charge for this guarantee.
What does this mean? It means that businesses that might not be accepted for a loan under normal circumstances should now be able to get a loan. However, it will be a loan – not free cash.
The Government will cover the first 12 months of interest payments, so you will not need to pay these yourself.
However, do take note of whether you need to provide personal guarantees. The Chancellor confirmed on 2 April that these would not be needed on loans up to £250,000 but most lenders need them on larger loans.
Make sure you know what you’re signing up for and that you can afford the repayments in the new business world on the other side of coronavirus.
Any VAT payments due to HMRC between 20 March and 30 June 2020 will not need to be paid until 31 March 2021.
This will help with cashflow but please remember that you will have to pay the VAT owing in March 2021.
Income Tax payment deferral
There will be a six-month deferral on your personal tax Payment on Account due on 31 July. The payment date will now be 31 January 2021.
This will still have to be paid but, for now, it should help you with some cash that can be used elsewhere.
Delays to paying your taxes
HMRC has a dedicated coronavirus helpline on 0800 024 1222 if you’re struggling to pay a tax bill. You might be able to get a Time to Pay agreement to stagger any tax payments.
If you’re a subcontractor/freelancer, the reforms to IR35 that were due to come in to force in April 2020 have been delayed to April 2021.
Mortgage repayment holiday
If you are suffering financial difficulties, you will be able to apply for a 3-month repayment holiday on a residential or Buy-to-Let mortgage.
This is only a “holiday”, ie the capital will remain, and interest will be added. However, it may provide some breathing space for those 3 months.
Not every application will be approved as your lender will look at whether it would be helpful. The banks have confirmed it will not affect your credit rating.
We do have a couple of separate detailed videos on this on our Youtube channel, so this is a summary. If you do want more detail, the best place to go is to the coronavirus section on our website at www.jondaviesaccountants.co.uk – the details are below this video.
I hope you found that useful – tomorrow we’ll move on to stabilising your business.
See you then…
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