24 March 2020
CoronaVirus – What business support is available to you?
We are in unprecedented times and the Chancellor in response to this has announced drastic measures. As the country wakes up this morning in partial lockdown, it follows the launch of a series of initiatives to support both business, individuals and the economy. These measures include the launch of a package of £330bn of Government backed loans – equal to 15% of GDP - which compares favourably to packages offered by some European countries like France or Germany.
Pulse Cashflow applaud this support but calls on the Government to ensure this support is made available quickly and easily. We do however, call for them to support the 5 million self-employed and owner managers of businesses in the UK who feel they have “been forgotten” amongst all these packages. We also encourage SMEs to act fast, check eligibility, determine your position and find out how they can access this support so they can take advantage of the support available to protect their businesses.
However, we know many businesses are confused about the support and whether they are eligible. To help we have produced the following Q&A to help you understand the support available and what you need to do.
What is happening with Business Rates?
The chancellor has bolstered support for businesses from the heavy fixed cost of business rates. He announced that:
- all retail, hospitality and leisure businesses in England will get a 100% business rates holiday for the next 12 months.
- All small businesses eligible for Small Business Rates Relief will receive a cash grant of £10,000 (increased from £3,000 in March 2020 Budget). This includes those businesses operating in the retail, hospitality or leisure sectors. This is estimated to support up to 700k businesses.
- The Government will also provide a cash grant of up to £25,000 per property to retail, hospitality and leisure businesses operating from smaller premises with a rateable value over £15,000 and below £51,000.
These changes should be implemented automatically without businesses needing to claim, but it would be prudent to check with your local authorities’ business rates team, that it has been applied if you are eligible and remember to check your bills/payments for 2020/21. If you are eligible for Small Business Rates Relief then make sure you have made your claims.
Will I still need to pay my tax obligations?
- VAT payments
The Government has announced that the next quarter of payments will be deferred, which means that your business will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
You do not need to do anything as this deferral will apply automatically, however, you do need to submit your VAT return as normal. If you pay your VAT by Direct Debit you will need to instruct your bank to cancel this payment. VAT refunds and reclaims will be paid by the government as normal.
- Income Tax payments
For payments due on 31 July 2020 under the Self-Assessment system these will be deferred until 31January 2021. This will happen automatically. No penalties or interest for late payment will be charged in the deferral period.
- The HMRC’s Time to Pay scheme
This scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
How can I support my employees during this crisis?
The Government has launched a Coronavirus Job Retention scheme, which is a grant available to all businesses to cover 80% of the salary of PAYE employees who would have been laid off as a result of Coronavirus. It includes all employers in employment on 28 February 2020. The scheme is backdated to 1 March 2020 and will be available before the end of April and will continue for at least three months.
To claim under the scheme employers will need to:
- Identify and inform those employees who are affected that they are ‘furloughed workers’. You are still subject to employment law and should discuss this with your employees and this may involve some negotiation
- 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.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.
What changes are being made to Statutory Sick Pay (SSP)?
The government has announced that:
- it will refund SSP for employees of businesses with less than 250 employees for up to two weeks.
- if you're a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
- the government will refund £94 per week, maximum £188, to your company.
Am I eligible for the Coronavirus Business Interruption Loan Scheme (CBILS)?
The Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support businesses through the provision of interest and fee free loans for 12 months of up to £5 million. The scheme provided by the British Business Bank through approved providers is now available. It covers overdrafts, loans, asset finance, and invoice finance.
You should in the first instance contact your own lender to discuss if they can offer the scheme. Some lenders do not offer all products.
More information can be found here:
To be eligible businesses must:
- be UK based, with turnover of no more than £45 million per annum
- have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty
The borrower will always remain 100% liable for the debt.
I’m self-employed what support is available to me?
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
It is expected that the Government will be making more announcements this week to outline support being provided for the self-employed.
Can I claim anything on my Insurance Cover?
The Government confirmed that pubs, clubs and theatres should be able to claim on their insurance if they have business interruption cover for pandemics in place. Please contact your insurers if you believe that this might be an option for you.
As the situation escalates and we move into more stringent lockdown measures, more businesses may be open to claiming on their insurance. Review your policy and speak to your insurers now.
I’m worried about cashflow and whether I have enough funds to keep my business going – what should I be doing?
The inevitable temporary but significant disruptions to supply chains and a drop in trading, could challenge business cashflow and increase demand for working capital from companies. The Governments measures are trying to support this. We would also advise you to talk to your funders now. Engaging in a conversation means that we are all aware of what the current situation is and what support may be available. We are certainly advising our clients to talk to us should problems arise.
You should also make sure that you have the right financing in place to support your cashflow through this time. Pulse Cashflow are open and available to discuss any financing needs. Call Brit Pearce on 07880 717845.
My employees are worried about their mortgage/rent payments?
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. It is important to remember that borrowers still owe the amounts that they don't pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
These measures go some way to relieving some of the concerns you may be feeling. The Government has hinted that there will be more support coming which we will update you on as it happens. In addition, the links below provides lots of useful information: