Being a business owner is a challenging role at the best of times, but with the COVID-19 outbreak changing the UK economy at a rapid pace, it is crucial that you remain informed about all the government support available to SMEs.
To access the latest Government information on the Coronavirus pandemic, head to the UK Government website, the Scottish Government website, the Northern Irish Government website or the Welsh Government website.
If you are currently feeling overwhelmed with the masses of information that has been released to businesses on behalf of the government, continue reading this guide where we dissect each of the rolled-out initiatives to make things simpler.
Coronavirus Job Retention Scheme:
For businesses that are unable to cover staff costs due to the impact of Coronavirus, the government has launched the Coronavirus Job Retention scheme. Businesses of any size are eligible for the scheme, though further guidance with more detail is expected to be released imminently.
The government has urged businesses to stand by its employees and in return, it pledges to pay 80% of an employee’s wage, up to a cap of £2,500 per month, to help businesses stay afloat.
This initiative has been designed to combat huge numbers of predicted redundancies amid the economic crash following COVID-19. Instead of dismissing your employees due to growing worries about paying them, you can instead opt to furlough them – in simple terms, you are legally putting them on a leave of absence and the government will cover the majority of their wage costs.
Payments given on behalf of the government through the Coronavirus Job Retention Scheme will not need to be paid back. All money awarded to employees is considered a grant and is therefore in no way a loan.
Initially, the scheme will run for three months, but the government may choose to extend it if they feel it is a necessary measure. Businesses are also able to backdate wages payable from the first of March 2020.
How to access the scheme?
There are a few things your business needs to do. Firstly, you will need to decide which employees are to be furloughed – as a business, your goal is to do this fairly, as decisions made now could impact your company at a later point.
Employees must agree to be furloughed. This means that you will first have to notify your employees of your intention to furlough them, as changing the status of any of your employees remains subject to existing employment law. If employees refuse to be furloughed, as a business you can dismiss them by reason of redundancy providing the required redundancy definitions are met and the redundancy process is followed.
Once you have your list of designated furloughed workers, you then need to submit this information to HMRC alongside data on their earnings. Unfortunately, HMRC does not currently have a system to accommodate payments to employers, but they are developing an online portal and further details are expected to follow.
Coronavirus Business Interruption Loan Scheme:
This new, temporary scheme has been introduced by the government to support SMEs with retaining their important workforce. On the 23rd March 2020, the government launched the Coronavirus Business Interruption Loan Scheme (CBILS) and it is now available through participating lenders.
The scheme enables small and medium-sized businesses that are currently struggling due to a lack of revenue to borrow up to £5m to help address their cash flow issues. Businesses, especially those smaller in size, are naturally concerned about what lies ahead and many remain uncertain about their future.
To assist with the growing anxiety experienced by many businesses across the UK, CBILS will provide funding facilities via a wide range of commercial finance products, including:
- Term loans (terms up to 6 years)
- Invoice finance (terms up to 3 years)
- Overdrafts (terms up to 3 years)
- Asset Finance (terms up to 6 years)
The government has provided lenders with a guarantee of 80% on each loan – the aim of this is to give lenders confidence so that they continue to provide finance to SMEs at a time more crucial than ever.
To further help SMEs through this crisis, there will be no guarantee fees for SMEs wanting to access the scheme, as lenders will pay the fee on behalf of borrowers.
The government will also make a Business Interruption Payment, meaning that for all businesses accessing CBILS, there will be no interest payments and lender fees expected for the first 12 months. This will enable SMEs to focus their time, energy and of course, money, on achieving business continuity.
For further information on the Coronavirus Business Interruption Loan Scheme, go to the British Business Bank website.
Micro Loan Scheme for Small Businesses:
The government announced a scheme to help SMEs whereby they can access new loans up to £50,000 that are backed 100% by the government. This removes the risk for lenders and therefore it is hoped that thousands more businesses will be able to access cash during this turbulent time.
The micro loans scheme provides a simple, quick and easy solution for those smaller businesses looking for smaller amounts of funding. Businesses will be able to apply for loans worth 25% of their turnover, up to a maximum of £50,000 and the government will pay the interest for the first year.
These loans will be available from 9am on the 4th of May 2020 and unlike other schemes, there will be no complex eligibility criteria or forward-looking tests to establish the viability for a business to borrow. Instead, businesses can quickly fill out a simple form to access this Micro Loan scheme.
Cash Grants for Small Businesses:
For the UK’s smallest businesses, cash grants of £10,000 will be available to help alleviate any cash flow challenges that arise due to Coronavirus. Under the Small Business Grant Fund (SBGF), small businesses that already pay little or no business rates because of rural state relief, small business rate relief and tapered relief can access this one-off grant.
Local authorities have been given guidance on which small businesses are eligible for this grant – due to this guidance, local councils will be in touch with any small business that meets the criteria to access this £10,000 grant, meaning you do not need to take any action.
Business Rates Holidays/Cash Grants for Retail, Hospitality, Gambling and Leisure:
All retail, hospitality, gambling and leisure firms in the UK will be granted a 12-month business rates holiday.
- Retail, hospitality and leisure businesses with a rateable value under £15,000 are set to receive a grant of £10,000.
- For those businesses within these sectors operating from premises with a rateable value of over £15,000 but below £51,000, larger grants of £25,000 will be given on behalf of the government.
Again, if your business is eligible for these grants, your local authority will be in touch, meaning there is no need to apply.
Business Rates Holiday for Nurseries:
Nurseries will also receive a business rates holiday for the 2020-2021 tax year, including the nurseries that have already received bills for the following 12 months. Nurseries set to benefit from this relief are those occupied by providers on Ofsted’s Early Years Register who are wholly or mainly used for the provision of the Early Years Foundation Stage.
Nursery owners/managers do not need to take action. Local authorities will automatically apply the business rates holiday to any outstanding bills.
Statutory Sick Pay Refunds:
For SMEs that employ less than 250 people as of the 28th February 2020, there is the option to reclaim Statutory Sick Pay paid for sickness absence due to Coronavirus.
- Businesses can reclaim up to 2 weeks’ statutory sick pay per employee who has taken time off work due to being ill with COVID-19.
- Businesses should keep records of staff absences and payments of Statutory Sick Pay, however, employees will not be expected to provide a GP fit note.
- The scheme will commence from the 13th of March 2020.
This scheme has not been fully developed at the time of writing, but the government is expected to provide additional updates at a later point - most likely in the COVID-19 Emergency bill, including how repayments to businesses will be made over the coming months.
Extensions for Filing Accounts with Companies House:
All businesses are to receive an additional three months to file accounts with Companies House.
The aim is to help companies avoid penalties as they deal with the tremendous impact of COVID-19. Businesses of all sizes will be able to focus on managing the difficult situation ahead of them due to the Coronavirus outbreak.
Businesses will have to apply for the three-month extension, however, as part of the agreed measures the government and Companies House have put together in their joint initiative, any firm citing issues around Coronavirus will be automatically and immediately granted an extension.
Applications can be made through a fast-tracked online system and the process takes just fifteen minutes to complete. Go to the Gov.uk website for more information on the three-month extension to file accounts during COVID-19.
VAT Payments Deferred for Three Months:
All VAT payments have been deferred for the next quarter, meaning businesses will no longer be required to make a VAT payment during this period. The deferral will apply from the 20th of March 2020 until the 30th of June 2020.
Taxpayers will have until the end of the 2020-2021 tax year to pay any liabilities that have accumulated during the deferral period. This is an automatic offer, so your business does not need to apply.
Income Tax Deferral for the Self-Employed
Income tax payments that are due in July 2020 will now be postponed until January 2021 and this applies to any person who is self-employed. The deferral will also incur no interest or penalties either.
Self-employed workers are also able to apply for a grant worth 80% of their average monthly profits, up to a cap of £2,500 a month. The scheme is available to all self-employed individuals who earn under £50,000 a year, though the funds will not be made available until June.
Additionally, the UK has now delayed the introduction of the new IR35 reforms by 12 months.
Dedicated Tax Helpline
If your business cannot afford to pay tax bills as a direct result of Coronavirus, you should approach HM Revenue & Customs to see if they will agree to grant you a ‘time to pay’ agreement. If so, all debt collection is suspended, and your business will enter a bespoke instalment arrangement that fits the needs and circumstances of your business.
A new HMRC helpline has been launched to help support the many businesses concerned about paying their tax due to COVID-19 implications. Up to 2,000 experienced call handlers will be on hand to advise businesses and individuals on tax affairs relating to the outbreak, from Monday to Friday, 8 am to 4 pm.
If you run a business and are worried about not being able to pay you tax due to coronavirus, call HMRC’s helpline on 0800 0159 559.
We will continue to update this guide whenever the government makes changes or additions to their Coronavirus measures for UK businesses.
For more SME advice regarding the Coronavirus situation, take a look at the additional resources on our Coronavirus Hub.
1 April, 2020