Coronavirus – How do I Claim Financial Help as a Small Business?

Last updated: 12th May 20

Updates – Extension to Job Retention scheme until the end of October

This blog is intended as a single source of factual information which will be updated daily (or even more often) as we find out exactly how to claim the financial support being offered to all types of business. There are a lot of rumours and incorrect information circulating so our aim is to cut through the speculation and provide only the facts in easy to understand language without the jargon.

CORONAVIRUS JOB RETENTION SCHEME

To protect jobs, a grant will be paid by HRMC to reimburse the wage costs of people still employed but not working due to the pandemic and otherwise would have been laid off. The grant will cover 80% of the salary of furloughed workers, up to a total of £2,500 per month plus the associated Employer National Insurance and minimum automatic enrolment employer pension contributions.

This scheme will run in the current form until 31st July 2020. From 1st August until 31st October the scheme will still pay up to 80% of furloughed staff salaries, but will be more flexible and allow for employees to return to work part time. Employers will be expected to contribute to the cost of this.  Full details will be announced towards the end of May.

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

WHAT IF I AM SELF EMPLOYED?

The full self-employed support scheme details can be found here:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

The main facts are:

  • 80% of trading profits up to a maximum taxable grant of £2,500 per month will be paid in June covering March, April and May initially.

You can apply if:

  • You have submitted a self-assessment tax return for 18/19 tax year.
  • Traded in the 19/20 tax year.
  • Would be trading except for COVID-19
  • Intend to continue to trade in the tax year 20/21

Your self-employed trading profits must be less than £50,000 and more than half of your income must be from self-employment.

How much will I get?

  • You will receive a taxable grant of 80% of the average profits from the tax years 2016/17, 2017/18 and 2018/19. If you have only traded for 1 or 2 years, HMRC will take the average of those years

The next self-assessment tax return payments on account due by 31st July 2020 will be deferred until January 2021.

We are aware that HMRC has already started to get in touch with eligible individuals over recent weeks and the claim system is due to open on 13th May 2020.

BUSINESS RATES

The government has confirmed an extension of the business rates reduction, now to a 100% business rates holiday covering ALL businesses in the retail, hospitality and leisure sectors in England for the 2020-2021 tax year. Businesses that will be newly eligible for the reduction may need to apply to their Local Authority. Detailed guidance can be found here:  https://www.gov.uk/government/publications/coronavirus-covid-19-business-support-grant-funding-guidance-for-businesses

Small businesses that already receive Small Business Rate Relief (SBBR) will receive a one-off grant of £10,000 to help meet their ongoing costs. This will be delivered by Local Authorities – so if you are eligible for SBBR or rural rate relief expect to be contacted by your local authority, you do not need to apply (funding expected early April 2020). Local authorities will be writing to businesses that are eligible to ask for bank details so if you have closed your premises, keep checking the post.

The latest update given on 17th March 2020 extended funding to now provide businesses within the retail, hospitality and leisure sectors operating from smaller premises (with a rateable value between £15,000 and £51,000) a grant of up to £25,000. Any enquiries on this should be directed to the Local Authority you pay your business rates to.

CORONAVIRUS BOUNCE BACK LOAN SCHEME        

The bounce back loans scheme will enable businesses to borrow between £2,000 and £50,000 and access cash within days, and in some cases within 24 hours.

This loan is backed by a 100% guarantee and interest is paid by the government for the first 12 months.

This scheme will launch 4th May. Further details can be found here: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan

CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME

This will be delivered by the British Business Bank and will be available from Monday 23rd March 2020. The scheme will provide loans up to £5 million and there will be no charge for the guarantee. Business loans are initially applied for via one of the accredited lenders and, if necessary, the government will provide lenders with a guarantee of 80% on each loan. Natwest have advised me that for their customers there will be no director’s guarantees and the business will have to show that it was viable and could afford repayments before the Coronovirus pandemic.  This means that up to date financial information will need to be available to support the application.

It is important to point out that the 80% government backed guarantee will only be called upon as a last resort after all avenues to recover the full amount of the debt from the directors have been exhausted. The Directors will remain liable for 100% of the debt.

The first 12 months of the loan will be interest-free, as interest will be covered by the government. For further details on accredited lenders and how to apply please keep up to date with this link: https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/enterprise-finance-guarantee-efg-delivery-partners/

CORONAVIRUS FUTURE FUND

This scheme will issue convertible loans between £125,000 and £5m to innovative companies which are facing financial difficulties due to the coronavirus outbreak. The scheme will launch in May 2020.

Eligibility:

  • UK business
  • Can attract the equivalent match funding from third-party private investors and institutions.
  • Has previously raised at least £250k in equity investment from third party investors in the last 5 years.

https://www.gov.uk/guidance/future-fund

R & D support

UK businesses driving innovation and development may be eligible for support via Innovate UK. £200m of grant and loan payments for 2,500 existing Innovate UK customers will be made available as well as £175,000 support for up to 1,200 firms not currently in receipt of Innovate UK funding. This scheme will be available in May 2020. https://www.gov.uk/government/organisations/innovate-uk

HMRC

HMRC have a dedicated helpline to support businesses and the self-employed who are struggling to pay any of their tax liabilities. You should make contact with HMRC as soon as possible, if you need to put in place a ‘Time to Pay’ arrangement. Do this before you miss any payments by calling the dedicated helpline on 0800 0159 559. (If you can get through – the lines are pretty much permanently jammed).

To assist with short term cashflow challenges, businesses will be able to defer their next quarter of VAT payments until the end of June and you will have until the end of the financial year to repay those bills.

STATUTORY SICK PAY (SSP)

As of 13th March 2020, this will be available for eligible individuals from day 1 of the sickness or self-isolation, in accordance with government advice, and will be paid at a rate of £94.25 a week for the over 25’s. SME’s (employers with fewer than 250 employees) will be able to reclaim the SSP they pay to their staff for absence due to COVID-19 for up to 14 days per eligible employee. This scheme may take several months to put in place as new systems are needed to allow for the refunds to be processed. HMRC have advised for employers to keep robust records of any SSP paid now (maybe using a separate line on your payslips) so that you will have all of the required information to make a claim for the refund in the coming months.

For more detailed information please refer to the actual guidance: https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

SUPPORT DURING SICKNESS OR SELF-ISOLATION IF YOU’RE NOT ELIGIBLE FOR STATUTORY SICK PAY (SSP) – E.G. SELF-EMPLOYED INDIVIDUALS

Those not eligible for SSP, either due to being self-employed or below the Lower Earnings Limit of £118 per week, can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance.

For example, the requirements of the Universal Credit Minimum Income Floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, ensuring self-employed people can receive support.

Those affected by Coronavirus can also now apply for Universal Credit online or by phone and receive up to a month’s advance up front without a face-to-face appointment at a Jobcentre. This link provides information on applying for Universal Credit: https://www.gov.uk/apply-universal-credit

Universal Credit helpline
Telephone: 0800 328 5644 – Monday to Friday, 8am to 6pm

MORTGAGE HOLIDAYS

The government has announced that all mortgage providers should offer a 3-month mortgage payment holiday for anyone struggling financially as a result of the Coronavirus (COVID-19) outbreak, where that is the most suitable approach for their circumstance. You should contact your lender if you are likely to need to apply for this break. Be aware that you will need to make catch up payments after the payment holiday, but it will still provide you an opportunity to reduce your monthly outgoings temporarily. This scheme does not appear to extend to landlords with buy-to-let mortgages.

Boris Johnson has today confirmed that the government will be bringing forward emergency legislation to protect private renters from eviction if they are unable to pay rent due to Coronavirus, with steps also being brought in for other ‘actors’ in the economy. Housing associations will not evict tenants who are affected by the virus and fall behind on rent payments. There are sure to be more updates – we’ll keep you posted.

COMPANIES HOUSE FILING OF ANNUAL ACCOUNTS

Company filings can now be deferred by 3 months if you apply for an extension

https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

INSURANCE CLAIMS FOR BUSINESS INTERRUPTION

If you have an insurance policy in place which includes business interruption cover for pandemics or government-ordered closure, confirmation that government advice to avoid pubs, clubs and theatres etc. should now be sufficient to claim under this clause of the policy if your business is within a sector affected by the latest government measures. Whilst many business policies do not have this level of cover, it is worth checking your policy documents and with your insurer.

FURTHER LOCAL AUTHORITY SUPPORT FOR INDIVIDUALS

The government has announced a £500 million Hardship Fund for Local Authorities to support economically vulnerable people and households e.g. via council tax relief.

 

 

 

 

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