COVID-19 Guidance for Small Businesses

coronavirus-small-business-guidance

COVID-19 Guidance for Small Businesses

coronavirus-small-business-guidance
coronavirus-small-business-guidance

COVID-19 Guidance for Small Businesses

COVID-19 Official Updates

I recommend you check the gov.uk website each day for the latest updates COVID-19: guidance for employees, employers and business

New reliefs for businesses

The Chancellor Rishi Sunak has announced a dramatic package of measures since the 17 March to help protect businesses, jobs and the vulnerable. The key measures announced by the Chancellor to boost the economy so far are as follows:

Self Employment Income Support Scheme

Under this scheme, the government will provide a taxable grant to self-employed workers. The government will pay direct cash grants worth 80% of profits, capped at £2,500 per month.

The scheme will be available to:

  • Individuals with trading profits of less than £50,000 in 2018/19
  • Or has an average trading profit of less than £50,000 from tax years 2016-17, 2017/18 and 2018/9.
  • Have submitted a self-assessment tax return for 2018/19
  • Have traded in 2018/19
  • Will continue to trade in 2020/21
  • Have lost profits as a result of COVID-19

Individuals have until the 23 April 2020 to submit their tax return for tax year 2018/19.

When will the grants be available?

The grant should be available from the beginning of June and can be backdated for three months. It is unclear if 2019/20 self-assessment will contribute towards the grant.

HMRC will contact you directly if you are eligible for this scheme. Grants will be paid directly into your bank account.

Who it does NOT cover

  • Those whose taxable profits are higher than £50,000 on average over the three years to 05 April 2019.
  • There is no taper, it is an all or nothing rule.
  • Those who earn through a limited company – you may be able to furlough your salary if you do no work. If you are a director of a limited company, you are employed, not self-employed.
  • Those who started trade after 05 April 2019.
  • Those whose self-employed taxable profit, on average over the three years to 05 April 2019, is less than half your total income. (i.e. if you also get a salary and your salary is the larger part of your income). You need to look to your employer, and perhaps the furlough rules.
  • Those who have not lost any income due to the Coronavirus.
  • Those whose self-employment does not continue through into 2020/21. Therefore, you must restart your trade after the shutdown to claim.

Universal credit

The Universal Credit standard allowance will be increased by £1,000 a year for the next 12 months. The working tax credit basic element will be boosted by the same amount.

The new scheme means that self-employed workers will be able to access Universal Credit payments in full. At a rate equivalent to statutory sick pay (£94.25) per week.

Coronavirus Job Retention Scheme

In a bid to protect jobs, the Chancellor announced that the government will step in and pay wages. Government grants will cover 80% of the salary of ‘furloughed’ employees, capped at £2,500 per month.

When will the scheme be available?

The scheme went live on Monday 20 April.

How do I make a claim?

There’s now updated guidance on how to calculate your claim and a simple step-by-step guide

There is also be a calculator available for you to check your calculations online before you make your claim.

Please have all your information and calculations ready before you begin your application. If you have a payroll provider, they will be able to help you with this. You should retain all records and calculations in case we need to contact you about them.

Who’s eligible?

  • you can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying us of payment of that employee on or before 19 March 2020
  • employees that were employed as of 28 February 2020 and on payroll (i.e. notified to us on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough. 

More information on this can be found on GOV.UK.

Employers who want to claim under this scheme will need to:

  • Designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation so please take HR advice. Accounting Inc. clients benefit from a free helpline.
  • 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. The portal is expected to be live by the end of April.

For staff you have chosen to furlough you will need to:

  • Obtain written consent from the staff you have chosen to furlough so that you can begin implementation.
  • Prepare letters confirming the position to inform them immediately of the situation and your decision.

For staff who shall continue working, you will need to:

  • Consider the level of wage reduction you will need to implement;
  • Begin a consultation process preparing the staff for what is to come;
  • Obtain written consent from the staff and prepare letters confirming the position.

Contact the Accounting Inc. team at your earliest possible opportunity if you need any assistance with your HR strategy or delivery. We are anticipating that this process will continue for some time as the legislation develops and there might also be scenarios where staff move in and out of ‘furlough’ depending on the business’ performance. As always, Accounting Inc. will be on hand to support you through this difficult time.

Director Furloughs

The Treasury has confirmed that a director can be furloughed and still carry on the statutory duties as a director as these do not count as work.

Duties of a company director

If a director receives a salary through PAYE then CJRS support is available for 80% of their qualifying salary.

There are still a lot of uncertainties around individual circumstances so please call our HR team for support in relation to your position.

Coronavirus Business Loan Schemes

Bounce back loans

The Chancellor has announced a 100% government-backed loan scheme for small businesses, designed to offer up to £50,000 of fast-track finance for those affected by the coronavirus.

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

Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple two-page standardised application form. There are no forward-looking business viability tests or eligibility criteria for the finance.

The bounce back loans should be available for application on Monday 4th May.

The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months.

Business interuption loans

The Coronavirus Business Interruption Loan Scheme is now open. No interest is payable within the first 12 months (previously 6 months). This scheme is being delivered through the British Business Bank. 80% of individual loans are being guaranteed by the government.

The maximum value of a facility provided under the scheme is £5 million, available on repayment terms of up to six years. The borrower remains 100% liable for the debt.

To date accessing funding from this scheme has proven pretty difficult. With less than a thousand successful applications. Banks have asked for financial forecasts and personal guarantees. Chancellor Rishi Sunak has now banned UK banks from requesting personal guarantees. In a bid to make the scheme more accessible.

To be eligible for the scheme, your business must:
  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

You will need to provide the following supporting evidence to prove you can afford to repay the loan:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

There are 40 approved lenders of the scheme. You should apply directly through these lenders. You can find a list of these accredited lenders here:

CBILS approved lenders

We recommend speaking to your current bank or lenders in the first instance. Traditional business or personal loan is likely to be more favourable, with faster access to funds. Check your online banking app for offers. Then check the approved lenders’ websites. Telephone lines are very busy, and branches have limited capacity with workers complying with social distancing rules.

Time to Pay Arrangements

The governement has offered additional support with the deferral of certain tax payments.

VAT holiday

The next quarterly VAT payments have been deferred. The VAT deferral will apply from 20 March to 30 June. Businesses will also have until the end of the tax year (5 April 2021) to settle any liabilities accumulated in the deferral period.

You should cancel your direct debit and submit VAT returns as normal.

There will be no need to apply for the deferral. VAT refunds will be processed as normal.

Income tax holiday

The 31 July 2020 income tax payment on account has been deferred to 31 January 2021. There is also no need to apply for this deferral.

This is welcome news for self-employed individuals. During the deferral period, no penalties or interest will be charged for late payments.

Please contact the HMRC Helpline on 08000 159 559 for more information and to make any payment arrangements or deferments.

Business Rates Holidays and Cash Grants

Cash grants (doesn’t have to be paid back) of up to £10,000 (previously £3,000). For all businesses with premises in receipt of small business rate relief. Theses grants are now being administered through local authorities.

Cash grants (doesn’t have to be paid back) of up to £25,000 for retail, hospitality and leisure businesses, with a rateable value between £15,000 and £51,000. Theses grants are now being administered through local authorities.

A 12-month business rates holiday for all business in the retail, hospitality and leisure businesses with rateable premises.

You’ll be eleigible for the scheme if:

  • Your business is based in England
  • Your business is in the retail, hospitality and/or leisure sector

Businesses in the following sectors will benefit from the rates exemption

  • Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • Assembly and leisure
  • Hotels, guest and boarding premises and self-catering accommodation

How to apply

You can apply online to your local authority. You’ll need your rates account number and bank details. Below are links to the local authority online applications

Newcastle

Gateshead

North Tyneside 

Durham

Sunderland 

Northumberland 

Statutory Sick Pay (SSP)

The statutory sick pay which you pay to anyone self-isolating due to COVID-19 for up to 14 days will be paid back to you. How and when is still being sorted out. The refunds will come, but we don’t yet know when at this stage.

The government will refund £94.25 per week. Up to a maximum of £188 for your company.

Businesses with less than 250 employees will be refunded SSP for up to two weeks.

Mortgage and rent holidays

Anyone who’s in financial difficulty can speak to their lender about taking a 3-month mortgage holiday. Residential and buy-to-let mortgages are eligible for the holiday.

Renters can speak to their landlord about a three month holiday. Landlords cannot evict tenants for three months.

It’s also worth speaking to other creditors for things such as loans, overdrafts, credit cards etc. Ask if they can also give a holiday. It’s always worth asking the question to help relieve financial pressure.

Insurance

Some people have basically been told to get lost by their insurers. However, the government have now made it very clear to insurers that if you have appropriate cover in place. Insurers should now treat the policy as if was enforced, and payout. Please check your policies to see what you might be covered for.

 

IR35 reforms postponed

In an announcement at the end of the parliamentary debate on the Budget speech, Steve Barclay, chief secretary to the Treasury, said: ‘The government is postponing the reforms to the off roll payroll working rules – IR35 – from April 2020 to 6 April 2021.

‘This is a deferral, not a cancellation. The government remains committed to re-introducing this policy reforms to ensure that people working like employees but through their own limited company pay broadly the same tax as those employed directly.’

Don’t rush in

For those of you who are struggling right now due to COVID-19. I would urge you to try and hold on for the above measures to come into effect. Further detailed guidance will be available within the coming days and weeks.

I would encourage all employers to check what your obligations are before making any staffing decisions, to ensure that you are still complying with employment law.

Think positive, take action

Finally, on a more personal note. I would also urge you all to ensure that you’re looking after your mental well-being during this crisis too. We’re all trying to be positive throughout uncertain times. I’m sure it’s causing a lot of stress and feelings of helplessness at the moment. There’s no shame in sometimes needing a bit of extra support. It could be beneficial to schedule an online or telephone counselling appointment with a professional if you feel you are struggling. Of course, we are here to help!

My advice is to take charge of what you can control. Analyse essential and non-essential expenses, both business and personal. We recommend calling HMRC on 0800 0159 559 to discuss deferring payments.

What will have the greatest short-term impact on your business? What will help you get through the next 12 weeks? We can help you take charge of your finances. Put a plan in place to navigate through this uncertain period. Ultimately making sure you don’t run out of cash. Together we can beat COVID-19.

Arrange a free discovery call

We'll get to know each other and discuss how we can benefit your small business in Newcastle.

What is a discovery call? Well, this is an introduction we will discuss where you are at in your business journey, and what is perhaps stopping you from getting where you want to be, and more importantly how we can help you get there!

Keep up to date and get our latest posts straight to your inbox

Be updated and subscribe

Sign up with your email address and gain insights from our free regular newsletter.

Be updated and subscribe

Sign up with your email address and gain insights from our free regular newsletter.