The impact of the coronavirus and government’s support for business is changing rapidly so we’ve updated our blog to outline the key measures for business and the detail behind them where it is available. We will continue to update this post as more information is released (last update 04/05/20).
In the meantime, we’ve summarised specifically below:
- Coronavirus Self-Employment Income Support Scheme (CSEISS)
- Universal credit
- VAT deferral
- Income tax deferral
- Time to Pay arrangements with HMRC
- Coronavirus Business Interruption Loan Scheme
- Cash grants
- Business rates relief
Please see our separate blog about the Coronavirus Job Retention Scheme (CJRS)
Coronavirus Self-Employment Income Support Scheme (CSEISS)
This new scheme enables self-employed taxpayers to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for the next 3 months.
This applies to sole traders and members of partnerships who satisfy all of the following conditions:
- You submitted a tax return for 2018/19
- You have traded in the tax year 2019/20
- You are trading now, or would be if the Coronavirus hadn’t closed your business down.
- You intend to continue to trade in 2020/21, and
- You have lost profits due to the Coronavirus.
Profits must also be less than £50,000 and more than half of your income must come from self-employment.
To calculate the amount of your grant, the last three years profits will be added together and an average calculated. The grant will be paid directly into your bank account in one instalment, expected in June.
You cannot apply for this scheme yet, an update on how the scheme will work has been issued, but as with many HMRC “guidance notes” issued recently, these tend to be quite basic, and, unfortunately, leave many questions unanswered.
It is hoped that HMRC may rethink the method of claim, but at this moment, the latest guidance clearly states: “Your tax agent cannot make the claim for you”, meaning we cannot apply on your behalf.
The guidance goes on to indicate that you will require: –
- Your Self-assessment Unique Taxpayer Reference Number
- Your National Insurance Number
- Your Government Gateway ID and Password
- Bank account number and sort code for payment
They have also launched an eligibility checker so you can confirm your eligibility in readiness to making the claim. The online applications open on the 13th May so you need to go through the eligibility checker and set up a gateway account as soon as possible. They have also said that payments will be made from the 25th May, so sooner than anticipated.
If you don’t qualify for any income support through other measures, you can claim increased amounts of universal credit. We have a factsheet available to send out if you are looking to claim this and would like some help.
All businesses can defer their VAT payments due between now and 30th June 2020. The deferred amount must be paid by 5th April 2021. This should be automatically operated but as with everything, things are moving very fast. You should cancel your direct debit for now to ensure your next payment isn’t taken.
So far there has been no mention of any further deferral of subsequent VAT payments.
Income Tax Payments
Income tax payments are also deferred, so you will not need to make your payment on account on 31st July 2020. This is an automatic deferral, there is no requirement to let HMRC know. Again, this is just a deferral, your full tax bill will be due 31st January 2021. There was some confusion over whether this applied to only self-employed individuals but the gov.uk website has been updated to state that this is available to everyone in self-assessment.
Time to Pay for Outstanding Tax Liabilities
HMRC have set up a dedicated helpline for businesses and individuals facing financial distress due to COVID-19 who have outstanding tax liabilities. It may be possible to arrange time to pay by phoning HMRC on 0800 0159 559.
Currently they are offering deferral of current outstanding bills, but they may also agree to a payment plan over a longer period, particularly if you present a reasonable payment plan to them.
Coronavirus Business Interruption Loan Scheme
This has been set up to provide loan finance to businesses who otherwise might not be able to access funding. The loans are interest free and charge for 12 months and are government backed.
To access this funding go to the Business Bank website and then choose your lender. You must approach your own lender first, lending has been very slow on these ‘CBILS’ loans but further guidance has been issued to tell banks not to ask for future forecasts in order to minimise the information required.
Bounce Back Loans
As of the 4th May small businesses can also apply for a bounce back loan of up to £50,000. For more information see our blog.
Companies in the leisure, retail and hospitality industry with a rateable value of less than £51,000 will be able to obtain a cash grant of up to £25,000 per business.
Small businesses who currently qualify for small business rates relief will have grants of up to £10,000 available to them. Many businesses have now received this funding, but we would encourage you to check the government guidance here carefully as some businesses who thought they may not qualify have been successful in making claims. Also, although the council has contacted you, if you haven’t seen the communication and responded, they may not reach out to you to try again.
Every business in the retail, leisure and hospitality sector will get a 12 month holiday from paying business rates.
Guidance has been published on which businesses will receive this relief. Broadly it includes businesses that sell goods, food or drink or provide services to visiting members of the public. So most of the businesses who have been told to close, or had to close due to social distancing should be covered by this relief.
Check the list here to see if your business will qualify.
The government announced further top-up grants which may be available to businesses who have so far missed out on the business rates grant support. Information is very limited and the grants will be managed by the local councils. Watch this space……