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Coronavirus: Government Support for SMEs

 UPDATED 26 SEPTEMBER 2020

On September 24th 2020, the Chancellor announced a series of measures to support businesses and jobs with the launch of his Winter Economy Plan.

The key measures announced are:

  • Job Support Scheme
  • Extension of the Self Employment Income Support Scheme (SEISS)
  • Self-Assessment Payments – Time To Pay Extension
  • Extension of the VAT Deferral Scheme
  • Extension to the Temporary VAT Reduction for the Hospitality Sector
  • Increased Leniency of the Bounce Back Loan Repayments

 Each measure has been detailed further below.

 Job Support Scheme

 A new Job Support Scheme will be introduced from 1 November 2020 to protect viable jobs. Key details of the scheme are as follows:  

 Employers will continue to pay the wages of staff for the hours they work, which must be at least 33% of their normal hours.

  • For the hours not worked, the government and employer will each pay one third of the employees remaining wages.
  • The employer will pay at least 55% of the employees wage while the government will contribute 22%.
  • In most cases, the employee will receive at least 77% of their pay.
  • The Government’s contribution will be capped at £697.92 per month.
  • The Government will not contribute to employers NI or employers pension.  
  • The scheme is open to all Small and Medium-Sized Enterprises (SMEs).
  • To be eligible for this scheme, an employee must have been on the employers PAYE scheme by 23 September.
  • There is no requirement for an employee to have been included in the furlough scheme previously.

 We have included an illustrative example below for an employee earning £24,000 per annum

 Usual Monthly Salary:                         £2,000 (100%)

33% of pay for hours worked:              £667 (33%)

Wages shortfall:                          £1,333 (77%)

  • Employer contribution:              £444 (22%)
  • Government contribution:         £444 (22%)
  • Employee shortfall:                    £445 (23%)

Total Employer payment = £667 + £444 = £1,111 (55%)

Total Employee pay = £667 + £444 + £444 = £1,555 (77%)  

 Further government guidance will be issued in due course. We will provide assistance with calculating and submitting your claim if you require us to.

Extension of the Self Employment Income Support Scheme (SEISS)

  • An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
  • The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year.
  • The grant will be worth 20% of average monthly profits, up to a total of £1,875.
  • A second additional grant will be available to cover the period from February 2021 to April but the value of this grant has not yet been announced.

Self-Assessment Payments – Time To Pay Extension

  • The self-employed and others who do self-assessment tax returns had already been given more time to pay taxes due, with those struggling to pay what was due by 31 July 2020 able to defer until 31 January 2021.
  • The Government has extended that further. It says those who are due to pay up to £30,000 in tax by 31 January 2021 will be able to use HMRC's 'Time to Pay' service to pay over an additional 12 months, meaning they won't need to pay in full until January 2022.
  • We expect further details to be announced as to how this will work in practice.

Extension to the VAT deferral scheme

  • If you chose to defer your VAT payment between April and June this year, rather than paying in full by March 2021, you will now be able to spread payments throughout the 2021/22 financial year.

Extension to the Temporary VAT reduction for the hospitality sector

  • The current lower 5% rate was supposed to revert to the usual 20% on 12 January 2021, this has now been delayed to 31 March 2021.

Bounce Back Loan Repayments 

  • The Bounce Back Loans can now be repaid over 10 years rather than 6 years, as initially announced.
  • You will be allowed to take payment holidays and make interest only payments.
  • The first year remains interest free and the interest for year 2 onwards remains at 2.5%.
  • Applicants now have until 30 November to apply for a bounce back loan. 

 UPDATED 9 JULY 2020

On Thursday 8th July, the Chancellor held a Summer Economic Update whereby he announced a number of further support packages for businesses and communities.  Our summary of the Update provides an overview of the key announcements arising from the Chancellor's speech. Measures include a new Job Retention Bonus to support phasing out of the Coronavirus Job Retention Scheme (CJRS), a VAT reduction for businesses in the hospitality and tourism sector and a temporary increase to the nil-rate band of residential Stamp Duty Land Tax (SDLT). Additionally, throughout the Summary you will find informative comments to help you assess the effect that the proposed changes may have. Click here to access our full report.  


 

On Friday 20th March the Chancellor set out a package of measures to support public services, people and businesses through the period of disruption caused by COVID-19.  

The package of measures to support businesses includes:


Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers are able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. All UK businesses are eligible. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Applications cannot be made through your government gateway account.


Which Employees are eligible?

  • In order to be eligible, employees must not only be PAYE but must have been on your payroll before 19th March 2020.  
  • Staff must be furloughed for a minimum of 3 weeks in order for their salary to be reimbursed under the scheme.
  • Employees who were made redundant after 19th March 2020 may be rehired and placed on furlough leave.
  • Employees who are on unpaid leave cannot be furloughed unless their period of unpaid leave started after 28th February 2020.
  • Employees receiving SSP for sick leave or self-isolation cannot be furloughed until after their period of sick leave ends.
  • Individuals who are on or plan to take maternity leave must take at least 2 weeks leave immediately after the birth of their baby, this is a health and safety requirement. If they are eligible for Statutory Maternity Pay or Maternity Allowance then the normal rules shall apply.


What will the grant cover?

  • Employers will receive the lower of 80% salary or £2,500 even if this is less than NMW.
  • The payment is to cover basic salary only includign contractual commission.
  • HMRC also cover the cost of Employers NI and Pension.
  • If you opt to “top up” your employees’ salaries you will be responsible for paying employer’s National Insurance and minimum pension contributions.
  • Contractual maternity, paternity, adoption or shared parental pay are considered wage costs and can be claimed under the scheme.


How can employers make a claim?

In order to claim for the grant you will need the following details:

  • your PAYE reference number;
  • your UTR;
  • the number of employees being furloughed;
  • the claim period (start and end date);
  • amount claimed;
  • your bank account number and sort code;
  • your contact name; and
  • your phone number.


How do you calculate how much you can claim?

  • For salaried employees, you should claim their actual salary before tax as at 28th February.
  • For employees whose pay varies, you should claim the higher of:
  • The same month’s earning in the previous year; or
  • Their average monthly earnings from the 2019/2020 tax year.

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your 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.
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal 

CJRS Update from 1 July onwards

The Coronavirus Job Retention Scheme is changing:

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Will the government continue to contribute?

From August, the government grant provided through the JRS will be slowly tapered.

  • in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
  • in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
  • in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
  • in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
  • the cap on the furlough grant will be proportional to the hours not worked.

Rogers Spencer have the necessary resources and skills to assist you with this process. Please contact us to discuss in more detail. 


Self-employed Income Support Scheme

The government also announced their support for the self-employed through the launch of the Self-employment Income Support Scheme (SEISS).  The scheme is due to launch on 13 May 2020.   

This scheme will allow self-employed individuals and partnerships to claim a taxable grant worth 80% of the trading profits up to a maximum of £2,500 per month for the next 3 months.  Eligible individuals will be invited to apply online for the grant. The grant will be paid in one lump sum in early June. 


Who can apply?

You can apply if you are a self-employed individual or a member of a partnership and you:

  • Have submitted an Income Tax Self-Assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-19
  • Have self-employed trading profits of less than £50,000 and more than half of your income comes from self-employment. This is determined by at least one of the following conditions being true:
  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you are a director of your own company, you are not classed as self-employed. You may be able to get support using the Job Retention Scheme.

How do I apply?

The guidance is still limited but currently states that you must submit your claim yourself. It cannot be done by your accountant. 

The guidance goes on to indicate that you will require: -

  1. Your Self-assessment Unique Taxpayer Reference Number
  2. Your National Insurance Number
  3. Your Government Gateway ID and Password
  4. Bank account number and sort code for payment

If you do not know or don’t have a government gateway ID and password we recommend you apply for one as soon as possible to avoid delays in receiving payment. You may be able to submit a paper claim (full details have not yet been published) but this may lead to a delay in payment. Click here for details on how to create a government gateway account.

SEISS Update from 1 July onwards

This scheme is being extended. You’ll be able to make a claim for a second and final grant in August 2020.

The online service for the second and final grant is not available yet.

If you’re eligible the second and final grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

Should you need any clarification on your status, please contact us for further details.


Deferring VAT and Income Tax Payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. All Income Tax payments due in July 2020 under the Self-Assessment system will also be deferred to January 2021. 


VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

All UK businesses are eligible. Our advice is to cancel your DD if you cannot afford to pay your VAT this quarter. 

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.  You do however need to submit your VAT return as normal. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.


Income Tax

For Income Tax Self-Assessment, payments due on the 31st July 2020 will be deferred until the 31 January 2021.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. 


A Statutory Sick Pay relief package for SMEs

The Government will make legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.  SSP payments can be made from Day 1. The eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that have symptoms can get a note from the NHS website
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

You are eligible for the scheme if your business is UK based and your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

A 12 month business rates holiday for all retail, hospitality and leisure businesses

A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year has been introduced.


Who is eligible?

You are eligible for the business rates holiday if:

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

Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • for hospitality, as hotels, guest & boarding premises or self-catering accommodation


How to access the scheme?

There is no action for you. However, local authorities may have to reissue your bill to provide this support.


Small business grant funding of £10,000

The government are providing Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBRR), Rural Rate Relief (RRR) and tapered relief. This provides a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. 

Who is eligible?

  • your business is based in England
  • you are a small business and already receive SBRR and/or RRR
  • you are a business that occupies property


How to access the scheme?

If you have not yet applied, you should apply today through your local council.

In early May an extension to this scheme was announced to allow local counciles to give descretionary grants to businesses who don't currently meet the criteria.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

To find your local authority: https://www.gov.uk/find-local-council


Grant funding of £25,000 for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Who is eligible?

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

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation


How to access the scheme?

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

To find your local authority: https://www.gov.uk/find-local-council


Coronavirus Business Interruption Loan Scheme (CBIL)

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, was launched on 23rd March 2020 to support primarily small and medium-sized businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.


Who is eligible?

  • your business is UK based, with turnover of no more than £45 million per year
  • your business meets the other British Business Bank eligibility criteria


How to access the scheme?

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/


All the major banks offer the Scheme. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.


A new lending scheme to support large businesses

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible. The scheme was launched on 23 March 2020. We will provide information on how to access the scheme here shortly. More information is available from the Bank of England: https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020.


HMRC Time to Pay Services

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559. If you’re worried about a future payment, please call them nearer the time.


3-month extension to file accounts from Companies House

From 25 March 2020, businesses will be able to apply for a 3-month extension for filing their accounts.

This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus. As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.

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

Bounce Back Loan

The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000.  The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.   Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.  The scheme will be delivered through a network of accredited lenders.

Eligibility

You can apply for a loan if your business:

  • is based in the UK
  • has been negatively affected by coronavirus

Who cannot apply

The following businesses are not eligible to apply:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools

If you’re already claiming funding

You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

The full rules of the scheme and guidance on how to apply is available on the British Business Bank website.