Covid-19 Support - Updated 06/05/20

We are very aware that this is worrying time for many people - along with the social aspects of the current situation many people have significant financial concerns. We have tried to list here as much information as possible about the different types of support available and who it relates to. We are trying to keep it as up to date as possible, but please bear with us as it is a fast moving area.

This is a resource as an initial step only - this information does not constitute or replace proper professional advice, and we cannot guarantee the accuracy of the information or that it is always up-to-date as things are changing very quickly.

More detail about the range of support available to help individuals and businesses through this time can be found here:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Below is a brief summary of the different types of support available and what we know about them so far:

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

The job retention scheme provides a grant to businessess to help them with the costs of keeping non-working staff on the books. The scheme was initially set up to run for three months from 1st March 2020 to 31st May 2020, but has now been extended to the 30th June.

The grant covers 80% of 'furloughed' employees wages (up to a maximum of £2500 per month) plus the associated employers NI costs and minimum employers (auto-enrolment) pension contributions.

Normal employment law prevails, and therefore employers may need to discuss and agree changes to employment contracts with employees if current contracts do not cover this.

Employers must pay the employees they are claiming for at least 80% of their normal wage (up to a maximum of £2500), and may top it up (at their own expense) if they wish.

The scheme covers any employee who was employed under PAYE as at 19th March 2020 - an RTI with the employee on must have been submitted by that date (so if the employee started on March 1st, but no RTI was submitted until after 19th March they cannot be claimed for).

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

For employees on variable pay, you can claim for 80% of the higher of:

the same month's earnings from the previous year.

the average monthly earnings from the 2019/20 tax year - if they have not been employed for the whole year, you use the average since they started work.

Where calculating part periods, calendar days (rather than working days) are used.

The employee must be furloughed for a minimum of three weeks for the claim to be valid.

A furloughed employee cannot do any work for the employer while furloughed.

You can only claim for amounts normally paid via the payroll (so dividends are not included).

The portal for claims is now open and funds appear to be arriving within the 6 days stipulated by HMRC.

Agent's can claim on behalf of clients - if you are interested in us making a claim for you and have not already heard from us please contact us to discuss.

Small Business and Retail, Hospitality and Leisure Grants - https://www.businesssupport.gov.uk/small-business-grant-funding/

https://www.businesssupport.gov.uk/cash-grant-for-retail-hospitality-and-leisure/

If you have your own business premises and are listed as the rate payer on those premises, you may be entitled to a business support grant.

All businesses that are the registered occupant for business rates, and receive small business rates relief (i.e. the [property has a rateable value of up to £15,000) or rural rate relief, will receive a grant of £10,000. For businesses in the retail, hospitality and leisure sectors, with a rateable value between £15,000 and £51,000, the grant will be £25,000.

In most cases these grants have now been paid to eligible businesses - if you believe you are eligible and have not received a grant we would suggest that you contact your local authority urgently. The link for TVBC is here https://www.testvalley.gov.uk/business/businessgrantsandsupport/coronavirus-covid-19-advice-for-businesses

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

The self employed income support scheme (SEISS) helps to support self employed individuals who's business has been adversely affected by Covid 19.

To be eligible to claim you need to meet the following criteria:

you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
you traded in the tax year 2019 to 2020
you intend to continue to trade in the tax year 2020 to 2021
you carry on a trade which has been adversely affected by coronavirus

There are also financial criteria to be met:

Your trading profit from self employed income should be less than £50k in 2019/20 , or for a 3 year average from 2016/17 - 2018/19.
Your trading profit from self employed income should be at least 50% of your total income for 2019/20, or for a 3 year average from 2016/17 - 2018/19.

The support is in the form of a grant (not a loan) and is taxable as self-employed income.

The amount of support available is 80% of your monthly trading profits for three months (up to a maximum of £7500), and is calculated using an average profit figure for the three years from 2016/17 to 2018/19.

If you have only traded for one or two of those three years, the average will be calcuated using those years only. If you traded in 16/17, not in 17/18 and started trading again in 2018/19, then it will be calculated using the one year of 2018/19.

Where trade only covered part of a year (for example 6 months in 18/19), the average profits calculation is still based on the whole year - so if you started trading in October 2018, and declared 6 months of profits on your 18/19 return, those profits would be divided by 12 to reach the average profit figure.

Profits are calcuated after adjustments for disallowable expenditure and capital allowances. So in most cases, will be the profit on which your tax and NI were calculated.

You can check is HMRC believe you are eligible for the scheme here: https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference You will require your UTR and NI number to check.

Agents will not be able to make the claim for you - individuals will need to claim themselves and will need a government gateway account to do so.

We believe we have contacted all self-employed clients regarding the scheme - if you are a clients and have not received an Email from us please contact us.

Time to Pay

VAT - You can chose to defer the payment for monthly and quarterly VAT returns for periods ending in Feb, March and April 2020.

You must pay the VAT due by 31st March 2021.

You do not need to apply or inform HMRC that you are deferring the payment, but if you are on direct debit you will need to cancel the direct debit or the payment will be automatically taken. HMRC will not repay amounts that are paid.

VAT returns must still be submitted as normal. Returns for periods ending after April 2020 must still be submitted and paid as normal.

Repayment returns will still be paid as normal.

Individuals - July payment on Account - If you are due to make a payment on account in July 2020, you can chose to delay this payment - payment must be made in full by January 2021. This could mean that some people will have a very significant payment in Jan 2021, as the normal balance of tax for 2019/20, and the first payment on account towards 2020/21 will still be due for payment.

Other taxes - If you are struggling to meet other tax obligations (including PAYE/NIC, CIS, corporation tax) you can contact HMRC to ask for a deferment or payment plan. Contact details for webchat and telephone can be found here https://www.gov.uk/government/organisations/hm-revenue-customs/contact/coronavirus-covid-19-helpline

Our experience so far is that HMRC are doing their best to be very reasonable and accommodating.

Business Rates Relief

If you are in the retail, hospitality and leisure industries or are a preschool/nursery for children up to 5 years old, you may not have to pay any business rates this tax year (2020/21). Further details on eligibility are available here - https://www.gov.uk/guidance/check-if-your-retail-hospitality-or-leisure-business-is-eligible-for-business-rates-relief-due-to-coronavirus-covid-19 and here - https://www.gov.uk/guidance/check-if-your-nursery-is-eligible-for-business-rates-relief-due-to-coronavirus-covid-19.

Local councils should apply the discount automatically, so if you think you are eligible and have not had the discount applied then contact your local authority urgently.

Reclaim of Statutory Sick Pay

Employers can reclaim up to two weeks SSP per employee, where employees have taken time off sick as a result of Covid 19.

Only the current rate of SSP can be claimed, so if you have topped up your employees pay the additional is an expense for your business.

This applies for periods of sickness from 13th March 202 for employees who:

have coronavirus
cannot work because they are self-isolating at home
are shielding in line with public health guidance

The claims will be made using an online service which is not yet available - we will update this guidance once we know more about the service.

Additional information is available here: https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19

Government Backed Loans

The government are backing (or partially backing) a number of loans for various sizes of business. Details of all the loans available can be found here: https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19#support-for-small-and-medium-sized-businesses

and here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/

We believe the two most likely to apply to our clients are the Business Interruption Loans and the Bounce Back Loans.

Please note that you cannot claim under both schemes.

Business Interruption Loans

These are for small and medium businesses with turnover up to £45m.

The loans are for up to £5m.

The government will pay the fees and interest for the first 12 months of the loan.

The government are providing a guarantee to the lender for 80% of the loan amount - however, please be aware that you are still liable for the entire loan amount. This does not mean that you will not be chased in the case of default.

To be eligible you will need to show, in effect, that had it not been for the pandemic your business would have been a viable lending prospect.

You will also need to show that your business has been adversely impacted by the pandemic.

Our experience is that most banks are requiring quite a lot of financial material to approve these loans - including cashflow forecasts, accounts, management account etc. Although we have had some clients who have been successful in being approved under this scheme, the process is slower than had been hoped, and even once approved there seems to be a delay in the funds being made available. Do not expect this to be a quick process.

More information on the business interruption loans can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

Bounceback loans

The loans are for up to £50k.

The loan is capped at 25% of your business turnover for 2019.

The government will pay the fees and interest for the first 12 months of the loan.

No repayments will be required for the first 12 months.

The interest rate is set at 2.5%, and lenders are not allowed to charge fees.

Repayments will be over 6 years, but there are no early repayment fees (although any interest due will need to be settled).

The government are providing a guarantee to the lender for 100% of the loan amount - however, please be aware that you are still liable for the entire loan amount. This does not mean that you will not be chased in the case of default.

For a bounce back loan, you must be able to self-declare that your business was not a 'business in difficulty' at 31st December 2019 and that is has been adversely impaced by the pandemic.

These loans only came out on Monday 4th May, so are very new - however, our experience so far has been very positive. Client's who applied on Monday were approved within hours and received the funds on Tuesday. The application process is an online process and appears to be quick and easy. There are currently less lenders offering these loans, but we expect this to increase over the coming days as they are approved by the British Business Bank.

More information on the bounce back loans can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/

Universal Credit

To help those in financial difficulty because of the pandemic, the way Universal Credit is calcuated has been changed so it is calcuated on actual earnings rather than an assumed level of earnings. If you have lost your job or your self-employment earnings as a result of the pandemic you may be eligible for support.

Further details are available here: https://www.gov.uk/self-employment-and-universal-credit

More information on eligibility is available here: https://www.gov.uk/universal-credit/eligibility

Other Support

We have tried to list here the support most likley to be relevant to our clients and that we can offer some support with. There are however a number of other initiatives such as protection from eviction for commercial and individual tennants. In addition, many lenders, local authorities, utility companies etc are also offering help in the way of reduced or deferred payments and rent, mortgage/loan payment holidays, council tax deferment etc. Our advice would be that if you are struggling financially as a result of the Covid 19 pandemic, contact those companies and organisations to which you make regular payments so see if they can offer any help.