Covid19 — Support Service Updates
Coronavirus: Support Services and Updates
COVID-19, the 21st-century pandemic has taken the world by a storm. The entire world is in a state of frenzy, countries are facing an extreme shortage in health-based resources. Whereas, a financial crisis is threatening the global economy. The situation has caused a massive set-back to businesses, however, it appears that small and medium-sized businesses are the most vulnerable to suffer ramifications from this global catastrophe. Entrepreneurs are faced by financial challenges and are faced with the question of whether they will be able to survive at a time like this?
Keeping in view the current situation, the UK government has announced various support packages to assist small and medium-sized businesses to cope with financial constraints over the next few months. Our article today focuses on providing an update to businesses on the different support programmes and assistance services being offered by the UK government to face this crisis.
Note: All information in this article is up to date as of the 26th of March 2020, please refer to the government website for any further updates after this date.
Business support announced in the budget 2020
This section comprises a quick overview of the key announcements made in the 2020 Budget. (We will be discussing some of these points in detail)
- Rishi Sunak, Chancellor of the Exchequer, announced that the government of the UK plans to spend over £30bn to tackle the economic and financial challenges arising from the outbreak of COVID-19.
- The government of the UK has promised that it will extend the scale of financial assistance to the National Health Service (NHS) to prevent the spread of the Coronavirus effectively.
- The government has announced that it will provide financial assistance to employers paying SSP for qualifying employees.
- Small and medium-sized businesses might be offered loans to help them compensate the financial losses resulting from the ongoing pandemic.
- Retail businesses along with businesses from the leisure and hospitality sector with a valuation under £51,000 will be offered a full break from paying business rates for the 2020–21 tax year. Moreover, about 700,000 businesses that are unqualified for this relief may be offered £10,000 in cash grants.
What do you need to know about the Coronavirus Business Interruption Loan Scheme?
Coronavirus Business Interruption Loan Scheme (CBILS) is business funding support offered by the Government of the UK working with the British Bank to assist small and medium-sized businesses. The purpose of this scheme is to shield businesses during a time of economic crisis. The programmes allow businesses to get access to loans, invoice finance, overdrafts and asset finance with a limit of up to £5 million. The small and medium-sized businesses can avail this opportunity for up to six years.
The Government of the UK, led by Mr Boris Johnson, has also offered Business Interruption Payment to help such businesses cover the first 12 months of interest payments and any lender-levied fees as well. This can enable small businesses to eliminate their upfront costs and benefit from lower initial repayments.
Commercial lenders will help fulfil this scheme with the support of state-owned British Business Bank. With all the major banks in the UK included, 40 accredited lenders will deliver this scheme.
What is the eligibility criteria?
In order to qualify for this scheme, your business must:
- Be a UK-based business with an annual turnover of no more than £45 million.
- Fulfil the eligibility criteria set by the British Business Bank.
How can you avail of this scheme?
To avail this scheme you can apply through the lender’s website or via one of the 40 accredited lenders delivering the scheme apart from the British Business Bank. Moreover, you should also be aware that certain bank branches may be closed to practice social distancing. You may also speak to your accountant or to us to be introduced to our finance partners to help you with CBILS, alternatively, use our funding portal to find CBILS approved lenders ready to lend to your business based on your criteria.
Moreover, you may review the rules of the scheme and the list of accredited lenders delivering the scheme on the British Business Bank website.
It is worth mentioning that all of the major UK banks are offering this scheme.
Statutory Sick Pay Rebate
What do you need to know about it?
The UK government plans to introduce new legislation in an effort to allow small and medium-sized businesses to reclaim Statutory Sick Pay for employee absence due to the coronavirus illness. The legislation will also help sponsor the SSP of every qualifying employee for up to two weeks.
What is the eligibility criteria?
In order to qualify, your business must:
- Be UK-based.
- Be small or medium-sized with less than 250 employees on board as of 28 February 2020.
How can you access it?
Note: The rebate scheme is under development and further details will be provided soon. The UK government plans to coordinate with employers over the coming months to establish a proper repayment mechanism as soon as possible.
What do you need to know about VAT Deferral?
Another initiative introduced by the UK government to support small and medium-sized businesses is through the deferral of VAT payments for up to 3 months.
What is the eligibility criteria?
To avail of this scheme, your business must be VAT-registered in the UK.
How can you access it?
Accessing this scheme is a simple and automatic procedure that requires no application submission. According to this, VAT registered businesses in the UK are not required to pay for VAT which is due during the period. Taxpaying businesses will be exempted until the 2020–21 tax year ends to pay for the liabilities accumulated during the VAT deferral period. The state will pay VAT refunds and reclaims as it does in normal circumstances.
For customers making payments by direct debit should cancel their direct debit if they want to defer payments and cannot pay. Kindly ensure that you do this on time. So that HMRC does not try to collect the receipt of your VAT return automatically.
The deferral period has begun from 20th March 2020 and will continue till 30th June 2020.
What do you need to know about Business Rate Relief for retail, hospitality and leisure?
Retail, hospitality and leisure sector businesses will not be liable to pay business rates for the 2020–21 tax year.
What is the eligibility criteria?
In order to qualify for this scheme, your business must:
- Be based in England.
- Belong to one of the following sectors:
- Retail
- Hospitality
- Leisure
The properties that can benefit from this must be those that are wholly or mainly being utilized, for instance:
A. Shops, bars, cafes, cinemas, live music venues.
B. For assembly and leisure; or as hotels, guest/boarding premises and self-catering accommodation.
How can you avail it?
- The local authorities usually levy the business rates holiday on your bills automatically.
- You can use the business rates calculator to calculate the business rate charge that you will not be liable to pay this year.
- To find your local authority, consult gov.uk.
What do you need to know about the deferral of self-assessment payment?
The Self-Assessment 2nd payment on account to HMRC may now be deferred until January 2021. This payment is usually made by 31st July 2020.
What is the eligibility criteria?
You qualify for the deferment of Self-Assessment payment if you have due self-assessment payment on account to make on 31st July 2020. The deferment plan aims to assist self-assessment tax-paying individuals like self-employed individuals to ease the financial burden resulting from the coronavirus crisis.
How can you avail it?
This is a simple automatic procedure which requires no application submission. You will not be penalized for delaying your July 2020 payment on the account until January 2021.
Moreover, HMRC has further reduced the hardship by extending the Time to Pay offer to all companies and self-employed individuals currently suffering from financial complications due to the ongoing health crisis.
What do you need to know about the Coronavirus Job Retention Scheme?
The coronavirus crisis has stagnated the global economy. Businesses in the UK fear that they might eventually have to temporarily close down their businesses. The situation is worse for the employees working in the UK, who have little or no job security. Economic experts around the world have predicted that the UK economy will be one of the most affected economies due to the coronavirus pandemic.
Keeping in view the current consideration, the UK government has introduced a temporary support scheme under the name of Coronavirus Job Retention Scheme. This scheme aims to provide financial support to employers whose day-to-day business operations have been negatively impacted by the pandemic All employers can avail this scheme, effective from a 3-month period that commenced from 1st March 2020.
Under this scheme, employers are allowed to claim 80% of their regular monthly wage costs of furloughed employees (up to 2500/month) along with employer NI contributions and minimum automatic enrolment employer pension contributions on their wages.
The UK employers can utilize this support scheme whenever they wish to during the given 3-month period (mentioned above). Also, every employer that had developed and started a PAYE payroll scheme on the 28th of February 2020 can avail this temporary support programme.
This scheme is available for any UK organization with employees, like:
- Businesses
- Charities
- Public authorities
- Recruitment agencies (agency workers working under PAYE)
What do you need to know about COVID-19 corporate financing facility?
Another support initiative introduced is the COVID-19 Corporate Financing Facility. The initiative will enable the Bank of England to purchase short-term loans from larger enterprises. This purchase is aimed to help established businesses who are facing short-term funding shortages. Moreover, this initiative will also help support corporate finance markets and ensure the provision of credit to companies. The government plans to fund this scheme through central bank reserves.
This scheme will be functional for at least 12 months and will continue to function as long as the support is required to ease cash flow pressures on firms contributing to the UK economy.
What is the eligibility criteria?
Enterprises along with their finance subsidiaries which make material contributions to the economy qualify for this programme. You can visit the website of the Bank of England to learn more about this facility.
How can you access it?
In order to avail this opportunity, you have to contact your bank. You need to keep in mind that all banks do not issue commercial paper. If by any chance your bank does, then UK finance will inform you of the banks that issue commercial paper by providing you with a complete list. For more information, you should visit the website of the Bank of England.
What do you need to know about protection for commercial tenants who miss rent payments due to the coronavirus situation?
The UK government has announced that it will protect every commercial tenant, who is unable to pay their rent due to the ongoing coronavirus situation, to save themselves from possible eviction.
This has been brought into the light because the government believes that many businesses will be struggling with cash flow problems during this time. Due to which commercial tenants might fear eviction. Most landlords and tenants are already signing agreements and making voluntary arrangements about rent payments that are due shortly.
The emergency Coronavirus bill which is currently being reviewed by the Parliament, strictly orders that no business will be evicted out of their rented premises if they are unable to pay their commercial rent within the next 3 months.
However, commercial tenants will still be required to make rental payments soon after the 3-month period ends.
What do you need to know about Extension of Business Improvement Districts (BIDs) arrangements?
According to this project, Business Improvement Districts will be allowed to extend the maximum time limit to make their arrangements till the 31st March 2021 by postponing BID ballots that had to take place this year. The extension can enable BIDs and the local authorities supervising the ballot process to focus more on how they should be responding to the current pandemic emergency.
What is the eligibility criteria?
This extension can be availed by any BID in England owing to ballot between now and 31st December 2020.
How to avail this scheme?
The changes will come into effect as soon as the Coronavirus Bill receives Royal Assent.
What do you need to know about commercial insurance during a pandemic?
An alarming concern for most businesses is that they are not insured for pandemics or ‘Unspecified Notifiable Diseases’. Notifiable Diseases are particular infectious diseases for which registered medical practitioners are liable to inform the ‘proper officer’ to their local council or health protection team whenever diagnosed as a suspected coronavirus case.
As most of the commercial insurance policies do not cover pandemics, there are a few insurance policies that protect businesses during closures ordered by the government. Businesses who have subscribed to such insurance policies; where they are covered in situations when the government has ordered the closure, in case of pandemics or unspecified notifiable disease. They can legally make a claim with their insurance provider (the claim may be subject to other terms and conditions of the insurance policy).
Insurance policies may vary from company to company. Therefore, it’s advisable for businesses to properly assess the terms and conditions of their insurance policy and contact their insurance providers accordingly.
You may check the list of notifiable diseases on the government’s website. Recently, on the 5th March 2020, COVID-19 was added to the list of notifiable diseases
What do you need to know about unspecified notifiable diseases?
There are businesses who have additional covers in their insurance policy regarding ‘unspecified notifiable diseases’. Through these insurance add-ons, businesses can safeguard themselves by letting them claim for losses. The losses may be during the outbreak of a disease listed as a notifiable disease along with diseases that were unknown at the time the insurance policy was devised.
Important:
Who can make a claim for insurance cover?
The following businesses can seek an insurance cover:
- Businesses covered for COVID-19 (pandemics or infectious diseases) are allowed to make a claim.
- Businesses that have event cancellation policies that cover unspecified notifiable disease. They are allowed to make a claim for the required and unavoidable cancellation, curtailment, delayed, and disruption of the event due to reasons that cannot be entertained by organizers and participants.
Most commercial insurance policies will not take the pandemic into account. Therefore, it is advisable for businesses to check the terms and conditions of their insurance policy thoroughly. In case of discrepancies, they should contact their insurance providers.
Government support for individuals due to COVID-19:
What do you need to know about the self-employment income support scheme?
The self-employment income support aims to provide relief and financial assistance to those self-employed individuals whose earnings are most likely to be negatively affected by the coronavirus.
You also need to know that any payment received through this scheme will be subject to Income Tax and National Insurance (NI). As they are a substitute for the income that comes with the routine practice for benefits. Also, this grant is considered as an income for Universal credit and Tax credits purposes. It may impact the amount individuals are entitled to claim.
Meanwhile, self-employed individuals waiting to get paid may qualify for universal credit. The government of the UK has supplied more than £6.5bn additional support for everyone who is negatively impacted by COVID-19.
The government aims to ensure that the neediest individuals get the support. In order to achieve this, they have capped this scheme. They have also revealed that self-employed individuals with trading profits of £50,000 and more, with mean self-employment income of £186,000 and the mean total income of £217,000 will receive the support. Individuals with a higher average income can utilize their savings. They may still be able to avail this facility via the temporary Coronavirus Business Interruption Loan Scheme.
What is the eligibility criteria?
Self-Employment income support scheme is for self-employed individuals who have reported their income in their returns from self-employment in the tax year 2018–19.
The eligible self-employed individuals who were unable to file their returns for 2018–19 have a 4 weeks notice from the announcement until 23rd April 2020 to qualify for this scheme. If this is something you have not done. Speak to our tax accountants to help you file a tax return immediately. You can learn more about this grant here.
What do you need to know about the mortgage and rent holiday?
The government of the UK has offered a new package as a preventive measure to protect tenants who are affected or those who are likely to get affected by corona. According to this scheme, no tenant residing in either social or private accommodation can be evicted from their home. The scheme has come into effect from 26th March 2020 and advises landlords to give a 3 months notice to their tenants if they are planning to repossess the property. The additional period legally extends until 30th September 2020. You can apply for an extension for the 3 month notice period if needed.
These measures will apply to England and Wales. However, tenants are still required to pay their rent like in normal circumstances. They may seek support if they are facing financial problems. It is advisable for tenants to speak to their landlords about their problems first. The government has encouraged both tenants and landlords to devise a rent payment scheme to sort out the issue.
Additionally, interest rates will be implemented and interest will be charged every month on any payment due by the tenant as in normal circumstances.
What do you need to know about the Statutory Residence Test (SRT)?
The guidelines and events resulting from the effects of the coronavirus pandemic may continue to change at short notices frequently. Under the current circumstances, every individual’s case may vary and the verification would depend entirely on the facts and evidence. For this, HMRC has developed circumstances to justify what would be considered as ‘exceptional days’. Exceptional days are counted as that can be discarded or disregarded. This is to determine whether an individual is deemed as a resident in the UK or not.
Following circumstances are considered as exceptional:
- In case you are quarantined or self-isolating on the advice of a health professional or public health guidance in the UK.
- If you are advised by the state to refrain from travelling from the UK as a result of the virus.
- In case you are unable to exit the UK due to closure of international borders.
- If you are requested by your employer to return to the UK temporarily as a result of the coronavirus pandemic.
COVID-19 advice for employees and employers
- The government has advised businesses to encourage their employees to work from home when the situation allows.
- Anyone showing mild symptoms like a dry cough or high temperature should be immediately sent home. They are advised to take the necessary precautions like self-quarantine.
- Advise your employees to wash their hands more frequently and cover their mouth when they sneeze or cough.
- Disinfect any surface or object that you believe is touched or used frequently.
- Employees following the advice to work from home will qualify for SSP. The SSP rules apply from the first day off from work.
- Advise your employees to stay and work from home to slow down the spread of COVID-19 within the community.
- If your employer demands evidence for illness then any employee who is showing symptoms of the virus can get an isolation note from NHS 111 online. Those employees who are living with someone who has shown symptoms for the virus are also eligible to get an isolation note from the NHS website.
- Ensure the provision of hand sanitizers and other disinfectants to employees and encourage them to use them often.
- Do remember to update the contact directory and emergency contact details of every employee working in the company.
- Ensure that your office has places where employees can easily wash their hands for 20 seconds with soap and water.
With the unpredictable situation at hand. It is vital to invest in the best business accountants who have the necessary expertise to guide you through this perilous maze. Clear House Accountants have extended their support through a Coronavirus Business Support Hub. We aim to help businesses regain their financial stability and manage the risk that comes with this pandemic.
