Financial support for businesses during coronavirus (COVID-19)
Updated: Apr 24, 2020
The Government has set out a number of measures to support businesses.
Find out what financial support you can get for your business by clicking here.
1. Deferral of VAT payments due to coronavirus (COVID-19)
To help businesses manage their cash flow during the coronavirus pandemic the government has made some temporary changes to the VAT payments due between 20 March 2020 and 30 June 2020. . Businesses will not incur interest or penalties from HMRC on the deferred amounts. No applications to HMRC are needed. Find out how you can defer your VAT payments for a limited period and manage your cash flow by clicking here.
2. Coronavirus Job Retention Scheme
This scheme is intended to prevent redundancies by reimbursing all UK employers r 80% of their employees’ wages, up to £2,500 per month. Employees must stop working but will stay on their employers payroll as employees.
3. Deferral of Income Tax Self-Assessment payments
Any second self-assessment payments due on 31st July 2020 can be deferred until 31st January 2021. This is optional and is not limited to those who are self-employed. Like VAT deferrals no applications to HMRC are needed. Penalties and interest will not be charged if payments are deferred.
4. Statutory Sick Pay (SSP) relief packages – small and medium sized businesses (SMEs)
This applies to small or medium-sized UK based businesses which as of 28th February 2020 employ less than 250 employees. This scheme permits up to two weeks’ SSP paid per eligible employee because of Covid-19 absence to be reclaimed (currently £94.25 per week rising from 6th April 2020 to £95.85) by the employer. You should keep records of staff absences and payments. SSP is payable from the first day of coronavirus related absence and a fit note from a GP fit note is not required. The legislation also introduced the concept of an “isolation note” which can be obtained from the NHS website by the employee if the employer requires a fit note.
5. 12-month Business rates holiday – retails, hospitality, leisure and nursery for businesses in England for 2020/2021 tax year.
Retail Hospitality and Leisure:
To be eligible the:
(a) Business must be based in England (b) Business must be in the retail, hospitality and/or leisure sector.
The properties must be properties that are wholly or mainly used as:
(a) Shops, cinemas , live music venues restaurants, cafes and drinking establishments (b) For assembly and leisure (c) Hospitality, hotels, guest & boarding premises or self-catering accommodation.
Further guidance is available from HMRC by clicking here.
Nurseries: Business rates holiday for nurseries in England for 2020/2021 tax year.
Properties that will benefit from the relief will be properties that are :
(a) Occupied by providers on Ofsted’s Early Years Register (b) Wholly or mainly used for provision of the Early Years Foundation Stage.
6. £10,000 one off business grant funding – small businesses in England
This funding is available from local authorities for businesses which pay minimal business rates or receive total small business rate relief, rural rate relief and tapered relief. Eligible businesses must occupy property and meet the rates criteria as at 11 March. Many businesses have applied for and received this funding from their local authorities. However some local authorities are still to receive applications for the loan from eligible businesses.
If your business meets the requirements and you have still not applied for the loan please ensure that you do so immediately as it will assist your business and your cashflow. If you are unsure as to whether you qualify for the loan please contact us.
7. Coronavirus Business Interruption Loan Scheme – SMEs
The scheme gives SMEs access to a variety of loans, overdrafts, invoice finance and asset finance for up to 6 years. The government has agreed to cover the first 12 months of interest payments and any lender fees and will also guarantee 80% on each loan subject to any lender caps as an incentive for lenders. This scheme is accessible via the British Business Bank and other commercial lenders including the high-street banks.
Businesses must meet the following criteria::
· Be UK based
· have a turnover of no more than £45 million per annum
· have a borrowing proposal which would be viable if it weren’t for the Covid-19 pandemic and the lender considers that the business will be able to trade out short and medium-term difficulty.
The details of the Scheme can be found here
Many businesses have complained that they have been finding it difficult to obtain these loans from the Banks and that lenders are requiring additional personal guarantees from business owners and levying high interest rates. Whilst the big four banks (Barclays, HSBC, Lloyds and Royal Bank of Scotland) have now announced that they will not seek personal guarantees for lending below £250,000 you should be careful when entering into any agreements with the commercial lenders. We advise that you seek independent legal advice before you enter into any of these finance agreements.
8. £25,000 grant funding – retail, hospitality and leisure
This funding is for retail, hospitality and leisure businesses with property rateable values between £15,000 and £51,000. To be eligible businesses must be based in England, be in the retail, leisure and hospitality industries and must occupy property with a rateable value of less than £51,000.
The available grants are :
· Rateable value up to £15,000 – grant of £10,000
· Rateable between £15,000 and less than £51,000 – grant of £25,000.
9.Self-Employment Income Support Scheme
· This scheme assists the self-employed, including partners in partnerships who have suffered a loss of income as a result of the pandemic.
· Under the scheme you can claim taxable grants worth up to 80% of your business’s trading profits to a maximum sum of £2,500 per month for a period of 3 months.
10. Time to Pay Scheme - HMRC
Any self-employed individuals and businesses in financial distress and with outstanding tax liabilities may be eligible to receive support with their tax payments. The assessment is on a case by case basis. To see if you qualify please contact HMRC on Tel no: 0800 0159 559.
11.Corporate Financing Facility for large companies
· There is a corporate financing facility available for large companies provided by the Bank of England. There is specific eligibility set out on the Bank of England website.
· Check your insurance policies to see whether unspecified diseases or pandemics are covered and contact your insurance policy provider.
· Ensure that you understand the penalties and enforcement measures in place particularly if your business remains open or operational in some way.
· There are also various measures in place to assist tenants and landlords (commercial and individuals) with rent holidays , prohibition of commercial and residential rent evictions for a specific period. Please note that these provisions do not remove the responsibility for payment of rent from tenants. For more information click here.
· Check your contracts for force majeure clauses
· Carry out a risk assessment for your business
· Check employment contracts and policies
· Review the impact on your employees
· Keep your employees informed of developments
· Ensure there is good hygiene in the workplace
· Discuss working arrangements with employees and in particular with high-risk employees
· Check the government’s guidance daily so that you can better advise your employees on what they should or should not be doing to protect themselves and other employees.
Some of the measures being implemented are very much at an early stage. If you wish to take advantage of any of these options, you should keep up to date with information provided on the gov.uk website which is being updated on a daily basis.
We are taking calls daily from clients in these uncertain times.
If you require advice on the current Coronavirus situation and how this will impact you and your business, please contact us. We are specialist Business and Commercial Solicitors based in Bedford and operate nationally.
If you would like to talk through the consequences for you, call our Coronavirus Helpline on 01234 938089 or e-mail us at firstname.lastname@example.org and one of our Helpline team member will be in touch.