Government help for SMEs coping with Coronavirus

This information was last updated on Friday 27th March 2020 at 10.30am. Further updates will follow as new measures are announced. Please join our mailing list here to receive updates straight to your inbox.

In the Spring Budget, new Chancellor Rishi Sunak announced £30bn of measures to shore up the UK economy against the coronavirus crisis. In this blog we look at the help being offered specifically to Small Businesses and the Self-Employed to insulate them from the economic impact of the pandemic.

Support for workers & employers dealing with sickness absence

Statutory Sick Pay (SSP) will be temporarily paid from the first day of absence rather the fourth day for individuals with COVID-19, and for those instructed to self-isolate. Those ineligible for SSP (such as the self-employed) will be able to claim benefits quicker through changes to Employment and Support Allowance and to Universal Credit.

The Government will pass legislation shortly to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. 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
eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force

We will keep you fully informed of any developments on when the repayment mechanism for employers will be finalised.

More flexibility for tax payments

HMRC’s Time to Pay scheme will be scaled up, allowing more businesses to use this service which allows them to defer tax payments for 6-12 months. 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.

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559. Please talk to us at ER Grove if you want our help with this.

Business loan funding for SME’s

A new temporary Coronavirus Business Interruption Loan Scheme (CIBLS), delivered by the British Business Bank, will launch in the week commencing Monday 23rd March to support businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan up to the value of £5m. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments. Please be aware, however that the borrower always remains 100% liable for the debt.

To be eligible for support businesses must:

Be UK based, with turnover of no more than £41 million per annum
Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements

Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

To apply for an CBILS-backed facility, businesses may wish to consider approaching one or more participating lenders to discuss their borrowing needs. A list of lenders can be found here.

Here at ER Grove we will support any clients needing assistance with obtaining this support. Download our PDF guide HERE to find out how to apply for a CBILS loan.

Temporary suspension of business rates

There will be a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority after 2oth March when they will receive their guidance from the government.

Support for businesses that already pay little or no rates

Additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) has been announced by the Government. This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs. If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be 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. The scheme will be in place for three months initially and all UK businesses are eligible.

The salary subsidy will be paid through a new HMRC system and will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. It will be backdated to 1^st March if required.

HMRC are working on the systems now and more details of the scheme will be provided shortly. They are working on a new system to reverse pay staff normally paid under PAYE rules.

It is not clear whether directors and shareholders of owner managed companies are eligible, or how it affects zero hours workers.

You will need to:

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

‘Furloughed workers’ are employees kept on the payroll rather than being laid off.

We will have a template furloughing letter available, which is currently being confirmed with solicitors.

A 3 month extension for filing Company Accounts

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.

Whilst this is a welcome move, we will continue to do all we can to ensure client’s accounts are prepared on time.

Coronavirus (COVID-19) Self-employment Income Support Scheme

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. This does not apply to limited company directors who take salary and dividends. They may be able to claim under the Coronavirus Job Retention Scheme, but we do not have the full information yet.

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

have submitted your 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

Your self-employed trading profits must also be less than £50,000 and more than half of your income come 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 started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

2016 to 2017
2017 to 2018
2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount. The grant will be paid directly into your bank account, in one instalment. It will be up to a maximum of £2,500 per month for 3 months.

Please note that you cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Individuals do not need to contact HMRC now.

Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.