Posted by James Pearson on 23 Mar 2020

COVID-19 Summary of Available Assistance

The impact of COVID-19 is being felt by everyone, with many businesses prevented from operating and preventing workers from working. A raft of measures to support businesses, employees and the self-employed have been set out by the Government – this article is to set out a summary of what is available to support you at this time.

All Businesses

VAT Payment Deferral

All UK businesses with a VAT payment due in the period from 20 March 2020 until 30 June 2020 will automatically have these VAT payments deferred. The deferred payments need to be made by 31 March 2021. VAT returns still need to be submitted as normal and VAT refunds and reclaims will be paid by the government as normal. Non-UK businesses paying UK VAT are not eligible for deferment.

Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. This cancellation should be done as soon as possible so that HMRC does not attempt to automatically collect on receipt of your VAT return. The direct debit will need to be set up once more following the deferral period.

Business Interruption Loan Scheme

This scheme supports UK based SMEs, with a turnover of no more than £45 million per year, with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan (subject to a pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

The scheme is now open for applications. All major banks are offering this scheme. To apply, businesses should talk to their bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss their business plan. The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.

Businesses with an existing loan with monthly repayments may want to ask for a repayment holiday to help with cash flow.

Covid-19 Corporate Financing Facility

The Bank of England will buy short term debt from larger companies. This will support larger companies affected by a short-term funding squeeze, and allow them to finance their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.

The scheme is now available for applications. All non-financial companies that meet the criteria set out on the Bank of England’s website are eligible.

Additional Assistance for Retail, Hospitality, Leisure and Nursery Businesses in England

There are additional support schemes for businesses in England which are in the Retail, Hospitality, Leisure and Nursery sectors. Properties that can 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 & boarding premises and self-catering accommodation.

Business rates holiday

This automatically applies to retail, hospitality and leisure businesses in England, for business rates in 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.

The Retail and Hospitality Grant Scheme

This provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property, where the business has a rateable value of under £51,000:

Businesses in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of between £15,000 and less than £51,000 will receive a grant of £25,000.

Businesses which don’t pay business rates are not included in this scheme.

Local authorities will write to those eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Business rates holiday for nurseries

Nurseries based in England will also receive an automatic business rates holiday for the 2020 to 2021 tax year.

Properties that will benefit from the relief will be hereditaments:

occupied by providers on Ofsted’s Early Years Register.
wholly or mainly used for the provision of the Early Years Foundation Stage.

This will apply to their next council tax bill in April 2020. However, local authorities may have to reissue their bill to exclude the business rate charge. They will do this as soon as possible.

Small Business Grant Scheme

This will provide a one-off grant of £10,000 to eligible businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. Businesses are eligible if:

The business is based in England.
It is a small business and already receives SBRR and/or RRR.
It is a business that occupies property.

Local authorities will write to those eligible for this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

All Individuals

Self-Assessment payments on account

Those due on the 31 July 2020 may be deferred until 31 January 2021. No penalties or interest for late payment will be charged if taxpayers defer payment until January 2021. Anyone with a payment on account due on 31 July 2020 is eligible – taxpayers do not need to be self-employed to be eligible for the deferment.

This is an automatic offer with no applications required.

Employers/Employees

Coronavirus Job Retention Scheme

All UK employers with a PAYE scheme will be able to receive reimbursement for 80% of their employees’ wages, up to £2,500 per month, to continue paying those employees that would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise described as ‘furloughed workers’.

Employers will need to:

designate affected employees as ‘furloughed workers’ and notify their employees of this change – changing the status of employees remain 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 (HMRC will set out further details on the information required).

The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but will be extended if necessary.

Calculate 80% of your employee’s wages and claim online via HMRC here.

Sick-Pay Support

The government is to legislate to allow UK-based small and medium-sized businesses and employers (fewer than 250 employees at 28 February 2020) to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19, covering up to 2 weeks’ SSP per eligible employee.

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 has symptoms can get a note from the NHS website.

The 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.

Self-Employed

The Self-employment Income Support Scheme (SEISS)

This will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19), allowing them to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Taxpayers can apply if they are a self-employed individual or a member of a partnership and:

have submitted their Income Tax Self-Assessment tax return for the tax year 2018-19;
traded in the tax year 2019-20;
are trading when they 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;

Their self-employed trading profits must also be less than £50,000 and more than half of their 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 their 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 their average taxable income in the same period. If the taxpayer started trading between 2016-19, HMRC will only use those years for which they filed a Self-Assessment tax return.

Eligible taxpayers can apply for the SEISS grant here. Once HMRC has received the claim from an applicant eligible for the grant, they will contact the applicant to confirm the grant amount and payment details. If the claimant also claims tax credits, they will need to include the grant in their claim as income.

If You Cannot Pay Your Tax Liability

It should be noted by all taxpayers that HMRC has also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities. Anyone who is struggling to make any tax payment should contact HMRC’s dedicated helpline (0800 0159 559) – if the payment is not due yet then HMRC request they call nearer the due date in order to manage the demand on their systems.

Whilst these measures have all been announced, bringing online all the systems for providing the reliefs and assistance (and actually making the promised payments) will take time. We are assured that the government and HMRC are working as hard and as fast as possible to ensure everyone has the support they need to get through the COVID-19 crisis.

Finally, we are already aware of several ‘phishing’ scams, where emails and texts are received purporting to be from HMRC, offering sums of money by clicking a link. Please be on the lookout for such messages, and do not access any links in such messages. HMRC will always contact you through official channels.

If you would like any advice regarding COVID-19 support and relevant taxes around this or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com

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