Coronavirus: Government support for businesses
As uncertainty develops and businesses feel the impact of the behaviour changes across the UK as a result of the current pandemic of Coronavirus (COVID-19), businesses of all sizes need to consider the potential impact on their activities and finances and plan accordingly.
In light of the current situation, the Government has announced ongoing enhancements to earlier announcements on public services and business support. These are to provide an economic response which ‘will be one of the most comprehensive in the world.’
Please find below our summary of the latest government updates to support businesses.
Coronavirus Job Retention Scheme
Announced on 20 March, a new Coronavirus Job Retention Scheme (CJRS) will be set up to help pay people’s wages. Any employer in the country (small or large, including charitable or non-profit) will be eligible for the scheme.
- Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the Coronavirus outbreak.
- UK workers of any employer who is placed on the CJRS can keep their job, with the government paying up to 80% of a worker’s wage costs, up to a total of £2,500 per worker each month.
- This will be backdated to 1st March and will be initially open for 3 months, to be extended if necessary.
- It can apply to anyone who was on the payroll at 19 March 2020, even if they have subsequently been made redundant, as long as they are reinstated on the payroll.
Self Employed Income Support
Under the Self Employed Income Support Scheme, individuals will be able to apply for a grant of up to 80% of average monthly trading profits for a 3-month period. This will be calculated by looking at average trading profits over the last 3 tax years (2016/17 to 2018/19) or shorter period where applicable. Like the Coronavirus Job Retention Scheme (CJRS), this is subject to a maximum claim of £2,500 per month. The maximum total grant is therefore £7,500.
The plan will be backdated to March and cover up to 95% of the self-employed, according to the Chancellor. Payments are set to be made to up to 3.8 million people.
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch to support businesses to access bank lending and overdrafts.
Any business that needs access to cash to pay their rent, salaries, suppliers, or to purchase stock, will be able to access a government-backed loan on ‘attractive terms’. These terms have not yet been specified.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value, with no interest due for the first 12 months.
All VAT payments due between 20 March and 30 June 2020 will be automatically deferred. This will apply to VAT periods ending February, March and April 2020. Any VAT deferred is due for payment by 31 March 2021 – details of how to pay will follow at a later date. Business can choose to pay VAT normally if they wish.
The scheme does not cover sales of digital services in the EU (VAT MOSS).
This deferral will apply to all businesses and is automatic so there is no need to contact HMRC. However, any business that pays VAT by Direct Debit must cancel it, otherwise HMRC will collect VAT due as normal.
For the avoidance of doubt, VAT returns should still be submitted on time as usual. For any business that is unable to file on time, a default surcharge may apply, though there may be grounds to appeal assuming it is COVID-19 related.
July payments on account for self-employed individuals have been cancelled. The payment will instead be due on 31 January 2021 with the balancing payment for the 2019/20 tax year. No action is required to defer, simply don’t pay and no interest or penalties will apply.
These measures apply to everyone within self-assessment however the deferral is optional. HMRC are encouraging people to pay if they can, but everyone is entitled to defer without drawbacks.
The government will bring forward legislation to allow small and medium-sized businesses (SMEs) and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
Help for the retail, hospitality and leisure sectors
The government will increase the Business Rates retail discount to 100% for one year, expanding it to the leisure and hospitality sectors, and increase the planned rates discount for pubs to £5,000. Further guidance on this scheme can be found here.
Businesses in these sectors with a rateable value of less than £51,000 will also have access to cash grants of up to £25,000.
Small business grant
Through local authorities, the government plan to support small businesses by providing a one-off grant of £10,000 to help meet their ongoing business costs. Those businesses with a rateable value of less than £12,000 that qualify for Small Business Rate Relief will be eligible for this grant.
Help with tax liabilities
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. For Time to Pay support if you are concerned about being able to pay your tax due, call HMRC’s new dedicated COVID-19 helpline on 0800 0159 559.
Companies House are accepting requests for deadline extensions if Coronavirus has impacted the ability to file accounts on time. Action should be taken ahead of the usual filing deadline.
MTD ‘Digital Links’ deadline extended
Businesses who registered for Making Tax Digital (MTD) for VAT are required to maintain digital records which can be held within more than one piece of software or spreadsheet. However, there must be a digital link between all parts of their functional compatible software, meaning the data cannot be transferred manually between software.
HMRC had imposed a deadline for compliance of 1 April 2020 / 1 October 2020, dependent on a business’ required registration date.
However, due to the impact Covid-19 is having on businesses, HMRC have granted an extension for those businesses participating in Making Tax Digital for VAT. Businesses now have until their first VAT return period starting on or after 1 April 2021 to implement digital links.
Further information on the key measures announced can be found on our information sheet.Read our Government support sheet
Information correct as of 30 March 2020.