Small Business Government Aid: COVID-19 Update

Here at ICS, we are committed to supporting you and your business, especially during these challenging and unprecedented times. To ensure you are fully up to date with the financial impact of COVID-19 we have set out a summary of the government’s key announcements for you, your business and your employees.

The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support businesses including:

  • a Coronavirus Job Retention Scheme
  • the Self Employment Income Support Scheme
  • deferring VAT and Income Tax (for the self-employed) payments
  • a Statutory Sick Pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000
  • grant funding of £25,000 for retail, hospitality and leisure businesses
  • the Coronavirus Business Interruption Loan Scheme
  • a new lending facility from the Bank of England
  • the HMRC Time To Pay Scheme

Job Retention Scheme 

The chancellor has announced that the government will pay employees wages, where individuals aren’t able to work due to coronavirus.  Employees will receive 80% of their wages, up to a maximum of £2,500 per month.  The understanding is that the wage subsidy will apply where businesses have already ceased the employment of a worker if they are re-employed and instead granted a leave of absence.

According to the chancellor’s announcement, the subsidy will be backdated to the start of March 2020 and last for three months, but the scheme could be extended if required.

The scheme is expected to be up and running by the end of April 2020.

Self Employment Income Support Scheme

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
  • self employment profits of less than £50,000

Your self-employed trading profits must also be less than £50,000 and more than half of your income (excluding dividends) must 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 6 April 2016 and 5 April 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.

If you meet the eligibility criteria set out above, you’ll get a taxable grant which will be 80% of the average profits for the following tax years (where applicable); 6 April 2016 to 5 April 2017, 6 April 2017 to 5 April 2018 and 6 April 2018 to 5 April 2019.

The grant will be paid directly into your bank account, in one instalment. The payment is due to be made in June, subject to confirmation.

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 and doing so will only delay the urgent work being undertaken to introduce the scheme.

VAT & Income Tax Deferral

The government will defer Valued Added Tax (VAT) payments for 3 months.  The deferral will apply from 20 March 2020 until 30 June 2020.  Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

If you are self-employed, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Statutory Sick Pay for SMEs

The government is bringing forward legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

You are eligible for the scheme if your business is UK based and your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

For full details of the criteria that must be met in order to claim the SSP please see here.

Business Rates

The government will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.  If this is applicable to your business, your next council tax bill in April 2020 will be automatically adjusted, although local authorities may have to reissue your bill automatically to exclude the business rate charge.

Loans & Funding

The government are introducing a variety of loans and funding facilities which are summarised as follows:

  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a ratable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

For further details, criteria & details of how to apply please click here.

HMRC Time To Pay (TTP)

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 have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is enough to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

There are elements of the support that have yet to be finalised, with systems still being developed.  We will therefore keep you up to date with any developments.

If you would like to discuss any of the above, please do not hesitate to get contact with us. 

We hope you and your family are keeping well and safe during this very challenging time.