COVID-19 – an update for businesses
Over the past few weeks there have been several announcements of increased restrictions to try and help delay the spread of coronavirus, as well as generous measures to help businesses and individuals through this crisis.
The Chancellor, Rishi Sunak, has pledged to do whatever it takes to help protect the economy with a total package estimated at £330 billion equivalent to 15 per cent of GDP.
We have summarised the key initiatives available to businesses below and how they can be accessed in this time of adversity:
Coronavirus job retention scheme - for employees who would have otherwise been laid off due to financial pressures, the Government has now pledged to cover 80 per cent of their wages up to £2,500 per month.
Businesses will need to identify and notify the individuals concerned. Details will then need to be submitted via an online portal to HMRC, but there are currently no timescales as to when this will be available.
Quarterly VAT deferral - the next quarterly VAT payments have been deferred by the Chancellor such that no VAT will be due between now and the end of June. Instead, businesses will have until April 2021 to settle this deferred liability. The Government has estimated that this deferral will help free up £30 billion to help businesses with their cashflow in the short term.
The relief will be automatic, and businesses will not need to apply. Submissions of VAT returns should still, however, be completed by the normal deadlines.
Statutory sick pay - UK based businesses with fewer than 250 employees (as at February 28, 2020), can reclaim up to two weeks statutory sick pay (SSP) for absence due to coronavirus.
HMRC is currently working on a means of repayment, so it is not currently possible to make a claim. Records should, therefore, be kept of staff absences and SSP paid.
A doctor's note is not necessary but an 'isolation note' can now be obtained if requested by employers by simply completing an online form on the NHS 111 website.
Business rates and grant funding
Shops, restaurants, pubs, cinemas, live music venues, hotels and other hospitality/leisure trades will receive a 12-month business rates holiday. No action will be required by these businesses and local authorities will reissue business rate invoices in due course.
Cash grants will also be available for businesses in these sectors. Properties with a rateable value of less than £15,000 will receive a £10,000 grant, whilst those with a rateable value of between £15,001 and £51,000 will receive £25,000. Again, no action is required by the business and local authorities will write to those who are eligible to access this funding.
Nurseries will also receive a 12-month business rates holiday and a one-off grant of £10,000 will also be provided to smaller businesses who pay little or no business rates; for example, if they are eligible for small business rate relief or rural rate relief.
A coronavirus business interruption loan scheme (CBILS) will provide UK businesses with turnover of less than £45 million access to a loan. The Government will guarantee 80 per cent of the loan up to a value of £5 million. They will also cover the first 12 months interest payments on behalf of the business.
This scheme is expected to be accessible from this week and should be requested via your bank. Further details and eligibility criteria can be found at https://bit.ly/398DwVe .
Larger businesses may be able to benefit from the Corporate Financing Facility, with the Bank of England buying short term debt from them.
Time to pay
A dedicated helpline has been set up for those who have concerns about paying their tax on time due to coronavirus. To discuss setting up a 'time to pay' arrangement with HMRC such that your tax liabilities can be spread over a more manageable timescale or to request a halt to debt collection proceedings you should call 0800 0159 559.
For the self-employed, there have been fewer measures announced to date, but they will now be able to access an equivalent rate of SSP via universal credits where they have to self-isolate. Furthermore, their next payments on account, under self-assessment, have been deferred from July 31, 2020 to January 31, 2021.
Hazlewoods tax partner, Nick Haines, said: "These are difficult and unprecedented times. Businesses need to consider their short- and medium-term cash flow requirements and assess their eligibility for the financial support on offer, to help them through the coming months.
"Clearly, employment costs are typically one of the largest expenses for businesses, so the job retention scheme is particularly welcome.
"The details are a little light at the moment so it will be important to keep abreast of developments in this area, which you can do by visiting our COVID-19 webpage."
Nick Haines is a partner at Hazlewoods, the Gloucestershire headquartered accountants and business experts.
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