Coronavirus: Support for Businesses

We thought it would be helpful to summarise the support for businesses that is currently available from the government. More in-depth information is on previous posts on this website, or the government website – a link is at the bottom of this post.

Support for Employees

Coronavirus Job Retention Scheme

  • This is a grant – you will not have to pay this back. But you will have to pay tax and NI on it, and declare it if you are on benefits.
  • Any UK business with employees can claim, including charities, recruitment agencies and public authorities.
  • Covers full-time, part-time, agency and zero hour contract employees.
  • Employees can be furloughed on 80% of their wages (capped at £2,500 per month) for up to 3 months if they would otherwise be made redundant, as long as they do no work for their employer at all whilst furloughed.
  • Employers can “top up” the other 20% of the furlough pay but they don’t have to.
  • Employees already on unpaid leave cannot be furloughed. Employees on Sick Leave or self-isolating should get SSP, but can be furloughed after this.
  • If an employee is working but on reduced hours or reduced pay they are not eligible for the scheme.
  • They must be furloughed for a min, of 3 weeks and must be notified in writing. They can be brought back and then furloughed again if necessary.
  • Some staff can be furloughed whilst some still work. If staff have more than one job they can still work elsewhere or do volunteer work.
  • Company directors can be furloughed as long as they have stopped providing services or generating income.
  • Furlough money will be able to be reclaimed by employers from the HMRC from approx. the end of April through a new portal.

Support for Sole Traders, Partnerships & the Self Employed

Coronavirus Self-Employed Income Support Scheme

Who can claim and what you’ll get:

  • This is a grant – you will not have to pay this back. But you will have to declare it on tax returns and if you are on benefits.
  • The scheme will pay taxable grant payments to anyone who submitted a 2018-19 tax return and is still trading through to the 2020-21 tax year. On the return self-employment has to have been your main source of income, and you must have made a profit of less than £50,000 ( or it was if averaged over the last 3 yrs)
  • You will get 3 months’ pay of 80% of your average self-employed profit based on the last 3 years (or whatever period you were trading if it was less than this.)

The bad news:

  • If you were not self employed on 5th April 2019 or if you have stopped trading since 5th April 2019, or are about to, you cannot claim.
  • If you average profit was over £50,000 in the last 3 years, or if self-employment was not the main source of income on your return, you cannot claim.
  • The money will be paid in one lump sum for the 3 months, but not until June 2020 at the earliest.

The HMRC will contact people that are eligible and explain how to claim the money. This will not be for at least 4 weeks – so expected to start in May. They will not contact you by text or email – please be aware of fraudsters.

Loans For Businesses

Coronavirus Business Interruption Loan Scheme (CBILS)

Good points:

  • Loans should be available for most small businesses with turnover under £45m interest free for at least 12 months – sole traders, partnerships or Ltd Cos.
  • Loans are backed by the government so personal collateral should not be required.
  • Loans should be available for businesses that would not have been eligible for help before.

Bad points:

  • Unlike the other support it will need to be paid back. The money is a loan. Any money owed over 12 months may have interest charged.
  • Loans must be for a business reason and cannot be used to pay personal living expenses etc.
  • Some banks are asking for personal or business assets as security – which is not as the government intended.
  • Some banks will offer you loans and overdrafts that they would normally have given you, at high interest rates, before they will offer you one of these loans.

If you have approached a bank and they have not offered you one of these loans, have asked for security or your own bank has been unhelpful, we would recommend trying another bank from the list of lenders. Full details of the scheme is on the British Business Bank website – see link below.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

Grants for those with Business Premises

The Retail and Hospitality Grant Scheme

  • This is a grant – you do not have to pay it back.
  • This scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
  • For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
  • For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

If you are not sure if you get one of these bills, check your paperwork. Councils should be contacting businesses shortly about this money.

Businesses in the retail, hospitality and leisure sectors will also not have to pay rates for the 2020-21 tax year.

Small Business Grant Scheme

  • This is a grant – you do not have to pay it back.
  • The government will provide funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief.
  • This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

If you receive a rates bill from the council every year, but it is adjusted to zero with the wording “Small Business Rates Relief”, you should be eligible for the grant. This we think also applies to holiday lets as well as businesses with premises. It would not apply to those with a high enough rateable value that they have to pay rates, or for normal rental property businesses that are not holiday lets.

If you are not sure if you get one of these bills, check your paperwork. Councils should be contacting businesses shortly about this money.

Other Business Support Available

  • All businesses that are VAT registered can delay paying VAT due between 20th March and 30th June 2020. This will now be due next year. (VAT returns do still have to be submitted)
  • Any individual on Self Assessment can now delay payments on account due 31st July 2020, and not pay them until 31st January 2021.

Other Personal Support Available

  • Universal credits are available immediately without a wait and you can earn more money than before and still be eligible. The amounts awarded have also been increased, including the amount to cover rent.
  • Most banks and building societies have agreed to offer up to 3 months mortgage payment holidays
  • Anyone with a loan or HP agreement may also be able to get up to 3 month’s holiday from payments.
  • Anyone paying council tax who is in real hardship can apply to the council – the council may be able to use money provided to them to reduce your council tax bill in the short term.
  • If you pay council tax you may also be able to ask if you can delay your payments for the first 2 months of the new tax year, paying in Feb and March next year instead. As they usually collect only 10 payments a year some councils have agreed to this.

All of the different types of support that are available are confusing, and we have tried our best to summarise them in plain English. Further in depth information is available both on this website and the government website – please make sure you meet all of the criteria to receive any of the support packages offered. We would be happy to provide specific advice to anyone who needs it, whether you are a client or not, free of charge. Please get in touch and we’ll be happy to help. We all need to help each other right now.

Please find below a link to the new government website, which has more information about all of these support packages

www.businesssupport.gov.uk


The CIS VAT Reverse Charge – VAT’s not going to be the same for Builders from Oct 2020!

CIS VAT Reverse Charge

In an attempt to stop fraud in the construction industry, HMRC will be introducing a domestic reverse charge which will take effect from 1st October 2020.

The new CIS VAT reverse charge will only apply to certain building and construction services. It will mean that the customer will now be liable to account for the VAT on purchases, rather than the supplier, just as it currently works when dealing with businesses within the EU.

The idea is to limit the amount of VAT paid from business to business, so that fraudsters cannot syphon off the money and not pay it over to the HMRC.

Although on the whole this will not have a negative affect on most businesses, it will affect cash flow, and will of course mean yet more paperwork at a time when small businesses are under pressure already.

This information was accurate as of March 2020.

There is more information about the CIS VAT reverse charge on the HMRC website here.

Please download our full free PDF guide for a full explanation as to the new rules, or get in touch for a no obligation chat.

Download CIS VAT Reverse Charge Guide


MTD For VAT – The Beginning of the End for the Annual Tax Return?

Making Tax Digital for VAT

Making Tax Digital for VAT is a government initiative that went live in April 2019 for anyone over the VAT threshold of £85k turnover a year. In a nutshell, returns now need to use software to submit their returns to a new government gateway, and cannot use the HMRC portal any more. They will also need to keep their accounting records digitally i.e. not on paper or spreadsheets.

This general requirement to submit and keep records digitally (just known as MTD) is expected to roll out to more businesses, and will drastically change the tax return system as we know it. The endgame is to have all businesses, no matter their size, submit a return each quarter instead of the annual Self Assessments of today, with additional returns at year end to finalise the figures.

These drastic changes will have a huge impact on business owners. It could also mean that many businesses, that have not used an accountant before, may need to engage one for the first time in order to comply.

In our opinion the rollout of MTD for VAT has been a much bigger deal for businesses than the HMRC first thought, so it is likely that further rollouts to other businesses will be delayed. However – it would be prudent to look at software solutions – especially those on the cloud. A lot of them do make sense for most businesses outside of these changes to the tax regime, and guarantee to save most business and company owners considerable time. Both FreeAgent and Xero, along with other software providers, have MTD for VAT solutions in place.

More information on MTD is available for the HMRC website here.

We are keeping up to date with information as soon as it is being released by the HMRC, and will keep all of our clients as informed as possible. Please get in touch of you are newly VAT registered and need help setting up MTD for VAT, or if you just need further information.