Information and support for the current Coronavirus situation
Businesses need to prepare for potential significant business disruption over the next few months, demand may fall and cash flow may get tight. The situation is constantly evolving and I will be sharing the latest information on this page. Please do speak to your accountant or business advisor throughout this time.
Cash position (cash flow)
Cash is king, that is never more true than now. It is vital that you understand your current cash position and your potential cash position over the coming months. This includes not only your business cash position but also your personal cash position.
Take a look at the updated blog for a free cash flow forecast template and some tips. It is here > https://southbourneaccountancy.co.uk/free-cash-flow-forecast-template
Here’s a quick summary of practical help notified by the Chancellor.
Coronavirus Job Retention Scheme
Employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
HMRC will reimburse 80% of furloughed (basically another word for redundant) workers wage costs, up to a cap of £2,500 per person per month (plus employers NI and 3% auto pension enrolment costs).
In order to use the scheme, you will need to tell employees they’ve been ‘furloughed’ and then apply for the payment through a new HMRC portal (which opened on 20th April 2020)
- New Coronavirus job retention scheme: Any employer in the country will be eligible for the scheme
- HMRC grant for most of the people that are not working, rather than being laid off
- Government grants up to 80% of wage costs up to £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
- Backdated to 1 March and open for at least 4 months for now
- Employees must be furloughed for a minimum of 3 consecutive weeks, they can be furloughed multiple times but each period must be a minimum of 3 weeks.
- A PAYE scheme must have been created and started on or before 19th March 2020, this includes Charities – this means an RTI must have been run.
- Full details for employers >https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
- Full details for employees is here > https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
- Online portal is due to be up and running on 20th April 2020
- First payments are to be made by 30th April 2020, taking 4-6 working days to allow for fraud checks.
- Employers who pay weekly, claims can be made weekly and one claim per pay period (weekly or monthly
- HMRC will issue a confidential whistleblowing hotline for employees to report any employer who furloughs but then asking employees to work.
- HMRC will have the powers to check/audit claims made, so employers must keep the written furlough notification for 5 years.
- Fraudulent claims could easily results in criminal proceedings.
VAT and Income Tax Deferral
If your VAT payment is due between now and 30th June 2020, you can defer this payment and not be penalised with interest or penalties. Then any unpaid VAT must be paid by 5 April 2021.
You must cancel your direct debit if you have one, otherwise the payment will be taken. You still need to submit your VAT return as normal.
The self-assessment tax payment you should be making on 31 July 2020 has been deferred until 31 January 2021. To reiterate these are deferrals not write offs, so both the tax and the VAT will still be payable.
The benefit here is that if you have a big dip in profits and get your tax return prepared promptly there is a possibility of not even having to pay the full amount of that payment on 31st January.
It is recommended to get your 19/20 tax return prepared shortly after April to see how this plays out.
Support for the Self Employed
Self-employed Income Support Scheme (this does not cover limited company directors)
- You can claim a grant of 80% of average monthly trading profits for last 3 years up to a maximum of £2500 per month.
- Initially this scheme is for 3 months
- You should earn more than half of your income from self-employment.
- This is not claimable if you have average trading profits over £50,000.
- You must have filed a 2018/19 tax return, have traded in this tax year and be looking to continue next year.
- If you are late filing your 2019 tax return, you can do so in the next 4 weeks (by 23rd April).
- HMRC will write to you to tell you how to apply online – they hope by mid-may 2020.
- This will be paid directly into your bank account in one lump sum.
- This help is not available if you became self-employed after 6th April 19
- The payment is expected in June.
- HMRC will not contact you via email, text or phone calls – these are scams.
Time to Pay
The Time to Pay helpline has fallen over several times this week and has been unable to cope, so this relief is something that was already happening in practice anyway. Contact HMRC on their Coronavirus helpline 0800 015 9559
- Businesses can defer PAYE between 1 and 3 months (they will need a valid reason – for example if the company has temporarily shut)
- Expectation is the deferral will apply up to and including April payroll
- If the business can’t pay at this point a formal payment plan can be set up between 3 – 9 months
- If the business doesn’t call, the expectation is late payments will NOT be applied but call when possible (this is not confirmed!)
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The interest free period on this loan is 12 months, there are no arrangement fees as the government will also cover these.
You can get full details of everything that is currently available to small businesses (basically loads of loans!) here…
Information on loans and finance supported by the Coronavirus Business Interruption Loan Scheme, including details of how to apply, a quick eligibility checklist for SMEs and a list of the 40+ accredited lenders. There is a dedicated page for smaller businesses and business advisors.
There are potentially cheap loans, overdrafts and invoice finance facilities being offered by the British Business Bank.
Unfortunately, they initially seem quite restrictive in terms of which businesses can apply for them.
Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:
- recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied;
- a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-baked facility.
- Have taken advantage of every other government relief package: VAT deferment, Time to Pay for PAYE, NI, Corporation Tax, Staff furlough etc.
- Have taken into account other cashflow maximising measures such as: talking to suppliers about stock, payments etc, cut costs where possible.
- Have 6 months of bank statements
- Be looking for a max of 2 * annual wage bill or 25% of T/O for businesses greater than 1 year old.
- Maximum application is £5,000,000.
- You will need to demonstrate how your revenue will be impacted over the next 3-6 months and prove you have a handle on your costs.
- You will need to be able to afford to loan repayments.
- 3 years of cash forecast and profit and loss.
If you would like help and guidance please do contact me, I have teamed up with Futrli and Swoop to streamline the process.
Contact me here>> https://southbourneaccountancy.co.uk/contact-us/ or email me at firstname.lastname@example.org
NEW! Small Business Bounce Back loan – announced on 27th April 2020 and expected to be open for applications on 4th May 2020.
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days.
- Loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form.
- The loans will be 100% government backed for the lender – not for the business.
- No repayments will be due in the first 12 months.
- Loan terms up to 6 years.
- Businesses will no longer need to provide future financial projections or business plans.
- Capped at 25% of turnover.
Statutory Sick pay
Employers with less than 250 employees will be able to reclaim statutory sick pay from day one, if they have employees off sick due to self-isolation. This is reclaimable so there is no cost to the business.
Currently there is no way to offset or claim the repayment; more details are due in the coming months.
Support for businesses that pay business rates
If your business is in the retail, hospitality and/or leisure sector you will have no business rates to pay now, this is applicable to England. This will be automatically calculated by your local authority.
This applies to occupied premises and the guidance has been extended from 23rd March 2020.
Coronavirus Business Support Grant Funding
This support will be for small businesses, and businesses in the retail, hospitality and leisure sectors which have commercial premises. The support will take the form of two grants:
- The small Business Grant Fund
- The Retail, Hospitality and Leisure Grant Fund
To support larger firms, the Bank of England has announced a new COVID-19 Corporate Financing Facility to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt.
This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.
The Government will very soon be announcing further information on this facility.
Mortgage and rent holiday
Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Businesses that have cover for both pandemics and government-ordered closure should be covered. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres, etc., is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.
With an increased number of employees working from home, there is a heightened risk of cyber security. There are already phishing scams which are going around via text message and emails to click for an NHS or HMRC refund.
Businesses will be given an additional 3 months to file accounts with Companies House to help avoid penalties as businesses deal with the impact of the Corona Virus. From 25th March 2020, businesses will be able to apply for a 3 month extension for filing their accounts. Applications must be made for this, they can be made through a fast-track online system which takes around 15 minutes. Government announcement here> https://www.gov.uk/government/news/companies-to-receive-3-month-extension-period-to-file-accounts-during-covid-19
But I don’t fit into any of the above?
At this time there is no further announced support for businesses that don’t fit into the above.
Please check back here for regular and further updates as they are announced.
Free cash flow template – https://southbourneaccountancy.co.uk/free-cash-flow-forecast-template
General business support:
Child care, early years and social care:
Step by step guide for Corona Virus Job Retention Scheme Portal.
Self employed income schemes: