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Business Support – Covid 19 2020-03-27T12:35:07+00:00

Business Support Hub – Covid 19

We have developed this hub to track the progress of government support and provide useful tools to help you manage your business at this difficult time.

If you are not a client please feel free to subscribe to our mailing list and you will receive regular updates.

Understanding your monthly cashflow (cash received and spent) and net cash burn rate to calculate the number of months of cash you have remaining are hugely important in this difficult time.

We have provided this free cashflow template for you to use to monitor your businesses cashflow.

To calculate your net cash burn rate https://corporatefinanceinstitute.com/resources/knowledge/modeling/burn-rate/  This will tell you how many months of cash you have available.

Click to download

Primotax-Cashflow-Forecast-Template

The government announced their unexpected, yet welcome, Job Retention Scheme in an effort to support business in these hard times.  This scheme provides all UK employers funding to cover 80% of employee costs, up to a limit of £2,500.  It is understood that employee costs will include NIC and benefits.

There is some ambiguity around the qualifying criteria and when funding will be made available.  This lack of clarity from the Government has led to many questions.  We aim to answer some of those questions for you and will continue to monitor the situation and update you as we know more.

Importantly this scheme provides all UK employers funding to cover up to 80% of staff salary costs.  This is subject to a limit of £2,500 per employee and applies where the employer can no longer afford employee costs due to Coronavirus.

In order to qualify for the funding the employee must be classified as a furloughed worker.  A furloughed employee must be told to stand down and do no further work.  This is crucially important.

What is a furloughed employee?

An employee furlough is when an employer requires some or all of their staff to take unpaid leaves of absence, to protect the business.

In other words, they’ll still technically be employed but won’t work or get paid.

How much can I claim and what does the job retention scheme cover?

Funding for up to 80% of employee costs

HMRC guidelines state that the scheme allows employers to claim funding of up to 80% of an employee’s wage for all employment costs, up to a cap of £2,500 per month.  The government has not fully confirmed what is covered under the term “all employment costs”.  Whether this will cover only the employee’s basic salary, or include additional costs such as pension contributions and benefits is currently unknown.  However, it is understood that the maximum an employee can receive is £2,500 per month.

What about the remaining 20%?

Employers are not obliged to top up the remaining 20% but employers can ask employees for their consent to this reduction in their wages.  However, it is expected that they will consent if this is considered preferable to redundancy or unpaid leave.

How do I access the job retention scheme funding?

There are a number of steps that you will need to consider:

1. Decide which employees to classify as furloughed 

The decision of whether or not to place an employee on furlough leave ultimately lies with the employer.

2. Notify all furloughed employees in writing 

Firstly discuss with your employee their change in employment status to a furloughed worker.  Further explain that this means that the employee remains on the payroll, but that they cannot undertake any work whilst classified as a furloughed worker.  Importantly not performing any work is crucial.

In addition, it may make sense to mirror HMRC’s time frames by placing all of your furloughed employees on leave for an initial 3 month period, subject to review.

Most importantly, we recommend that you take advice from a HR professional before changing anyone’s employment status.

3. Submit information to HMRC to claim your grant

HMRC are setting up a new portal through which employers should submit information about furloughed employees and their earnings.  This system will be separate to the current PAYE system used to report employee earnings.

Other Questions

1. When will the job retention scheme funding be available?

It is understood that funding will become available in April 2020 and that it will be possible to backdate claims to 1 March 2020.  We also believe that funding will be available to all employees who were on the payroll as at February 2020.

2. Who will receive the funds?

It is not totally clear who will receive the funding whether this will be paid to the employer or directly to the employee.  However, from an administrative perspective, it is likely that claims will be made by the employer and they will receive the funding.  This funding can then be used to pay employees.  We will update you as we know more.

3. How long will the job retention scheme last?

The Scheme is intended to run for 3 months from the 1st March 2020 until 31 May 2020, and may be extended beyond this as the situation develops.

4. Can furloughed employees work part time?

No the definition of a furloughed worker means that it is important that they undertaken no work for the business during this period, otherwise they may not qualify for the funding.

5. I’m self employed – can I claim under the job retention scheme?

No, this funding does not apply to consultants and self employed workers.

6. I receive dividends are these included in the £2,500?

It is unlikely that employees (usually director/shareholders) who get paid wholly or partly in dividends, will be able to include dividends in their earning figures when making a claim. We will provide further details as they become available from HMRC.

Please see the link to the .GOV website – https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/

Who can apply?

You can apply if you’re a self-employed individual or a member of a partnership.

Directors paying themselves dividends will be unlikely to qualify.

How much you’ll get

You’ll get a taxable grant which will be 80% of the business average profits.

It will be up to a maximum of £2,500 per month for 3 months.

HMRC will pay the grant directly into your bank account, in one instalment.

How to apply

Please note that the current guidance from HMRC is that this funding will not be available until June 2020.

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.

See full details on the .Gov site

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

What is it?

The banks are starting to release details of what they are offering and the terms around these loans. Already there are very different terms being offered so we recommend that you shop around to find good deals. We cannot offer direct advice on which loans to take but if you need help contact us and we can you put you in touch with a brokerage firm that looks at different lenders. If you are looking for high value loans (over £1m) we can also put you in touch with a firm who specialises in finding these.

The temporary Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years.

The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank.

There are 40 accredited lenders able to offer the scheme, including all the major banks.

Am I eligible?

You are eligible for the scheme if:

your business is UK based, with turnover of no more than £45 million per year

your business meets the other British Business Bank eligibility criteria

How do I access it?

You should apply via your lender’s website or through one of the 40 accredited finance providers offering the scheme (and not the British Business Bank).

Please note that branches may currently be shut down to enable social distancing.

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.

1. VAT

The deferral will apply for VAT quarters from 20 March 2020 until 30 June 2020.

Eligibility

All UK VAT registered businesses are eligible.

How to access the scheme

The deferral is an automatic offer with no applications required.  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 usually pay your VAT liability via direct debit, no payments should be taken during this period.  We advise that you cancel any direct debits to be sure. These can be reinstated once the business is in a better cash position.

2. Income Tax – Payments on account delayed until 31 January 2021

For Income Tax Self-Assessment, payments on account usually due on the 31 July 2020 will be deferred until the 31 January 2021.

No penalties or interest for late payment will be charged in the deferral period.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer with no applications required.

3. Time to pay arrangements

Time to pay arrangements are available to spread the payment of outstanding tax liabilities when a business is in financial difficulty.

HMRC have relaxed their Time to Pay offer to all businesses and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Time to pay arrangements can be used in addition to the deferrals noted above and you should contact HMRC at the end of the deferral period if you are still unable to pay.

Eligibility

You are eligible if your or your business:

  • pays any taxes to the UK government including VAT, corporation tax , income tax and PAYE
  • has outstanding tax liabilities that it will be unable to meet by the normal deadline

How to access the scheme

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.

If you’re worried about a future payment, please call us nearer the time.

What is it?

The Government is providing additional funding for Local Authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), 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.

Am I eligible?

You will be eligible if

  1. Your business is based in England* AND
  2. You are a small business and already receive SBRR and/or RRR AND
  3. You are a business that occupies property

How do I access it?

You do not need to do anything. Your Local Authority will write to you if you are eligible for this grant.

When can I access it?

Local Authorities will write to all eligible businesses with information on how to claim this grant. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant Local Authority. To find your Local Authority, use this search tool.

*Some aspects of business support are devolved. For business support outside of England go to ScotlandWales and Northern Ireland.

Grants

If your business is in the retail, hospitality or leisure sector, you will receive a cash grant of up to £25,000 per property.

Businesses in these sectors with a property that has a rateable value of up to £15,000 will receive a grant of £10,000.

Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.

Am I eligible?

You will be eligible if:

  1. Your business is based in England*
  2. Your business is in the retail, hospitality and/or leisure sector
  3. Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used

What is it?

Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020-21 tax year. Businesses that received the retail discount in the 2019-20 tax year will be re-billed by their local authority as soon as possible.

Am I eligible?

You will be eligible if:

  1. Your business is based in England*, AND
  2. Your business is in the retail, hospitality and/or leisure sector. Properties that will benefit from the relief will be those that are wholly or mainly being used:
  3. a. as shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
    b. for assembly and leisure; or
    c. as hotels, guest and boarding premises and self-catering accommodation.

How do I access it?

  1. There is no action for you. Local authorities will apply the business rates holiday to your bills. For more information please check the guidance on gov.uk.
  2. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.
  3. You can find your local authority on gov.uk.

When can I access it?

This will apply to your business rates bills for the 2020/2021 tax year. However, local authorities may have to reissue your bill. They will do this as soon as possible.

*Some aspects of business support are devolved. For business support outside of England go to ScotlandWales and Northern Ireland.

What is it?

The Government will bring forward legislation to allow small and medium-sized businesses to reclaim Statutory Sick Pay (SSP) paid for staff sickness absence due to Coronavirus. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of Coronavirus.

Am I eligible?

You will be eligible if:

  1. Your business is UK based AND
  2. Your business is a small or medium sized and employs fewer than 250 employees as of 28 February 2020.

How do I access it?

A rebate scheme is being developed, further details will be provided in due course.

When can I access it?

The Government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.

If you are self-employed and want to know if you are eligible for Universal Credit, please visit the gov.uk Universal Credit page

Unfortunately, we are seeing more activity from fraudsters trying to take advantage of the current situation.

HMRC Fraud

If you get any emails, texts or phone calls  purporting to be from HMRC that are asking you to take action, for example enter your bank details for a refund, please do not respond. If you are in any doubt refer the email to us or contact HMRC directly [email protected]

HMRC will never send notifications by email about tax rebates or refunds. Do not:

  • visit the website
  • open any attachments
  • disclose any personal or payment information

Fraudsters may spoof a genuine email address or change the ‘display name’ to make it appear genuine. If you are unsure delete it.

Xero

Be careful of fake invoices, this is where you receive a fraudulent invoice that looks genuine  – here is the link with details of how these frauds work

https://www.xero.com/blog/2017/03/email-fraud-protect-business/

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