Covid-19 Financial Update

Click here for a PDF download – Version 10 as at 03/04/2020

Business Interruption Action Steps (BIAS)

Update as at 03/04/2020

1.Business Interruption Loan Scheme (BILS)
Further to point 4 under the ‘Business Funding’ section and the 24/03/20 update below;

The BILS programme is being extended so all viable small businesses affected, not just those unable to secure regular commercial financing, will now be eligible for a loan should they need finance to keep operating.

Lenders have also been stopped from requesting personal guarantees for loans under £250,000. The government will continue to cover the first twelve months of interest and fees.

The British Business Bank says that businesses that meet the following conditions must be considered for CBILS:

-Be UK-based in its business activity
-Have an annual turnover of no more than £45 million, of which more than 50 per cent is generated through trading activities
-Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
-Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/cbils-faqs-for-smes/

2.Coronavirus Job Retention Scheme
Further to point 4 under the ‘Dealing with Staff’ section

Employees who have started a new job after the 28 February 2020 will not be able to benefit from the scheme.

Employers can re-hire staff that have already been made redundant and still claim the subsidy. This does not apply if staff left voluntarily.


Update as at 31/03/2020

1. Directors of Companies

Company directors that receive salaries through PAYE can be furloughed and apply for a grant of 80% of their salary.

Individuals who are directors of their own family companies and who are themselves paid via PAYE should be eligible for the coronavirus job retention scheme, although the same rules will apply as to other businesses and their employees. i.e. no work on the business should be undertaken.

Furloughed employees must not perform any work for the employing business –Depending on the size and needs of the company, it may be possible to furlough one or more directors.

A director can furlough and continue with their statutory duties. However, references to these duties only mention certain compliance activities such as filing accounts.

Directors paid a nominal salary but receiving the bulk of their reward through dividends would only receive 80% of the nominal salary (if they qualify). Payment-by-dividends is not supported by the scheme.

Full details on how the amount of the grant will be calculated for these individuals have yet to be released.


Update as at 26/03/2020

1. Company Accounts Filing Deadline Extension
Companies House are allowing Limited Companies to extend their filing deadline by 3 months. An application has to be made for the extension and the application must be submitted before you filing deadline.

https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.

2. Self-employment Income Support Scheme (SEISS)

Proposed statutory self-employment pay which would cover the lower of £2,500 or 80 per cent of a self-employed person’s monthly earnings, averaged over the last three years.

The scheme is open to anyone with trading profits of up to £50,000. It will only be available to those who make the majority of their income from self-employment and who filed a tax return for 2019.

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 to qualify for SEISS.

Claims will be paid out from June directly into your bank account, in one instalment. In the mean time, universal credit can be claimed and paid out a lot quicker.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Further information

3. Update on Coronavirus Job Retention Scheme
Further to point 4 under the ‘Dealing with staff’ section below

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.


Update as at 24/03/2020

1. Businesses in rented properties
Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction;

No business will be forced out of their premises if they miss a payment in the next three months.

Commercial tenants will still be liable for the rent after this period, the Government is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

2. Business Interruption Loan Scheme (BILS)
Further to point 4 under the ‘Business Funding’ section below

Banks have stated they will only provide these loans as a last resort if all other avenues of funding have been exhausted along with the current business rates grant on offer and if the Corona Virus Job Retention Scheme is not enough to help you through this period.

 


Update as at 23/03/2020

Dealing with staff

1. Statutory Sick Pay (SSP)
Reclaim of SSP for Covid19 = 2 weeks per employee
Eligible if less than 250 employees // Doesn’t require doctors certificate
Rebate access tbc

2. Staff into teams wherever possible so that key functions are covered in each team(s); Separate teams not to meet physically to preserve at least one team if virus spreads amongst staff;

3. Staff payment policy on working from home and SSP to be made clear;

4. Coronavirus Job Retention Scheme
Employers able to reclaim 80% of staff salaries up to £2,500 per month. Staff must be ‘furloughed’. Redundancies not included. 3 month initial period backdated to 1st March 2020.

All UK businesses are eligible.

Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Business Funding

1. Business rates holiday
Reclaim if in Retail / Hospitality / Leisure, Rebate automatically when rates bills come out

2. Cash grants retail/hospitality & leisure
£25,000 grant where rateable value is between £15,000 & £51,000
Claim from local authority – more information to be provided

3. Cash grants retail/hospitality & leisure
£10,000 one off grant to those businesses that don’t pay rates
Eligible rateable value less than £15,000
No need to apply // Local Authority will contact business

4. Business Interruption Loan Scheme (BILS)

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims). The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

Eligibility:

-Business is UK based, with turnover of no more than £45 million per year
-Your business meets the other British Business Bank eligibility criteria

Talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched

The scheme will be available from week commencing 23 March 2020.

Access via https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

5. Time to Pay services
Eligibility – Outstanding tax liabilities due to Co-Vid19 disruption
HMRC dedicated helpline 0800 0159 559

6. VAT payment Deferral
VAT payments deferred for 3 months to 30 June. This is automatic and no application required and repay by March 2021 • VAT refunds paid as normal

7. Corporation Tax – do not pay as loss relief / time to pay arrangements available; If making a loss this year then don’t pay corporation tax for last year;

8. Equipment leasing – request repayment holiday;

9. Business interruption insurance – are you covered ? Usually excludes Pandemics;

10. Rental holiday – Rent free or pay 1 month at a time (instead of quarterly in advance). Claim from landlord.

11. Utilities providers : Claim for holiday on energy bills;

12. Debt Collection priority – Review credit terms; service / goods without payment on account;

13. Co-Directors / Shareholders of SME’s – to discuss salary / dividends reductions with each other;

14. Cash flow retention : Review discretionary costs such as Directors pension contributions // Marketing costs //

Self Employed/Individuals

1. All payments on accounts due by 31st July 2020 have now been deferred to 31st January 2021.

2. Personal Mortgage holiday.
3 month payment holidays offered to Help to Buy equity loans, Buy to Let mortgages and Residential mortgages
-It is important to remember that you still owe the amounts that you don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount owed.
-Taking a payment holiday will not impact your credit score.

3. Universal Credit
Can be accessed in full at rates equivalent to statutory sick pay

Useful HMRC websites

Business Support

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Guide for Employers

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-coronavirus-covid-19

Guide for Employees

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees

General Guidance

https://www.gov.uk/guidance/coronavirus-covid-19-information-for-individuals-and-businesses-in-scotland

As always, if you wish to discuss any of the items above, or simply for a sane voice to talk through your situation, we are all working from home so feel free to call us.

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