The government has announced a range of business support measures to help businesses facing difficulties as a result of COVID-19.
We are committed to helping our clients through these difficult times by providing the right guidance and support in making the claims for various grants and loans available to them through the government’s new initiatives to provide financial support for businesses during coronavirus (COVID-19).
Support for businesses
- A new Local Authority Discretionary Grant scheme for small and micro businesses
- Bounce Back Loan scheme
- Defer VAT payments
- You may be able to defer other tax payments
- Business rates relief for businesses in the retail, hospitality and leisure sectors, and nurseries
- Claim for employees’ wages through the Coronavirus Job Retention Scheme (CJRS) – now extended until 31 October 2020
- Claim back Statutory Sick Pay paid to employees due to coronavirus
- Small business grants
- Coronavirus Business Interruption Loan Scheme (CBILS)
Support for the self-employed
- Defer Self Assessment payments
- Claim for a grant through the Self-employment Income Support Scheme (SEISS)
We have explained each of the above in more detail below.
Local Authority Discretionary Grants
The government has recently announced a new Local Authority Discretionary Grants scheme to support small and micro businesses that are not eligible for other grant schemes.
Small and micro businesses with fixed property costs that are not eligible for the Small Business Grant or the Retail, Hospitality and Leisure Grant may be eligible for the Discretionary Grants Scheme. A grant of £25,000, £10,000 or any amount under £10,000 at the discretion of the local council is available to small and micro businesses that meet the eligibility criteria.
You may be eligible if your business:
- is based in England
- has relatively high ongoing fixed property-related costs
- occupies property (or part of a property) with a rateable value or annual mortgage/rent payments below £51,000
- was trading on 11 March 2020
In addition, you will need to show that your business has suffered a significant fall in income due to the coronavirus restriction measures. Local Authorities will decide what information they will need as part of the application. For example, your business income in April 2019 may be compared to a reference amount from a period prior to the pandemic taking into account seasonal variations. Check with your local council for specific details.
Local councils will prioritise businesses such as:
- small businesses in shared offices or other flexible workspaces, such as units in industrial parks or incubators
- regular market traders
- bed and breakfasts paying council tax instead of business rates
- charity properties getting charitable business rates relief, which are not eligible for small business rates relief or rural rate relief
Ultimately the local councils have the discretion to decide how to prioritise the funding under this scheme based on local business needs.
Grants will not be paid if the business is in administration, insolvent or has received a striking-off notice.
Businesses that are already claiming another government grant scheme will not be eligible to apply for this funding. Grants such as:
- Small Business Grant
- Retail, Hospitality and Leisure Grant
- Fisheries Response Fund
- Domestic Seafood Supply Scheme
- Zoos Support Fund
- Dairy Hardship Fund
You are still eligible if you claimed for the Coronavirus Job Retention Scheme or the Self-employed Income Support Scheme.
Businesses that apply for the discretionary grants scheme can still apply for coronavirus-related loans if they’re eligible.
Bounce Back Loan
A Bounce Back Loan scheme (BBLS) was announced on 27 April 2020 for small and medium-sized businesses (SMEs) to enable them to access finance more quickly during this pandemic.
SMEs can apply for a loan under this scheme from £2,000 up to 25% of their turnover, with a maximum cap of £50,000 on the loan. The loan is 100% government-backed so the lender will have a guarantee from the government for the full amount of the loan. The borrower will always remain fully liable for the debt.
The loan term is 6 years with no early repayment fees. The government will pay any loan arrangement fees and interests on the loan for the first 12 months. There will be no repayment due until after 12 months. After the first 12 months, 2.5% interest will apply on the remaining term of the loan.
Businesses based in the UK and negatively affected by coronavirus will be eligible to apply for this loan.
There are several accredited lenders the borrower can approach. The full list of lenders can be found here. Businesses can apply for the loan from 4 May 2020 by approaching any of the accredited lender’s website.
If you are already claiming a loan under the Coronavirus Business Interruption Loan Scheme (CBILS) [see further down the page for details on CBILS] you will not be eligible to claim under this scheme. However, if you have already received a loan of up to £50,000 under CBILS you can arrange to transfer it into the Bounce Back Loan scheme by contacting your lender by 4 November 2020.
Deferral of VAT payments
UK VAT registered businesses can choose to defer VAT payments due between 20 March 2020 and 30 June 2020. This does not include VAT MOSS payments or import VAT. Payments deferred as a result of COVID-19 must be paid on or before 31 March 2021.
VAT returns must still be filed on time. However, you do not need to inform HMRC that you are deferring your VAT payment. If you pay by direct debit, you will need to cancel it. HMRC will not charge interest or penalties on any payments deferred as a result of COVID-19.
VAT reclaims and refunds will continue to be processed by HMRC as normal. VAT payments due after the deferral period (30 June 2020) will have to be paid as normal.
Deferring other tax payments
HMRC has confirmed that you may be able to defer other tax payments by contacting HMRC’s coronavirus helpline.
If you have missed your payment or struggling to pay your tax bill due to the impact of COVID-19, you should contact HMRC as soon as possible. Interest will still be charged on late payments but penalties could be avoided by arranging a payment plan.
Business rates relief
Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020 to 2021 tax year provided they meet the following eligibility criteria:
The property on which business rates is payable is either a:
- shop, restaurant, cafe, pub or a bar
- a sports club, gym or a spa
- a hotel, guest house or a self-catering accommodation
- a cinema or a live music venue
Nurseries in England that meet the following eligibility criteria will also not have to pay the business rates for the 2020 to 2021 tax year:
- the nursery is on Ofsted’s Early Years Register
- it provides care and education for children up to 5 years old
A claim for business rates relief is not required from businesses. Local councils should apply this discount to eligible businesses automatically, though they may have to reissue the bill if they have already issued one before.
Claim for employees’ wages through the Coronavirus Job Retention Scheme
Under the current state of the Coronavirus Job Retention Scheme (CJRS) businesses can claim 80% of their employees’ wages up to a maximum of £2,500 a month plus employer national insurance and pension contributions. You can choose to top up your employees’ wages above 80% but you do not have to. There are limits to how much employer national insurance and pension contributions you can claim.
On 12 May 2020 the Chancellor has announced a further 4 months of extension to the Job Retention Scheme until 31 October 2020. Today (29 May) the Chancellor has announced more details about this extension.
There are three changes to this scheme:
- From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
- From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
- The scheme will close to new entrants from 30 June.
1. Part time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
2. Employer contributions
From August, the government grant provided through the job retention scheme will be slowly tapered.
- in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
- in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
- in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- the cap on the furlough grant will be proportional to the hours not worked.
3. Important dates
It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
The government’s online portal for employers to make the claim went live on 20 April 2020.
To claim, you must have:
- created and started a PAYE payroll scheme on or before 19 March 2020 and reported payment to your employees on an RTI submission to HMRC
- enrolled for PAYE online
- a UK bank account
Employer national insurance and pension contributions will still need to be paid on behalf of furloughed employees, however these can be claimed too.
The following limits apply to how much employer national insurance and pension contributions can be claimed:
- you cannot claim for additional national insurance or pension contributions you make because you decided to top up your employees’ wages above the 80%
- pension contributions you make that are above the mandatory employer contribution cannot be claimed
Claims can only be made for employees who have been put on furlough on or after 1 March 2020. This means employees who have been put on temporary leave by their employer without terminating their employment contract due to the impact of COVID-19 on the business’ operations.
Under the scheme’s current form, the minimum period of furlough is 3 consecutive weeks. Whilst the employee is on furlough they cannot be asked to undertake any work that constitutes work under normal employment terms or generates revenue for the employer. They can however choose to take part in any volunteer work.
The amount claimed in its entirety must be paid over to the employees and no deductions are allowed for administering the claim. However, PAYE and national insurance contributions (NICs) must be deducted from the pay. HMRC has confirmed that any payments received through this scheme are subject to tax and national insurance as they are replacement for income in line with normal practice for benefits or grants that replace income.
Claim back Statutory Sick Pay paid to employees due to coronavirus
The Coronavirus Statutory Sick Pay Rebate Scheme will allow employers to reclaim the current rate of Statutory Sick Pay (SSP) they pay to their employees who are off work sick due to COVID-19 started on or after 13 March 2020. The SSP can be claimed from the first day of sickness instead of having to wait for 4 days of sickness prior to being able to claim (which is the requirement for illnesses other than COVID-19).
The scheme was launched online for claim on 26 May 2020.
Employers can claim back the coronavirus-related Statutory Sick Pay if they meet the following eligibility criteria:
- the claim is for an employee who is eligible to receive sick pay due to coronavirus
- a PAYE payroll scheme was created and in operation before 28 February 2020
- had fewer than 250 employees on 28 February 2020
- eligible to receive State Aid under the EU Commission Temporary Framework
The repayment will cover up to 2 weeks starting from the first day of sickness if an employee was unable to work on or after 13 March 2020 because they either:
- have coronavirus
- cannot work because they are self-isolating
- are shielding in line with public health guidance
Employees do not have to provide a doctor’s fit note for their employer to make a claim.
Small business grants
All eligible businesses in England that are in receipt of either Small Business Rates Relief or Rural Rates Relief in the business rates system will receive a grant of £10,000. To be eligible, the property must be in receipt of Small Business Rates Relief or the Rural Rate Relief on the 11th March 2020.
Businesses in the retail, hospitality and leisure sectors in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of up to and including £15,000 will receive a grant of £10,000. Businesses in the same sectors with a rateable value above £15,000 but below £51,000 will receive a grant of £25,000. To be eligible for the grant, on 11th March 2020 the property will have been eligible for the Expanded Retail Discount had the scheme been in force.
Businesses with rateable value of £51,000 or above are not eligible for the grant. Properties occupied for personal use will also not be eligible for the grant.
The guidance from the government states that the local authorities will contact businesses that are eligible for the small business grant. Some local authorities have set up an online application process to make the claim. We recommend that you check with your local authority to confirm the process in your area to avoid any unnecessary delay in receiving the grant.
Coronavirus Business Interruption Loan Scheme
Conronavirus Business Interruption Loan Scheme (CBILS) is introduced by the government to support small and medium-sized businesses with a turnover of up to £45 million. The scheme allows small and medium-sized businesses to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.
The government has confirmed that it will pay the first 12 months of interest on the loan and any lender fees which means smaller businesses will benefit from no upfront costs and lower initial repayments. The government will also provide lenders with a guarantee on 80% of the loan (subject to lender cap on claims) to give lenders the confidence to provide finance to small and medium-sized businesses.
To be eligible for this scheme, the business must:
- be based in the UK for its activity
- have annual turnover of no more than £45 million
- have a borrowing proposal which the lender would consider viable, if not for the coronavirus pandemic
- self-certify that it has been adversely impacted by COVID-19
Businesses from the following sectors are excluded and will not qualify for this scheme:
- Banks, insurers and re-insurers (but not insurance brokers)
- Public sector bodies
- Further education establishments, if they are grant funded
- State funded primary and secondary schools
Most lenders will need supporting documents as evidence to show that the business can afford to repay the loan. These are likely to include:
- Previous years’ accounts
- Management accounts
- Business plan
- Cash flow forecast
At MAR Accountants, we can help our clients prepare the necessary documents required by the lenders as part of the application. We also work with commercial financing organisations who can help with the application and secure the loan that is available to your business under the Coronavirus Business Interruption Loan Scheme.
Defer Self Assessment payments
The second payment on account for Self Assessment is usually due on 31 July. HMRC has confirmed that because of coronavirus the 31 July 2020 payment can be delayed until 31 January 2021. For more information on Self Assessment payments on account refer to our personal tax section.
Claim for a grant through the Coronavirus Self-employment Income Support Scheme
Under the current state of the scheme, self-employed individuals and members of a partnership in the UK who have lost their income due to COVID-19 will be able to claim for a taxable grant for 80% of their trading profits up to a maximum of £2,500 a month, capped at a total of £7,500. Claims for this first SEISS grant, which opened on 13 May, must be made by 13 July 2020.
Today (29 May) the Chancellor has announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19. Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.
The eligibility criteria for the second and final grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 more recently. If your business has been adversely affected on or after 14 July 2020 you’ll be able to make a claims from 17 August 2020.
There is an online eligibility checker which can be used to check whether you qualify for a grant if you’re self-employed. To use this service, you will need your UTR (Unique Tax Reference) and national insurance number.
You can claim for the self-employed support grant if you:
- are self-employed or a member of a partnership
- have submitted your Self Assessment tax return for 2018/19 tax year (if you have’t already, you have until 23 April 2020 to submit otherwise you will not be able to claim)
- have traded in the 2019/20 tax year and are trading when you apply, or would be if not for coronavirus
- intend to continue to trade in the 2020/21 tax year
- lost trading income due to coronavirus
You will not receive the grant if your trading profits is more than £50,000. Your trading income must also be more than half of your total income for either the tax year 2018/19 or the average of the tax years 2016/17, 2017/18 and 2018/19.
You will need the following information to make the claim:
- Self Assessment UTR
- National Insurance number
- Government Gateway user ID and password (you can create one if you do not have one)
- Bank details for the account you want to receive the money into
The grant received under this scheme must be reported as income from your self employment in your self assessment tax return.
Advice to our clients
HMRC’s guidance specifically states that tax agents and advisers will not be able to make the claim for Self Employment Income Support grant on behalf of their clients. Claims must be made by the self-employed individuals themselves. At MAR Accountants, we are committed to help our clients and are available to provide full support throughout the process of claim, although we will not be able to make the claim on your behalf. We will check on your behalf using HMRC’s online eligibility checker and inform you whether you are eligible to make a claim and, if eligible, the date you can submit your claim online. We will also help you find the information you need to make the claim online if you do not already have it. If we believe you are not eligible for a grant we will explain the reason(s) why based on your previously submitted tax returns.