The government set out various financial aid packages to assist individuals, small to medium businesses, as well as larger corporate bodies in light of the coronavirus outbreak and the decision to place society within a quarantined lock down to suppress its spread. The government admittedly stated their packages would be available to 95% of the population with 5% slipping through the ‘net’. Below we have outlined the various financial aids available depending on your business.
For self employed individuals & those in partnerships who submitted a tax return for 2018-19 year will receive communication from HMRC within this month to invite them to apply for the grant. The grant payment will cover 3-months with a maximum payment of £7,500 for the period.
We have learnt that any communication from HMRC sent (text, email, or letter) will never link you to the claiming of the SEISS but to the general webpage regarding the SEISS. Please be cautious of any fraudulent messages and if in doubt please do not hesitate to contact us 020 8761 8000.
To check whether you are eligible will require your Unique Tax Reference (UTR) as well as your National Insurance Number. You can find your UTR on communications you receive from HMRC through the post. To meet the criteria for eligibility:
- You will need to have posted taxable profits
- You traded in 2019/2020
- You intend to trade in 2020/2021
- Your trading profits were £50,000 or less
- 50% or more of your income was derived from self-employment
- You trading profits were adversely effected by COVID-19
The calculation used to determine the payment made to you will be based on the mean average of your taxable profits from 2016/17, 2017/18, & 2018/19. This is done by adding the 3-years profits and then dividing the value by 3. Dividing this value by 12 will give you your average monthly income & 80% of this value will be paid to you. The initial (& possibly only) payment will be for 3-months. This value will be capped at £7,500 & once you make the claim and it is approved, you should receive the amount within 6-working days.
If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to firstname.lastname@example.org and then delete it.
When you make your claim you’ll need your:
- Self Assessment UTR
- National Insurance number
- Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online (you will need a valid driving licence or passport to verify your identity)
- bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)
You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.
Any monies received as a result of the SEISS, is taxable, and therefore needs to be treated as income on your 2020-2021 tax return.
Furthermore, if you had a payment on account to make by 31st July 2020 against income tax calculations from 2019/2020 then that payment has now been deferred to 31/01/2021.
For businesses hit with cash flow problems the government is providing a number of initiatives to relieve the stress from the lock down.
Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020 to 2021 tax year.
You’re eligible if your property is a:
- restaurant, café, bar or pub
- cinema or live music venue
- assembly or leisure property – for example, a sports club, a gym or a spa
- hospitality property – for example, a hotel, a guest house or self-catering accommodation
Following from this a grant of £10,000 or £25,000 was offered to businesses within these sectors dependent on the rateable value of the premises – Retail, Hospitality and Leisure Grant Fund. A £10,000 grant was also offered to small businesses for those eligible for the Small Business Rate Relief (SBRR) Scheme & The Rural Rate Relief Scheme– Small Business Grant Fund. These initiatives were made available by the Local Authorities & business rate payers were contacted automatically.
The government also set up the Coronavirus Business Interruption Loan Scheme (CBILS) to help small and medium-sized enterprises (SMEs) that are struggling with cash flow because of revenues that have been deferred or lost due to COVID-19. Any UK-based business that has a turnover less than £45m is eligible for the CBILS, offering loans between £1,000 to £5m.
The loan scheme covers several business financing services, including term loans, overdrafts, asset finance and invoice finance. The finance terms are up to six years for loans and asset finance facilities & 3-years for overdrafts and invoice finance facilities.
The loans are offered through a number of finance providers and are backed by a government guarantee that covers up to 80% of the balance. This will enable lenders to turn ‘no’ financing decisions into more ‘yes’ decisions with interest and fees for the loans will be paid by the government for the first 12 months.
A version of this loan is also available to large businesses with turnovers more than £45m and business activity based in the UK – Coronavirus Large Business Interruption Loan Scheme.
A further loan scheme was announced for quick and easy access to cash flow labelled the Bounce Back Loan Scheme available form your banking provider. This was aimed at small and medium-sized enterprises (SMEs) based in the UK. However, if you were already claiming funds from CBILS then you won’t be eligible.
With the bounce back loan you can claim up to 25% of your businesses turnover, with a minimum £2,000 to a maximum of £50,000 available.
The loans have a 100% guarantee from the government and there’s no interest or fees to pay for the first 12 months.
The term of the loans are six years and businesses don’t need to make repayments for the first 12 months. The interest rate for the loan is set at 2.5%.
The Bounce Back Loan Scheme launched on 4 May 2020. To apply for it, choose one of the accredited lenders, which includes high-street banks, and check their lending requirements.
Ideally, choose your own lender for this process. If you find you can’t get the finance you need, approach one of the other lenders.
You may also need access to the following information about your business:
- Company registration number
- Business account number and sort code
- Estimated annual turnover
You need to fill in a short loan application form online (including the details above if required).
If your application is approved, you should receive the funds in your account within a matter of days (it could be within 48 hours).
Coronavirus Job Retention Scheme is the government initiative to prevent a sudden surge in unemployment as a result of the lockdown imposed to curb the spread of the pandemic. All UK businesses, including charities, are eligible for the Coronavirus Job Retention Scheme. There isn’t a cap on the number of workers who can be selected for the scheme.
The Coronavirus Job Retention Scheme will reimburse 80% of furloughed workers’ wages, up to £2,500 per employee per month. Your business can top up these salaries if you wish.
Your workers need to be currently working in your business – and not have been laid off or made redundant – in order for you to access the scheme.
If required, they can take on other jobs with other businesses; doing so won’t impact on this cover – but they can’t do any work for the employer who claims under the Coronavirus Job Retention Scheme.
The scheme is available for four months, from 1 March 2020.
It means any of your employees who aren’t actively working for you due to the current disruption to the economy still receive a salary and your business can retain their services in the long term.
If Taxfile runs your payroll, we can place your elected staff on furlough and set up the reimbursement system for your business. Contact us on 020 8761 8000.
As a director of a company you can also be furlough, yet conduct your statutory director’s obligations. As I director you will be eligible for 80% of the salary you took via PAYE submitted on a monthly basis and not on dividends.
Other (more specialised) aid packages announced were a £500m loan scheme aimed at high-growth businesses, which was launched by the government in April 2020. The Future Fund has been created to ensure eligible businesses can access the investment they require to keep functioning. This was aimed at high-growth businesses that are unlisted UK registered companies. In the past five years, they must have previously raised a minimum of £250,000 in equity investment from third-party investors.
A £750m funding pot for small and medium-sized business that are driving research and development (R&D), which was announced by the government and Innovate UK in April 2020 aimed at the most R&D-intensive small and medium-sized businesses.
Reimbursement of Statutory Sick Pay (SSP) is also available as under normal circumstances SSP is paid by the employer to the employee when they are sick. The government has said it will reimburse employees who have to make payments in light of coronavirus.
Any employees who are unable to work due to coronavirus are able to claim Statutory Sick Pay from day one rather than the usual day four of sickness, following a temporary change by the government.
For individuals that are VAT registered, the government announced a deferral of VAT liabilities for those who have a payment due between 20/03/2020 to 30/06/2020. Those payments can now be deferred to 31/03/2021.
To make a VAT deferral the only thing you will need to do is cancel your direct debit with HMRC/VAT (if you have one set up). AT refunds and reclaims will be paid by the government as usual.