Financial support for UK businesses during the Coronavirus

22 March 2020

Updated Monday 23rd March 2020

As the Coronavirus (COVID-19) continues to effect UK businesses, including impacting their cash flow and placing some at risk of insolvency.

The UK Government has announced several measures, as well as pre-existing initiatives for business funding. We look at some of these in further detail in this article.

1. ‘Time to Pay’ for business tax

Businesses and self-employed individuals with outstanding tax liabilities, who are in financial distress, will be given support in settling their tax affairs through the ‘Time to Pay’ scheme.

This is where HMRC offer a time-limited deferral period on monies owed and a pre-agreed repayment schedule.

The usual 3.5% annual interest on deferred tax will be waived during the Coronavirus pandemic

2. Deferring VAT and Income Tax Payments.

VAT

You can defer VAT from 20th March 2020 until 30th June 2020 and ‘ALL’ UK businesses are eligible.

This is an automatic scheme with no application required. Businesses will not need to make VAT payments during this period, with liabilities accumulated settled before the end of the 2020 to 2021 tax year.

VAT refunds and reclaims will be paid by the government as normal.

Income Tax

Payments that were due on 31st July 2020 will be deferred until 31st January 2021 and ‘ALL’ Self Employed individuals will be eligible.

This is an automatic scheme with no application required. No penalties or interest for late payment will be charged in the deferral period.

3. Support for businesses borrowing funds

This is the new Coronavirus Business Interruption Loan Scheme (CBILS), which will support those businesses that would not traditionally meet the criteria of certain ‘accredited’ funders. This scheme will cover business loans, invoice financing, asset finance and overdraft facilities.

This scheme should come into effect on the week commencing 23rd March 2020. It will provide more attractive terms for both businesses applying for new facilities and funder.

It will provide funders with a government-backed guarantee on the facility that is being offered to the business, potentially enabling a positive outcome for the business, on a facility where they usually do not meet the criteria. (Note that the business / borrower will always remain 100% liable for the debt)

The government will also cover the first 12 months of interest payments so that the businesses will have lower initial repayments, though the business will remain liable for the repayments of capital.

The British Business Bank is still in the process of defining and agreeing the scheme’s details, specification and eligibility.

The Funding Store work with 6 accredited providers of the CBILS scheme. So do not hesitate to contact us should you need assistance sourcing funding.

4. The Coronavirus Job Retention Scheme

This scheme is open to ‘ALL’ UK businesses and the steps that businesses will need to take are as follows:

  • 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 – information that will be requested is yet to be confirmed.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, then please contact The Funding Store on 01908 882420.

5. Statutory Sick Pay relief package for SMEs

The government will bring forward legislation that will allow small and medium sized businesses and employers to reclaim SSP paid for sickness absence due to COVID-19. The eligibility criteria is as follows:

  • This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19.
  • Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020.
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
  • Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.
  • Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force.
  • The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

A rebate scheme is currently being developed and further details are still to be provided as the legislation has yet to pass.

6. Business rates holiday for retail, hospitality and leisure businesses

A business rates holiday will be introduced for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if:

  • Your business is based in England.
  • Your business is in the retail, hospitality and/or leisure sector.

Properties that will benefit from the relief will be occupied and that are wholly or mainly being used for:

  • Shops, restaurants, cafes, drinking establishments, cinemas and live music venues.
  • Assembly and leisure.
  • Hotels, guest & boarding premises and self-catering accommodation.

How to access the scheme

No application is required, this will automatically apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

7. Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

You are eligible for the grant if:

  • Your business is based in England.
  • Your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied and that are wholly or mainly being used for:

  • Shops, restaurants, cafes, drinking establishments, cinemas and live music venues.
  • Assembly and leisure.
  • Hotels, guest & boarding premises and self-catering accommodation.

How to access the scheme

Your local authority will write to you if you are eligible for this grant, so no application is required. Guidance for local authorities on the scheme will be provided by the government shortly.

8. Support for businesses that pay little or no business rates.

An additional Small Business Grant Scheme will be provided buy the government, which will allow local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief.

This scheme will provide a one-off grant of £10,000 to eligible businesses to help them meet their ongoing business costs.

You are eligible for the grant if:

  • Your business is based in England.
  • You are a small business and already receive SBBR and/or RRR.
  • You are a business that occupies property.

How to access the scheme

Your local authority will write to you if you are eligible for this grant, so no application is required. Guidance for local authorities on the scheme will be provided by the government shortly.

9. Support for larger firms through the COVID-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.

It will also support corporate finance markets overall and ease the supply of credit to all firms.

‘ALL’ UK businesses are eligible.

How to access the scheme

The scheme will be available early in the week beginning 23rd March 2020. More information is available from the Bank of England. (https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020)

10. Support for nursery businesses that pay business rates

The UK government will introduce a business rates holiday for nurseries in England for the 2020 to 2021 tax year.

You are eligible for the business rates holiday if:

  • Your business is based in England.

Properties that will benefit from the relief will be hereditaments:

  • Occupied by providers on Ofsted’s Early Years Register.
  • Wholly or mainly used for the provision of the Early Years Foundation Stage.

How to access the scheme

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.

IT IS IMPORTANT THAT YOU ASSESS YOUR OPTIONS AT THE EARLIEST OPPORTUNITY BEFORE IT LEADS TO MORE CRITICAL LIQUIDITY ISSUES.

Contact The Funding Store today on 01908 880420 to discuss your funding options.

Article information correct as 22nd March 2020 and updated 23rd March 2020

This article has been produced by The Funding Store for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of the information contained in this article is accepted by The Funding Store (MK) Limited. In all cases appropriate professional advice should be sought before making a decision.