The Chancellor, Rishi Sunak, outlined a raft of measures to support the UK's businesses affected by the COVID-19 outbreak.
Here is a summary of his key announcements:
- £330bn of government backed bank loans.
- Liquidity to larger firms at low-cost. Support for smaller firms can be via the Business Interruption Loan Scheme (increased to £5m). No interest due for the first six months.
- Businesses in the hospitality, leisure and retail sectors who may have had difficulty making claims for business interruption loans from their insurers. Government has now intervened and the insurers have agreed to pay up in appropriate cases.
- Retail, hospitality and leisure sectors with a rateable value below £51,000 will pay no rates for 2020/21 & receive a cash grant of up to £25,000 per business.
- Grants to smaller business increased to £10,000.
- Three-month repayment holiday agreed by lenders
Funding support
The Government had initially promised £7bn funding for small businesses and workers in the UK which you can find more details on the Coronavirus Business Interruption Loan Scheme website page. This will be via Government backed bank funding.
But responding to criticism that financial support was not happening quickly enough and was failing to reach all the companies that were in desperate need of funds, the Chancellor has announced some revised plans:
- Lenders would be banned from requesting personal guarantees – which mean borrowers often have to put their homes on the line – on loans under £250,000.
- The loan scheme would be extended so that it covered all small companies affected by Covid-19 and not just those unable to get commercial funding.
- A new scheme launched to bolster support for larger firms not currently eligible for loans, under which the government would provide a guarantee of 80% so that banks could make loans of up to £25m to firms with an annual turnover of between £45m and £500m.
£10,000 grant for small business
The Department for Business, Energy & Industrial Strategy will be writing to local authorities to outline the scheme, and encourage them to prepare. Once up-and-running, your local authority will contact you rather than having to apply yourself. Grants should be available for businesses with a rateable value below £26,000. This Government websiteoutlines it in a bit more detail.
Business rates suspended
Rates suspended for one year for shops, cinemas, restaurants and music venues in England with a rateable value of £51,000 or less.
There is also support for businesses who pay little or no business rates. The government will provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no business rates because of Small Business Rate Relief (SBBR). This will provide a one-off grant of £3,000 to business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. Again, this is covered off in a bit more detail via the Coronavirus Business Interruption Loan Scheme website page.
£500m "hardship fund" for local authorities
Mentioned in the recent budget, the Government has launched a £500m "hardship fund" to be given to local authorities in England to help vulnerable people in their areas. There hasn't been much more detail since then, but please ask us about it, and we will see how you can access this support.
Time to pay arrangements relaxed and extended
HMRC will now consider deferring any payments for VAT and PAYE using a 'time to pay' arrangement where your business is being affected (by the virus). Each arrangement will be assessed on a case-by-case basis and will look at what you can afford to pay and then use that to work out how much time you need to pay it.
HMRC typically expects you to pay no more than 50% of your disposable income.
You can find further information on our website here, or you can find the latest government guidance for businesses and employers on topics such as deferring VAT and Income Tax payments, business rates holiday & paying sick pay here
Areas we are looking for further clarity on:
Rates reductions made automatically and a revised statement sent to you for 2020-21?
Contact your local council to get further details and timescale.
How will qualifying businesses claim the grants (between £10,000 to £25,000)?
We assume you will need to apply to your bank for the guaranteed Business Interruption Loan. Your bank will probably ask for up-to-date figures to back up your application. Please call if you need help preparing these.
How can employers claim back the 14-day cost of Statutory Sick Pay paid to employees?
The coronavirus Statutory Sick Pay Rebate Scheme will launch online from the 26th May. The scheme will enable employers with fewer than 250 employees to claim coronavirus-related Statutory Sick Pay (SSP).
You are eligible to use the scheme if:
- You're claiming for an employee who's eligible for sick pay due to coronavirus
- You had a PAYE payroll scheme in operation before 28 February 2020
- You had fewer than 250 employees across all PAYE schemes on 28 February 2020
- You're eligible to receive State Aid under the EU Commission Temporary Framework.
The repayment will cover up to two weeks of the applicable rate of SSP, and is payable if a current or former employee was unable to work on or after 13 March 2020 and entitled to SSP, because they either:
- Have coronavirus
- They are self-isolating and unable to work from home
- They are shielding because they've been advised that they're at high risk of severe illness from coronavirus.
To prepare to make a claim, you should keep records of all the SSP payments you wish to claim for. More information can be found here on the Government's website.
IR35 update
The government is postponing the rollout of the IR35 measures to the private sector that would have affected many contractors across the UK. This a welcome change as it will minimise disruption in this sector until the COVID-19 outbreak have passed. The new rules are now pencilled into effect from 6 April 2021, a year later than planned.
You can find the latest government guidance for businesses and employers on topics such as deferring VAT and Income Tax payments, business rates holiday & paying sick pay here
We understand that as our clients you will all have different issues and different needs, so there are bound to be some financial questions you may need help with. We are here if you have any questions you would like to ask. Please call us on +44 (0)20 886 7575 or email marketing@lawrencegrantco.uk