We are living in very different times and business is not running as usual thanks to Coronavirus. The UK is in the midst of a nationwide lockdown. We have social distancing rules in place that inform our social decision-making. This article will bring together the latest announcements and make sense of these big changes.

The Government has announced £330 billion pounds worth of loan guarantees via the British Business Bank and its ancillary high street partners. The scheme is designed to help a range of different businesses during this extreme pandemic in relation to business operating costs and more. The second biggest announcement, a Coronavirus Job Retention Scheme, was a guaranteed 80% of people’s wages up to £2,500 allowing companies to keep staff – even if they are not working. Finally, the Government announced a similar scheme to the Job Retention scheme for the Self Employed allowing companies earning profits less than £50,000 access to a grant worth 80% of profits.

Prestige Business Management – What we are doing to help maintain our services to our clients

This is an unprecedented time for all of us, at PBM HQ we are maintaining the highest level of sanitization as possible. We have hand sanitizer and strict cleaning regimes, so our staff remains well and healthy. Our staff is also not taking any form of public transport to get into work. For the time being, we are keeping the office open rather than working from home. However, we are ready to implement an office closure and home working when required, with full access to phones and emails.

The Coronavirus Self-Employment Income Support Scheme

The Government has announced the creation of the Coronavirus Self-Employment Income Support Scheme. If a self-employed freelancer has suffered any kind of decrease in income there is a taxable grant available worth 80% of your self-employed profits up to a cap of £2,500 per month. The scheme will only be available to those with trading profits that are less than £50,000. This scheme is targeted at the majority of low-income self-employed freelancers and tradespeople.

According to the Office of National Statistics, there are five million people in the UK who are currently self-employed. On average, the self-employed earn £781 a month which has skyrocketed since the 2007/08 credit crunch. As more and more freelancers and entrepreneurs explore the earning potentials of the so-called “Gig” economy. Nearly a fifth of the self-employed are in the construction and building services sector whilst hundreds of thousands work in professional services (accountancy, law, etc.) and education (private tutors) along with the motor trade taking a substantial chunk (mechanics and driving instructors).

Another key caveat is that for you to receive this grant, you need to earn more than 50% of your income from self-employment. However, you can apply for the grant funding and continue to do business. Payment of the taxable grant isn’t on condition that you cease trading. It is support funding to help drive long-term economic growth.

The scheme is only available to those self-employed tradespeople and freelancers with a trading profit of less than £50,000 either during the 2018/2019 financial year or an average of trading profits from 2016/17, along with 2017/18 and 2018/19. This is the calculation basis for the taxable grant payment.

According to the Chancellor, ninety-five percent of the self-employed population will be eligible to apply for this scheme. The scheme is predominantly aimed at those who earn the bulk of their income from self-employment. This is how the scheme will work in practice.

1. HMRC will use self-assessment tax data to identify those who meet the eligibility criteria and will therein “invite” people to apply online.
2. The grant payment, on the basis they meet the criteria for eligibility, will be paid into a bank account that is confirmed by HMRC.

You don’t need to do anything – HMRC will contact self-employed who meet the criteria directly.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme has been set up and will provide businesses and non-profit organisations access to a grant worth 80% of an employee’s salary up to £2,500 in value. The purpose of the grant is to allow businesses of all sizes to “furlough” employees – i.e. to stand down employees rather than sack them. This UK-wide scheme will even allow employees to “top-up” this payment as they see fit.

The Chancellor stated that this new Coronavirus Job Retention Scheme will help businesses hold on to human capital so that once this pandemic is over – and he stated categorically that it will come to an end – that businesses are fighting fit when it comes to rebuilding the economy.

The scheme will allow for retrospective applications dated from March 1st, 2020. The scheme will initially be made available for three months, but the Chancellor left open the possibility of an extension to this grant. The Chancellor believes the business, non-profit and micro business communities can “stand together” thanks to this support package. He concluded that in relation to this scheme, HMRC is “working day and night” to help launch this “unprecedented” Government scheme. As such, they believe this programme will be up and running by the end of April 2020.

Coronavirus Business Interruption Scheme Update

The already announced Coronavirus Business Interruption Scheme has also been tweaked by the Chancellor in response to wider public consultation. The Government will extend the interest-free period for loans beyond the initial six months and will now allow the scheme to continue for a minimum of 12 months. The loan scheme will be available from Monday 23rd of March 2020.

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. 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 the government will cover the first 6 months of interest payments.

VAT Quarter Deferral

The Chancellor also announced that he was deferring the next quarter of VAT payments. This means that no company will pay VAT until the end of June 2020. They will have up until the end of the financial year to repay this deferred payment sum. HMRC believes this will allow a further £30 billion pounds to be injected into the economy.

Self-Assessment Payments Deferred

HMRC will also now defer Self-Assessment payments until January 2021. This will help self-employed workers keep hold of much-needed revenue to help protect their income in the short-term. Any payments that were due in July 2020 will now be deferred to January 2021.

Abolition of Rates for Hospitality and Leisure Businesses

The Chancellor announced that business rates for hospitality and leisure businesses will be abolished for a period of 12 months.

Support for Business that pay business rates

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any inquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March

Support for businesses that pay little or no business rates

The government will provide additional 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 £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.

If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme will be provided shortly.

Staff on Sick Pay

We will bring forward legislation to allow small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be 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
• UK 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
• All employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
• eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay 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

We are endeavouring to help all our clients through this difficult time, please bear with us as we respond to each of your emails and enquires about The Chancellor’s announcement. Now some of the finer details of how his announcements will work and money can be claimed are still unclear and when we know more, we will update all of you. Please contact us if you are struggling and we will do our best to point you in the right direction.

A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

During these difficult times, we at Prestige Business Management will always be available to help our clients make sense of the myriad of schemes available. Whether you’re a limited company or self-employed, as a valued client, we can give you the right support and advice to help make sure your business survives and flourishes after the COVID-19 pandemic. Call us today on 0203 773 2927 to discuss your COVID-19 Government scheme issue today?