In the unprecedented times we currently find ourselves in, small business owners will be facing significant challenges in the upcoming weeks and months to keep their businesses afloat. As a result, we wanted to drop everyone a quick note to help summarise the announcements the government has currently made.
Unfortunately a lot of the detail around how such schemes and reliefs will operate is still unknown (due to the rapidity with which they’ve had to be announced) but hopefully this will provide some clarity.
The Coronavirus Job Retention Scheme
As this was announced less than 24 hours ago, there is still a lot of speculation about exactly how this will operate, but in our opinion, this is a huge step taken by the government that will hopefully help a lot of people. The government have committed to covering 80% of an employee’s wages (up to £2,500 a month) at the point their employer is no longer able to keep them on as a worker.
Employers will have to classify their employees as “furloughed workers” meaning they are temporarily no longer working for the business. This therefore offers businesses an alternative whereby rather than making their employees permanently redundant, they can temporarily halt employment and reclaim 80% of the employees’ salary from HMRC until they return to work.
Claims will be made via a dedicated online portal that will launch in the near future. Claims can be backdated to the 1st of March and any employee who’s been employed since 28th February 2020 is eligible. Exactly what businesses will have to demonstrate to prove their workers are “furloughed” remains to be seen.
HMRC have stated that “changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation” so please seek legal advice before making any decisions.
The Coronavirus Business Interruption Loan Scheme
This scheme is being backed by the British Business Bank, the launch of which has been pushed forward to the week commencing the 23rd March. The British Business Bank will provide lenders with a guarantee of 80% of each loan issued to small businesses (under £45m turnover) thus making cash far more accessible to those who need it.
All major banks will be taking advantage of this scheme upon launch and thus the best option is to speak with whoever you currently bank with once the scheme is live.
Loans will be issued up to a maximum of £5m and will be interest free for the first 12 months (as the government will be covering any interest for this period).
Deferral of VAT Payments
Fairly straightforward, any businesses with a VAT payment due between the 20th March and 30th June can defer this payment until the end of the 20/21 tax year. No application is required and thus this relief will be applied automatically. Although not specifically addressed, one can assume VAT returns still need to be submitted as normal.
If you are in a repayable VAT position, there are no changes so you can expect to receive repayments as normal.
Deferral of Self-Assessment Payments
A small concession for the self-employed who have so-far been left largely unaddressed, for anyone with a payment on account due on the 31st July 2020, this will be automatically deferred until the 31st January 2021.
Support for Payment of Statutory Sick Pay
The government will repay businesses up to two weeks of statutory sick pay (£94.25 a week) paid to employees who have been off work due to the virus. This is eligible to all businesses with fewer than 250 employees and no doctor’s note is required. Those with symptoms can obtain an isolation note from NHS 111 online.
Please note the repayment mechanism for this is not currently In place. Until an announcement is made, all employers need to do is ensure their payroll reporting is reflective of the fact they’ve been paying statutory sick pay to those off work with COVID-19.
Business Rates Exemption and Cash Grants
This is an area that appears to have caused some confusion and thus first and foremost, please note this is only applicable to businesses in the hospitality, retail and leisure sector, and specifically those either paying business rates or not paying business rates due to their eligibility for small business rate relief (SBBR) and rural rate relief (RRR).
For all businesses in these industries currently paying business rates, an exemption for the entire 20/21 tax year will be automatically introduced through your council tax bill. Such businesses will also be eligible for a cash grant up to £25,000, the exact amount dependent on their rateable value. If you are eligible for the scheme, your local authority will contact you directly and automatically and thus no further action is required.
For those currently receiving small business rate relief (SBBR) or rural rate relief (RRR), you’ll be eligible for a £10,000 cash grant and per the above will be contact by your local authority.
Hopefully this provides some clarity in the most uncertain of times. If we can be of any further assistance, please do not hesitate to contact us at info@leapaccounts.com.
The Team at Leap Accounts & Outsourcing