26 Mar 2020 10:24 AM

During this difficult period as businesses across the country are impacted by Coronavirus COVID-19, the government is announcing various funding support mechanisms to reduce the impact on small and medium sized businesses (SMEs).

Visit our COVID-19 Information Hub 

Here we are highlighting the key areas that businesses need to consider after each series of announcements.  Some areas are updated by the Government over time. We are here to help our clients.

Please email Luke BathSudheer Gupta, Richard Hopes, Jon Luk or  Ian Gibbon, if you have any questions.  

Update 26 March 2020

Read our separate summary of assistance for individuals here.

Self Employment Income Support Scheme (SEISS)

The Government announced on 26 March that it will support self-employed individuals and members of partnerships, providing a grant of 80% of their monthly profits up to a cap of £2,500 per month.

HMRC will calculate the size of the grant using the average monthly profits from self-assessment tax returns submitted for 2016-17, 2017-18 and 2018-19. The scheme will only be open to those with trading profits of less than £50,000 and where the majority of their income comes from self-employment.

The scheme will initially be open for an initial three months with people able to make their first claim by the beginning of June 2020.

HMRC will invite eligible individuals to apply once the scheme is operational.

More detailed information  

Update 25 March 2020

  1. Coronavirus Job Retention Scheme

The Government announced yesterday that all employers will be able to access funds to pay 80% of an employee’s salary, backdated to 1 March and up to a cap of £2,500 per month, for those employees that would have otherwise have been laid off as a result of the COVID-19 pandemic.

The relevant employees need to be designated as ‘furloughed workers’ and the employee needs to be informed. Details need to be uploaded to HMRC to a separate online portal (not yet active) to obtain the reimbursement.

The payment mechanism for the Coronavirus Job Retention Scheme is not yet active and is expected to be operational by April 2020. Read more

  1. Time to Pay (HMRC)

Time to Pay is a service offered by HMRC, to spread tax payments (PAYE, VAT, Corporation Tax) over a period of time (usually 3 - 12 months).

Contact HMRC on the Coronavirus Helpline on 0800 024 1222 (lines open Monday to Friday 8am to 4pm) to discuss further.

  1. VAT & Income Tax Deferral

The Government announced on 20 March that all VAT payments due from 20 March to 30 June can be deferred and that taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.

VAT returns will still need to be submitted during this period and if the business has a Direct Debit in place, this will need to be cancelled to ensure that HMRC does not automatically try to take payment. No application to HMRC is required and no penalties or late payment interest will be charged in this deferral period.

If you are self-employed, any Income Tax due on account in July 2020 will be deferred to January 2021. No application to HMRC is required and no penalties or late payment interest will be charged in this deferral period.

Read more

  1. Statutory Sick Pay (Employees)

The Government has announced that people who cannot work due to coronavirus and are eligible for Statutory Sick Pay will get it from day one, rather than from the fourth day of their illness – and the Government intends to legislate so that this measure applies retrospectively from 13 March 2020.

Statutory Sick Pay will be payable to people who are staying at home on Government advice, not just those who are infected, from 13 March 2020 - employers are urged to use their discretion about what evidence, if any, they ask for.

Employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay for employees unable to work because of coronavirus. This refund will be for up to 2 weeks per employee.

The repayment mechanism for the SSP refund is not yet active.

  1. Coronavirus Business Interruption Loan Scheme (CBILS) (British Business Bank)

The chancellor on 17th March 2020 announced an extension to the loan scheme first introduced in the budget on 11th March.

The measures announced on 17 March 2020 extend the amount available to small and medium businesses from the initial announced limit of £1.2m up to £5m. The loan will also have no interest payable in the first 12 months of the term (the Government will cover the first 12 months of interest payments). This new facility will be available from the start of the week commencing 23 March 2020.

Funding to lenders will come via the British Business Bank and details of how to apply are due to be shared by British Business Bank partners from 23 March 2020.

The British Business Bank’s CBILS facilitates business finance to smaller businesses that are viable but are unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. It is important to note that the borrower always remains 100% liable for the debt.

In this situation, CBILS provides the lender with a Government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. Essentially the Government is acting as a loan guarantor to help banks get funds out to businesses with undue delay. The Government will not charge businesses or banks for this guarantee.

To be eligible for the funding businesses must meet the following criteria:

An approved lender can use CBILS to help a borrower access from £1,000 to £5 million. Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

We understand from our recent interactions with banks and funding partners that they will likely need the following information and that the following will apply:

  • The CBIL loans are only approved in situations where banks would normally have lent, subject to standard lending criteria, but where viability has been impacted by Covid-19.
  • Criteria is based on historic trading (an average of the last 3 years) and it is only available to cover essential expenditure and critical payments. The scheme rules are such that a maximum of 25% of 2019 annual turnover or double the annual wages bill is available whichever is the greater. The loans will be guaranteed by the government up to 80% and for a term of up to 6-years.
  • High street banks are prioritising or only accepting enquiries from their existing banking customers.
  • Very detailed information required in respect of the purpose of the loan, what it will be used for, have you explored all the other government support, how will you reach historic trading levels after the pandemic is resolved, how are you reducing your cash burn rate etc.
  1. Cash grants

The Government announced on 17 March 2020 that it is increasing grants to small businesses eligible for Small Business Rate Relief, from £3,000 to £10,000 and providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.

No action is required to obtain the grants. Your local authority will write to you if you are eligible to receive these grants.

  1. Business Rates Holiday – Retail, Hospitality, Leisure and Nurseries

The Government has announced a 12 months business rates holiday for all retail, hospitality, leisure and nursery businesses in England. In addition

No action is required to obtain the business rates holiday and your local authority will write to you if you are eligible.

  1. Protection from eviction for commercial tenants

Commercial tenants in England, Wales and Northern Ireland who cannot pay their rent because of COVID-19 will be protected from eviction. Therefore no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. The government has the ability to extend this period if needed.

Note that this is not a rental holiday and all commercial tenants will still be liable for the rent.

No action is required by tenants to take advantage of this.

  1. Finance facilities

Alongside the above, there is also the option of exploring more mainstream sources of finance, such as:

  • Bank Overdrafts
  • Business Credit Cards
  • Invoice Finance
  • Merchant Cash Advance

Alliotts use the funding platform, Capitalise, to assist clients in obtaining various forms of finance (including CBILS) by reaching out to up to 100 lenders simultaneously.

 

Update 20 March 2020

  1. Coronavirus Job Retention Scheme

The Government announced yesterday that all employers will be able to access funds to pay 80% of an employee’s salary, backdated to 1 March and up to a cap of £2,500 per month, for those employees that would have otherwise have been laid off as a result of the Coronavirus crisis.

The relevant employees need to be designated as ‘furloughed workers’ and the employee needs to be informed. Details need to be uploaded to HMRC to a separate online portal (not yet active) to obtain the reimbursement.

The payment mechanism for the Coronavirus Job Retention Scheme is not yet active and is expected to be operational by April 2020.

  1. Time to Pay (HMRC)

Time to Pay is a service offered by HMRC, to spread tax payments (PAYE, VAT, Corporation Tax) over a period of time (usually 3 - 12 months). Contact HMRC on the Coronavirus Helpline on 0800 024 1222 (lines open Monday to Friday 8am to 4pm) to discuss further.

  1. VAT & Income Tax Deferral

The Government announced on 20 March that all VAT payments due from 20 March to 30 June can be deferred and that taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period. No application to HMRC is required and no penalties or late payment interest will be charged in this deferral period.

If you are self-employed, any Income Tax due on account in July 2020 will be deferred to January 2021. No application to HMRC is required and no penalties or late payment interest will be charged in this deferral period.  

  1. Statutory Sick Pay (Employees)

The Government has announced that people who cannot work due to coronavirus and are eligible for Statutory Sick Pay will get it from day one, rather than from the fourth day of their illness – and the Government intends to legislate so that this measure applies retrospectively from 13 March 2020.

Statutory Sick Pay will be payable to people who are staying at home on Government advice, not just those who are infected, from 13 March 2020 - employers are urged to use their discretion about what evidence, if any, they ask for.

Employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay for employees unable to work because of coronavirus. This refund will be for up to 2 weeks per employee.

The repayment mechanism for the SSP is not yet active.

  1. Coronavirus Business Interruption Loan Scheme (CBILS) (British Business Bank)

The chancellor on 17th March 2020 announced an extension to the loan scheme first introduced in the budget on 11th March.

The measures announced on 17 March 2020 extend the amount available to small and medium businesses from the initial announced limit of £1.2m up to £5m. The loan will also have no interest payable in the first 12 months of the term (the Government will cover the first 12 months of interest payments). This new facility will be available from the start of the week commencing 23 March 2020.

Funding to lenders will come via the British Business Bank and details of how to apply are due to be shared by British Business Bank partners from 23 March 2020.

The British Business Bank’s CBILS facilitates business finance to smaller businesses that are viable but are unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. It is important to note that the borrower always remains 100% liable for the debt.

In this situation, CBILS provides the lender with a Government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. Essentially the Government is acting as a loan guarantor to help banks get funds out to businesses with undue delay. The Government will not charge businesses or banks for this guarantee.

To be eligible for the funding businesses must meet the following criteria:

An approved lender can use CBILS to help a borrower access from £1,000 to £5 million. Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

  1. Cash grants

The Government announced on 17 March 2020 that it is increasing grants to small businesses eligible for Small Business Rate Relief, from £3,000 to £10,000 and providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.

No action is required to obtain the grants. Your local authority will write to you if you are eligible to receive these grants.

  1. Business Rates Holiday

The Government has announced a 12 months business rates holiday for all retail, hospitality and leisure businesses in England.

No action is required to obtain the business rates holiday and your local authority will write to you if you are eligible.

  1. Finance facilities

Alongside the above, there is also the option of exploring more mainstream sources of finance, such as:

  • Bank Overdrafts

  • Business Credit Cards

  • Invoice Finance

  • Merchant Cash Advance

At Alliotts we use the funding platform, Capitalise, to assist clients in obtaining various forms of finance (including CBILS) by reaching out to up to 100 lenders simultaneously.

The above supersedes any information previously provided in earlier updates.

Update 18 March 2020

  1. Time to Pay (HMRC)

Time to Pay is a service offered by HMRC, to spread tax payments (PAYE, VAT, Corporation Tax) over a period of time (usually 3 - 12 months). Contact HMRC on the Coronavirus Helpline on 0800 024 1222 (lines open Monday to Friday, 8am to 4pm) to discuss further.

  1. Statutory Sick Pay (Employees)

The government has announced that people who cannot work due to COVID-19 and are eligible for Statutory Sick Pay (SSP) will get it from day one, rather than from the fourth day of their illness – and the government intends to legislate so that this measure applies retrospectively from 13 March 2020.

SSP will be payable to people who are staying at home on government advice, not just those who are infected, from 13 March 2020 - employers are urged to use their discretion about what evidence, if any, they ask for.

Employers with fewer than 250 employees will be able to reclaim SSP for employees unable to work because of COVID-19. This refund will be for up to 2 weeks per employee. For more information read our blog  

  1. Coronavirus Business Interruption Loan Scheme (CBILS) (British Business Bank)

The chancellor on 17th March 2020 announced an extension to the loan scheme first introduced in the budget on 11th March.

The measures announced on 17 March 2020 extend the amount available SMEs from the initial announced limit of £1.2m up to £5m. The loan will also have no interest payable in the first 6 months of the term (the Government will cover the first six months of interest payments). This new facility will be available from the start of the week commencing 23 March 2020.

Funding to lenders will come via the British Business Bank and details of how to apply are due to be shared by British Business Bank partners from 23 March 2020.

The British Business Bank’s CBILS facilitates business finance to smaller businesses that are viable but are unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. It is important to note that the borrower always remains 100% liable for the debt.

In this situation, CBILS provides the lender with a government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. Essentially the government is acting as a loan guarantor to help banks get funds out to businesses with undue delay. The government will not charge businesses or banks for this guarantee.

To be eligible for the funding businesses must meet the following criteria:

  • Be UK based, with turnover of no more than £41 million per annum

  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support, further details here)

  • Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements

An approved lender can use CBILS to help a borrower access from £1,000 to £5 million. Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

  1. Cash grants

The government announced on 17 March 2020 that it is increasing grants to small businesses eligible for Small Business Rate Relief, from £3,000 to £10,000 and providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.

Details on how to access these grants has not yet been announced however it is likely to be in the form of a refund from local authorities.

  1. Finance facilities

Alongside the above, there is also the option of exploring more mainstream sources of finance, such as:

  • Bank Overdrafts

  • Business Credit Cards

  • Invoice Finance

  • Merchant Cash Advance