Government support to Businesses – COVID-19

26 March 2020

Here is a summary of the temporary measures set out by the Government to support individuals and businesses through the disruption caused by COVID-19.

Coronavirus Self-employment Income Support Scheme *UPDATE*

The Government have just launched this scheme and can be used by anyone who is self-employed and has lost income due to coronavirus. The scheme will pay a grant of 80% of trading profits (capped at £2,500 per month) for the next 3 months, and will be extended if needed. It is open to self-employed individuals and members of a partnership as long as they have submitted a self-assessment tax return for the tax year 2018-19 and have traded in the year 2019-20. They also must be trading when the application is made, or would have been trading if it had not been for COVID-19.

To qualify, self-employed trading profits must be less than £50,000 and more than half of the income must come from self-employment.

If you have not yet submitted your 2018-19 tax return, you have until 23 April 2020 to do so.

A taxable grant will be paid which will be 80% of the average profits from the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019. To work out the average HMRC will add together the total trading profits for the 3 years then divide by 3, and use this amount to calculate a monthly average.

The grant is not yet open for application, HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying 80% of the salary of their PAYE employees who would have otherwise been laid off. The scheme is open to any employer, and will cover the cost of wages backdated to 1 March 2020, up to a cap of £2,500 per employee per month.

In order to access the scheme employers will need to:

  1. Designate affected employees as ‘furloughed workers’ and notify your employees of this change. Note that changing the status of employees remains subject to existing employment law.
  2. Submit information to HMRC about the employees and their earnings. HMRC will set out the information required in due course.

We will be looking at how this develops very closely over the next few days. There are a number of unanswered questions in particular how this will affect companies whose only employees are directors. HMRC is working urgently to set up a system for reimbursement, however there is expected to be a wait, therefore if your business needs short term cash flow support, it is important to consider if you would be eligible for a Business Interruption Loan.

VAT Payments

The next quarters VAT payments will be deferred for 3 months, meaning businesses will not need to make VAT payments until June 2020. This is an automatic offer with no application required. Businesses will be given until the end of the 2020/2021 tax year to pay any liabilities accumulated during the deferral period (20 March 2020 to 30 June 2020). Returns will still need to be filed on time.

Income Tax Payments

Income tax payments due on 31 July 2020 (payments on account) are deferred until 31 January 2021. Note that this relates to payments on account, and does not effect the deadline date for submission.

Universal Credit

If you are self-employed you are able to claim Universal Credit at a rate equivalent to statutory sick pay.

Statutory Sick Pay

Employers with fewer than 250 employees will be eligible to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 for up to 2 weeks. SSP is £94.25 per week and will be paid from day 1 of sickness, rather than day 4 if you are sick or need to stay at home due to COVID-19.

We will also be keeping a close eye on this as it is currently unclear how employers claim back the SSP, we understand that HMRC will be working over the next few months to set up a repayment mechanism. For the moment, employers should maintain a manual record of staff absences and payments of SSP.

Business Rates holidays and Cash Grants *UPDATE*

There will be no rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors. In those sectors, if your rateable value is between £15k and £51k you will receive a cash grant of £25,000 per property.

Any businesses which gets small business rates relief will receive a cash grant of £10,000.

These rates holidays and cash grants will be administered by your local authority; for those in the City and County of Swansea, here is the link to apply for the grant

Coronavirus Business Interruption Loan Scheme

This should be available from Monday 23 March and delivered by the British Business Bank. It’s aim is to support small and medium-sized businesses to access bank lending and overdrafts. Businesses can access the first 12 months of that finance interest free. Talk to your bank or finance provider to find out more and to discuss a plan with them.

This page will be updated when we know more!