Essential updates for business
GOVERNMENT FUNDING SCHEMES
On 24 September 2020, the Chancellor announced that businesses which have borrowed money through government loan schemes will be given more time to repay and apply for loans.
Repayment time extensions
The recently announced extensions to repayments terms will be applied to the below loans:
- The Bounce Back Loan Scheme (BBLS) - Over one million businesses have benefitted from a £38 billion boost through this scheme to date and the further changes will give businesses more time and greater flexibility to repay.
- A ‘Pay as You Grow’ flexible repayment system will be introduced, where loans will now be repayable over 10 years instead of the original six years stated, with interest only payments and 6-month payments holidays also made available. These measures can cut monthly repayments by half and they will not affect business credit ratings.
- The Coronavirus Business Interruption Loan Scheme (CBILs) - There have been over 60,000 CBILs loans provided to date. Those small and medium sized businesses who have received these loans will now also have up to 10 years to repay the money.
Application time extensions
Application time for the above loan schemes as well as the Coronavirus Large Business Interruption Loan scheme and the Future Fund will be extended until the end of November.
There will also be a successor loan guarantee programme coming into place from January 2021. More details will be provided when these are announced.
More details on the various government coronavirus loan schemes can be found below.
The BOUNCE BACK LOAN scheme for small businesses is a fast-track scheme aiming to provide loans that offer a 100% government-backed guarantee for lenders. The scheme allows businesses to borrow between £2,000 and £50,000 (capped at 25% of turnover), and have access to the cash within a few days. These loans are interest free for the first 12 months. More information on how to apply for the loan can be found here .
The scheme launched on Monday 4th May 2020 and businesses will be able to access these loans through a network of accredited lenders.
The FUTURE FUND SCHEME , is intended for start-up businesses and VC-backed or EIS-funded Businesses. It will issue convertible loans between £125,000 to £5 million to innovative business facing financing struggles due to COVID-19. These convertible loans may be an appropriate option for those businesses that depend on equity investment and cannot access the Coronavirus Business Interruption Loan Scheme (CBILS). There have been 700 convertible loans worth £720 million approved so far. Those who have already received a Future Fund convertible loan cannot apply for another one.
The CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS) has given over 66,000 loan facilities worth £15.5 billion to eligible UK-based businesses with turnovers below £45 million. It is intended to provide banks and funds an 80% guarantee on loans of up to £5m for businesses with a turnover of up to £45m. The government is also providing the first 12 months of interest and fees. The Treasury set out rules for the CBILS, detailing the:
Removal of personal guarantees
- Business owners who are borrowing below £250,000 will not have to give personal guarantees.
- For loans above £250,000, personal guarantees will be capped at 20% of the outstanding value of the loan.
Small business pre-requisite requirements
Previously, government-backed loans for small businesses were only available to firms that were unable to secure regular commercial financing.
- In the chancellors update on 3 April, "all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating"
- It is important to note, companies wanting to take out these loans will still be 100% liable for the debt and the government has not set a cap on the interest rate banks can charge.
- Operational changes are also being made to speed up the lending process, with details to follow.
The CORONAVIRUS LARGE BUSINESS INTERRUPTION LOAN SCHEME (CLBILS) has provided more than 566 facilities worth over £3.8 billion to eligible UK-based businesses with turnovers between £45 - £500 million. The scheme provides loans of up to £200 million (to a maximum of 25% of turnover), with an 80% government guarantee to the lender.
The COVID CORPORATE FINANCING FACILITY , is intended to support larger businesses, with the Bank of England stating it will buy Commercial Paper issued by investment grade companies at the prices that existed on 1 March 2020. This will help prevent those businesses who rely on Commercial Paper from running out of liquidity. This is only for investment grade businesses which tend to be large entities and typically listed companies, or government backed with low levels of gearing.
JOB SUPPORT SCHEME
From 1 November, a new Job Support Scheme (JSS) is being implemented to protect viable jobs in businesses that are facing depressed demand, over the winter months, due to the ongoing pandemic.
Effectively, the JSS is split into two arrangements:
- The “Open JSS” – for business that remain open during the period from 1 November – 30 April
- The “Closed JSS” – for businesses that are required to close due to local or national Government intervention in the period 1 November – 30 April.
Details on how the JSS supports employers and employees are summarised below.
Who can use the JSS?
All employers can use the arrangements. However, the Closed arrangement is only available for businesses that are required to close due to local or national Covid-19 rules.
- The employees must be furloughed for at least seven consecutive days to be able to be included in JSS and the employer must have written to the employee to have informed them of this change
- Large employers (with 250 or more employees) will have to meet a financial impact test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. There will be no financial impact test for small and medium enterprises (SMEs) and charities.
- Fully publicly funded organisations are not expected to use the scheme, as has been the case with the CJRS, but partially publicly funded organisations are eligible where their private revenues have been disrupted.
- Employers will be able to make a claim online through the Government portal from 8 December 2020. They will be paid on a monthly basis in arrears and will be reviewed by HMRC.
- The JSS will be available for six months until 30 April but will be reviewed regularly
- Employers can choose to top up wages further if they wish
- The employee does not need to have been furloughed previously but does need to have been on the payroll (an RTI submission on or before 23 September 2020)
Further details and analysis can be found on our Let’s Talk Tax page - https://blogs.mazars.com/letstalktax/
SELF-EMPLOYED INCOME SUPPORT SCHEME
The Government is continuing to support the millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS).
The SEISS Grant Extension provides critical support to the self-employed. The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.
- This will only be open to people with trading profits of up to £50,000.
- The majority of income must be from self-employment.
- It is only available to those who have submitted tax returns with self-employment income for 2019. The Chancellor has given those who have not filed 2019 tax returns four weeks to submit these to qualify.
Additional Eligibility includes those who:
- Declare that they are currently actively trading and intend to continue to trade
- Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period. The qualifying period for the first grant is between 1 November and the date of claim.
The extension will provide two grants and will last for six months from November 2020 to April 2021.
The initial lump sum will cover three months’ worth of profits for the period from November to the end of January 2021. This is worth 40% of average monthly profits, up to a total of £3,750.
A second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April - ensuring government support continues right through to next year.
- The Government will be providing additional funding for Local Authorities (LAs) to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by restrictions. The amount of funding that LAs will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.
- LAs will receive a funding amount that will be the equivalent of:
- This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month).
- LAs will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
- It will be up to LAs to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide.
- Businesses in Tier 3 / Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter, case support is being provided through business support packages provided to LAs as they move into the alert level. The Government is working with local leaders to ensure the Alert Level very high packages are fair and transparent.
- Grants of £934 per month for properties with a rateable value of £15,000 or under
- Grants of £1,400 per month for properties with a rateable value of between £15,000-£51,000
- Grants of £2,100 per month for properties with a rateable value of £51,000
Should this be a new section on it’s own – I have just copied this from the Gov website for now and amended slightly, but can further amend so as not to plagiarise!
VAT DEFERRAL ‘NEW PAYMENT SCHEME’
The government will give businesses, which deferred VAT due in March to June 2020, the option to spread their payments over the financial year 2021-2022.
Rather than paying in full at the end of March 2021, businesses will be able to make 11 equal instalments over 2021-22. All businesses who took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible.
HMRC will put in place an opt-in process in early 2021.
SELF-ASSESSMENT PAYMENT OF TAX FOR INDIVIDUALS
Self-assessment payments on account due on 31 July 2020 were deferred until 31 January 2021.
In addition to this, the government will give the self-employed and other taxpayers more time to pay taxes due in January 2021. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
An increase of £1,000 a year to the Universal Credit standard allowance will also be made for the next 12 months.
The Working Tax Credit basic element is also increasing by the same amount.
Self-employed people will be able to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
SUPPORT FOR HOSPITALITY AND LEISURE SECTOR
As part of the package, the government has announced it will extend the temporary 15% VAT cut (from 20% to 5%) for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector, which has been severely impacted by the pandemic, the confidence to maintain staff as they adapt to a new trading environment.
STATUTORY SICK PAY (SSP) CONCERNING COVID-19
Statutory Sick Pay concerning COVID–19 will be refunded by businesses with less than 250 employees, for up to two weeks per employee. Sick pay has also been extended for those who have to self-isolate, even if not ill, and sick notes will be available from NHS number 111.
Employment Allowance will increase from £3,000 to £4,000 from April 2020. Please note this will only be available to businesses which have a Class 1 Secondary NICs bill of £100,000 or less in the previous tax year.
There will also be increases in the flat-rate deduction for homeworking from April 2020, to cover additional household expenses from £4 per week to £6 per week. This is typically paid to help employees with the additional costs of heating the home, water usage etc.
COMPANIES HOUSE –3 MONTH EXTENSION TO FILE ACCOUNTS
Businesses will be given an additional 3 months to file accounts with Companies House to help organisations avoid penalties as they deal with the impact of COVID-19. Companies still have to apply for the 3-month extension to be approved. Those with clear issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
Full guidance can be found here on how to apply for an extension and more detail from the government on the deferral can be read here .
MTD DIGITAL LINK EXTENSION
HMRC has also granted an extension to all MTD businesses to form digital links between all parts of their functional compatible software. Therefore, all organisations now have until their first VAT return period starting on or after 1 April 2021 to implement digital links.
BANK OF ENGLAND RATES
Before the 2020 UK Budget, the Bank of England announced:
- An interest rate cut from 0.75% to 0.25%. This has now been cut to 0.1%.
- A four-year loan scheme of up to £100bn at this rate for small businesses; and
- A loosening of the capital rules for banks to encourage lending.
These measures are an attempt to calm the financial and economic markets. These followed similar rate cuts around the world and have been welcomed. This rate cut announcement is the first outside the regular monthly announcements and illustrates the severity of the situation in the UK and wider global economy finds itself in.
DEDICATED PHONE LINES
HMRC has made 2000 staff available to help if:
- You cannot pay your tax bill due to the coronavirus
- You cannot pay your self-assessment tax bill and want to pay in instalments online (only if you owe less than £10,000). If you have already set up a payment plan online, you do not need to contact HMRC. If you’ve missed a payment date or are unable to use the online service contact the self-assessment payment helpline here.
- You are unable to pay other taxes and have received a payment demand such as a tax bill or legal action letter (call the HMRC office which sent you the letter or the Payment support services ).
- You are a nominated partner in a business partnership you can also agree time to pay with HMRC for the partnership or individual.
COVID-19 GUIDANCE FOR EMPLOYERS, BUSINESSES AND EMPLOYEES
- Encourage employees to work at home, wherever possible.
- Ensure that if someone becomes unwell in the workplace with a new, continuous cough or a high temperature, they are sent home and stay at home for two weeks.
- Ensure adequate PPE including face coverings are worn wherever possible.
- Remind employees to wash their hands for 20 seconds or more, frequently and use tissues for coughs and sneezes.
- Continually, clean and disinfect objects and surfaces that are touched regularly.
- Support employees to adhere to the advice to stay at home to reduce the spread of coronavirus (COVID-19) to others.
- Be aware that those who stay at home will be eligible for statutory sick pay (SSP) from the first day of their absence from work.
- Use your discretion with the requirement for medical certification for employees who are unwell. This alleviate pressure on GPs so they can focus on their patients.
- If evidence is of illness is required, those with symptoms of coronavirus can get an isolation note from NHS 111 online, and those who live with someone that has symptoms can get a note from the NHS website
- Encourage employees from defined vulnerable groups to stay at home and work from there if possible.
Please see here for more detailed government advice for different types of workplaces. This guidance will be updated as the situation changes.
SCOTTISH GOVERNMENT UPDATES
A £100 million package of additional grant support for small and medium sized businesses (SMEs) and newly self-employed people opened on 30 April.
The three separate funds are being administered by local authorities and Scotland’s enterprise agencies and will start to pay out grants in early May.
This £100m support package is made up of the following funds:
- A £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed who are ineligible for UK support (as they became self-employed since April 2019) but are facing hardship, with £2,000 grants.
- A £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies with support from Creative Scotland and VisitScotland for small and micro creative, tourism and hospitality companies not receiving business rates relief with grants of up to £25K.
- A £45 million Pivotal Enterprise Resilience Fund controlled by the Enterprise Agencies giving bespoke grants and wrap around business support to viable SMEs who are essential to the local or national economic foundations of Scotland but are currently vulnerable.
The Scottish Government is also providing an additional £1 million to the Creative Scotland’s Bridging Bursaries in the not-for-profit sector.
To find out more and apply, please click here .
Below are the additional actions the Scottish Government is taking to aid businesses including measures worth £2.2 billion, starting 1 April:
- A full year’s 100% non-domestic rates relief for retail, hospitality and tourism
- £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
- £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
- A 75% rates relief for retail, hospitality and leisure sectors with a rateable value of less than £69,000 from 1 April 2020
- 1.6% relief for all properties, effectively freezing the poundage rate next year
- an £80 million fund to provide grants of at least £3,000 to small businesses in sectors facing the worst economic impact of COVID-19
- A fixed rates relief of up to £5,000 for all pubs with a rateable value of less than £100,000 from 1 April 2020
- Extending the go live date for the deposit return scheme to July 2022
- halting the introduction of the Visitor Levy Bill
The £2.2 billion package of support for business supersedes the £320 million announced on 14 March after the Chancellor’s announcement on 17 March.
Please see the Scottish government website here for further information.
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