As Coronavirus is wreaking havoc on the global economy, the UK government has taken substantial measures to support businesses and their employees financially to help make it through the measures imposed to slow the virus. The Chancellor has so far introduced £440bn worth of measures to support small and medium sized businesses. Following are schemes and programs available to support businesses and their staff.
Coronavirus Business Interruption Loan Scheme (CBILS)
This loan scheme from the British Business Bank to lenders in order to support businesses’ access to funds. Key points of the scheme are:
- Loans of up to £5m are available to UK companies with a turnover up to £45m
- Lending can be in the form of a term loan, overdraft, invoice finance or asset finance
- 80% of the loan is back by the government
- Initially, the loan can be interest free for 6 months
The details on this scheme have only been provided to lenders over the past week (at the time of writing), but we have already started helping clients on our Virtual CFO plans apply to help cover supplier and overhead costs while sales have been either depressed, or stopped altogether.
As part of the application process, our clients have been required to provide:
- Management or annual accounts for a 12 month period prior to the virus to show how the business was operating before interruption
- A cash forecast to show the expected shortfall of funds from business interruption due to the virus
- Risk analysis of factors that could affect the cash forecast
This information is something that we work with our clients on and provide to them on a regular basis, so has been a simple task to provide for the lenders. If you feel CBILS funding is right for your business, we would be happy to help provide the financial information required by your lender.
Coronavirus Job Retention Scheme (CJRS)
UK employers with a PAYE scheme will be able to access support to continue paying their employees’ salary for the employees that would otherwise have been laid off during this crisis. The purpose of this scheme is to avoid redundancies.
This scheme applies to furloughed workers. These are employees who have been asked to stop working, but are still on the company’s payroll. HMRC will reimburse 80% of their wages, up to £2,500 per month. It will also support employers national insurance and employers pension contributions of up to 3%.
You can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date. You need to have made an RTI submission notifying HMRC of payment to that employee on or before the 19th of March. Employees that were on payroll as of 28 February and were made redundant or stopped working prior to 19 March can also qualify for the scheme as long as they have been reinstated on the payroll and put on furlough. The scheme has been extended to the end of October 2020.
The scheme will continue in its current form until the end of July. After that, changes to the scheme will allow for more flexibility such as part-time working and part-time furlough. The government will also require companies to contribute to some of furloughed employees wage costs.
You’ll need the following information to make a claim
- Your bank account and sort code for HMRC to pay you.
- The name and phone number of the person HMRC should call with any questions.
- Your unique tax reference (UTR) or company registration number.
- A Government Gateway account. If you don’t have an account, you can apply for one online.
- Be enrolled for PAYE online. If you aren’t registered yet, you can do that here.
- You will need the following information for each furloughed employee:
- PAYE/employee number
- National Insurance number
- Claim period and claim amount – HMRC provides a calculator to work out your claim for the period
Making a claim
The claim service launched on the 20th of April. The only way to make a claim is online. You can either make a claim yourself, or your agent can do it for you. Claims will be paid within 6 working days. When you have all of your information ready, you can claim for wages.
All VAT payments due between 20 march and 30 June will be automatically deferred until March 2021. There is no need to contact HMRC for this deferral, however, the VAT return is due as normal. Any business that pays VAT by Direct Debit must cancel it, or HMRC will collect the VAT due as normal.
HMRC Time to Pay
Businesses with outstanding tax liabilities may be eligible to receive support in extending their payment terms. In our experience, HMRC has been open to deferring March, April and May PAYE payments until 22 July.
Statutory Sick Pay Rebate Scheme
This scheme will provide coronavirus business support to small and medium sized businesses with less than 250 employees. They will be able to apply to recover Statutory Sick Pay (SSP) paid to employees from HMRC. The repayment will cover up to 2 weeks of SSP paid if your employee is unable to work because of either:
- They suspect they have coronavirus
- They cannot work because they are self-isolating
The reclaim can be for periods of sick that started on or after the 13th of March, and the employee does not have to provide a doctot’s fit note in order to make a claim; however, you may ask your employee to provide you with an isolation note, which they can obtain online from NHS111.
There will be an online service to use for reclaiming SSP, but at the time of writing, the service is not yet available. HMRC will announce when the service becomes available.
Xero is working hard to update Xero Payroll to accommodate the changes in SSP related to coronavirus. You can keep up with their updates here.
There are other ways in which the government is supporting businesses and sole traders through the business interruption caused by Coronavirus. We have highlighted the main areas that we have found to have the biggest impact to support our clients, but we will continue to update this page with additional schemes and more detailed information to help support businesses. Please check this post regularly for updates.