Covid-19 – Advice for Business

As well as the devastating human health impact of the current epidemic, these are unprecedented times for the business owners and the wider economy. We list information and resources to support our clients, and business owners and individuals.

Please note that this is a rapidly evolving situation, and we will attempt to update this page as new information and clarification becomes available.

Coronavirus Self-employment Income Support Scheme [NEW]

Claimants fulfilling the following the criteria will be entitled to a taxable grant worth up to 80% of profits, up to a cap of £2,500 per month.

Trading profit of £50,000 or less in 2018/19 OR average trading profits of less than £50,000 from 2016/17, 2017/18 and 2018/19.

Most of total taxable income arises from self employment.

Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.

HMRC will use existing information to identify eligible claimants and ask them to confirm their bank details.

Finance

If your business has been affected by the downturn, we suggest you call us to make a rough plan as to how you will finance your living costs and business expenses over the next few months.

Your first point of contact for financing should be your bank. The government is offering a free guarantee of 80% on each loan (including term loans, overdrafts, and asset- backed finance or invoice factoring) of up to £5 million to a UK based SME business (a business with a turnover of no more than £45 million per year). There are a small number of ineligible businesses sectors or business sectors with reduced eligibility for this scheme.

Banks have agreed a three month forbearance period on mortgage payments with the Chancellor. We will have to wait to see how this pans out in practice.

There are various websites and credit cards offering liquidity, but at exorbitant interest rates, and we would generally advise against these options except for defined short period bridging finance.

VAT Deferral

You will not have to pay any VAT ordinarily falling due for payment between 20 March 2020 and 30 June 2020 until by 5 April 2021.

At this stage there is no suggestion that VAT returns do not need filing at the usual times, and note that this is a deferral of the VAT debt – not a write-off. This is an automatic offer – no applications are required. It’s not clear whether interest will be charged, but we doubt that it will be. However, VAT registered businesses paying by direct debit will need to cancel the direct debit to prevent payment being taken.

Income tax deferral

The July 2020 payment on account has been deferred until 31 January 2021. Again, this is a deferral, not a write off, and eligibility is automatic with no applications required. No interest or late payment will be charged in the deferral period.

Other tax including PAYE

Time to pay is available for all tax liabilities. This will need to be applied for on 0800 0159 559. Due to demand, there may be difficulty getting through.

Coronavirus Job Retention Scheme

HMRC will reimburse up to 80% of the regular wages of “furloughed” workers temporarily relieved of their duties, up to a cap of £2,500 per person per month.

There seems to be no mention of any restrictions for payrolled directors of small businesses.

Payroll is calculated as normal on the gross pay of the employee, and normal deductions are made. It is for the employee and employer to agree whether the 20% of regular salary will be topped up by the employer, or will be deducted from gross wages.

You can claim up to 80% of the sum of furloughed employee’s regular wages, national insurance and minimum pensions up to a maximum of £2,500 per month per employee. Employer national insurance and pension contributions on any top up payment cannot be claimed.

Regular wages in this context for part or full time employees on fixed working patterns means the employee’s actual salary before tax in the month of February 2020, excluding fees, commissions and bonuses, and making a pro-rated adjustment upwards for employees starting their employment in the middle of February. For employees with varying working patterns and pay, the higher of the corresponding month’s wages from the previous year and average earnings in the tax year for 2019-20 should be used..

HMRC are scrambling to set up this reimbursement system, which will integrate in some ill understood way (at the time of writing) with the existing PAYE / RTI system. HMRC are working on an online portal for you to submit information about employees who have been furloughed and their earnings. We will update this section as more information becomes available.

The scheme is available to any UK employer including charities.

The furlough scheme can be backdated to 1 March and will continue until at least 31 May. The minimum furlough period is 3 weeks.

To make a claim, you will need your PAYE reference, the number of employees being furloughed, the claim period, the amount being claimed, and the bank account and sort code for the payment to be made ot.

Employees on unpaid leave and statutory sick pay cannot be furloughed, including those who are self isolating due to the virus.

Payments received by a business under this scheme are subject to income or corporation tax.

Self employed

Self-employed workers may need to apply for universal credit if their business collapses as a result of the Covid-19 epidemic. There is a possibility that the government may support self-employed workers in new measures to be announced this coming week – we will update you as soon as more information becomes available. Current advice is to apply for universal credit. The minimum income floor is relaxed for those who are in isolation due to the virus.

Statutory sick pay

Up to 2 weeks SSP will be reimbursed by the government for each employee who claims SSP as a result of COVID-19. The requirement to retain a GP sick note will be relaxed. The current government guidance is that employers require an isolation note from the NHS online service.

This is limited to employers with fewer than 250 employees as determined on 28 February 2020 where employees earn an average of at least £118 per week, or have received Employment and Support Allowance within 12 weeks of starting or returning to work.

Business rates holiday

Businesses in England operating in retail, hospitality, children’s nurseries or the leisure sector such as shops, restaurants, pubs, entertainment venues, and hotels will be given a holiday from business rates for the tax year ending 5 April 2021. There is no need to apply, but you may need to ask your local council to reissue their rates demand if this is required.

There is a one-off grant of £10,000 in support of businesses already benefiting from Small Business Rates Relief, Rural Rates Relief, or Tapered Relief. Again , eligibility is automatic, and will be administered by your local authority.

Company Accounts

Companies can apply for a deferral to the usual deadlines for filing their accounts with companies house as a result of Covid-19.

Cash grants for retail, hospitality and leisure businesses

Businesses in these sectors with premises with a rateable value of less than £15,000 will receive a grant of £10,000.

Businesses in these sectors with premises with a rateable value of £15,001 to £51,000 get a cash grant of £25,000.

Insurance

Check with your broker to see if you are covered. The government’s announcement on Friday that they were ordering the shut down of pubs, gyms and leisure venues may be helpful in making a claim.

Investments: Financial market losses

Unfortunately there is no prospect of losses in investments being recouped from government finances. If you have made a capital loss, you will get relief against capital gains you have made in the year.

Now may be a good time to gift shares or other investments to children as depressed market prices reduce the deemed capital gain.

Controlling the virus

NHS doctors, nurses and cleaners risk their lives daily to save a lives in the face of a looming tsunami of deadly disease that threatens to overwhelm all available capacity. The least those we can do for them is to stay at home, maintain maximal physical separation when it is necessary to walk in the street, support one another, especially those in isolation, shop with restraint and dignity, look out for the elderly and those who are in self-isolation, isolate ourselves for 14 days if anyone in the household suffers from a fever, dry cough, sore throat, or loss of sense of taste or smell, and to reserve attendance at A&E to critical incidents. Try to avoid touching your face, and of course, regularly wash hands to your preferred 20 second melody.

Stay in touch

It is advisable to communicate with your staff, customers and suppliers to allay fears and provide certainty.

Staff will have increased childcare responsibilities, and to the extent possible, employers should seek to accommodate that.

We are finding Zoom, Mailchimp and Whatsapp useful tools for keeping in touch externally and internally. Our staff are mainly working remotely using a secure virtual private network. Our telephone system is on VOIPStudio and has been diverted to remote location. Our outsourced IT support at H2O have been outstanding, as has all our staff who have continued working to support our clients in trying situations.

Contaminated office environments

Here is some advice of how to clean and disinfect someone in your workplace has been taken ill with some suspected or confirmed coronavirus. Where possible, close the workplace for 72 hours after the possible contamination.


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