In response to measures taken to restrict the economic impact of COVID-19, the UK Government has launched various emergency schemes and initiatives to help UK businesses through this period of economic disruption.
To help long-term viable businesses respond to cash-flow pressures, the government has committed to providing accredited lenders with a partial guarantee of 80% against the outstanding balance of new debt facilities up to £5m, for businesses generating up to £45m in annual turnover. The government will not charge businesses or banks for this guarantee.
Demand for the scheme is high and accredited lenders are independently setting their lending parameters in adherence with the eligibility criteria as set out by the British Business Bank. Further information on the scheme and details on how Spectrum can assist with your application can be found on our CBILS support page.
The Coronavirus Large Business Interruption Loan Scheme provides a government-backed partial guarantee of 80% against the outstanding balance of new debt facilities to enable accredited lenders to make loans of i) up to £25m to businesses with an annual turnover of between £45m and £250m or ii) up to £200m to businesses with annual turnover above £250m, under broadly similar rules as the CBILS initiative.
The scheme aims to support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance. Further information on the scheme and details of how Spectrum can assist with your application can be found here.
Under the Scheme, all UK employers are able to access support to continue paying all or part of the salaries for those employees that would otherwise have been made redundant during this crisis. Employers must designate affected employees as ‘furloughed workers,’ and will need to submit information to HMRC about the employees that have been furloughed and their earnings.
Up until the end of July 2020, HMRC will reimburse 80% of furloughed workers wage costs, up to £2,500 per month, as well as pay employer National Insurance Contributions and pension contributions. Employers can top up salaries further if they choose to. From 1 July, the scheme will enable furloughed employees to work part-time with employers able to claim the grant for hours their employees are not working calculated by reference to their usual hours worked. The grant will be slowly tapered to reflect that people will be returning to work from August with employers required to pay employer NICs and pension contributions. From September HMRC will reduce its contribution to reimburse 70% of furloughed workers wage costs, with employers now covering 10% (in addition to employer NICs and pension contributions). This will reduce again from October to 60% (with employers paying 20% to ensure workers continue to earn a minimum of 80% of their salary). The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June. The scheme will close in entirety on 31 October 2020.
In order to support self-employed individuals (including members of partnerships) who have lost income due to Coronavirus, the government has launched the Self-Employed Income Support Scheme which allows self-employed people who make profits of up to £50,000 a year to claim a taxable grant. The scheme is only open to people who submitted a 2018-19 self assessment tax return (or who do so before 23 April 2020) and traded in the 2019-20 tax year. The scheme was opened for an initial three months with applicants able to claim up to 80% of their past average trading profits, capped at £2,500 a month. Claims must be submitted by 13 July 2020. The scheme has since been extended for another 3 months, albeit only at 70% of average trading profits, meaning the maximum payment that can be claimed is £2,190 a month. No further extensions are expected. HMRC will contact those who are eligible directly and invite them to apply online.
The deferral will apply from 20 March until 30 June 2020. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period and 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 refunds and reclaims will be paid by the government as normal.
Employers with fewer than 250 employees will be able to recover the cost of SSP for those who self isolate or are unwell because of COVID-19 for a maximum of two weeks’ sickness per employee.
The eligible period commenced on 13 March and is payable from day 1 (rather than day 4 as is typical) Employees will not need to provide a GP fit note. The government is working to set up the repayment mechanism for employers as soon as possible.
A rates holiday for all businesses in the leisure, hospitality and retail sectors of 12 months with cash grants of £25,000 per business for those with a rateable value of less than £51,000.
Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020-21 tax year. Businesses that received the retail discount in the 2019-20 tax year will be rebilled by their local authority as soon as possible. Local authorities will apply the business rates holiday to bills automatically.
The government has confirmed that the action taken to advise people to stay away from leisure and hospitality venues will count as an event for the purposes of insurance claims to be made by these businesses.
The Government is providing additional funding for Local Authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. Local Authorities will notify those eligible for the grant directly.
Further details on schemes referred to above and others can be found at Coronavirus Business Support and include Covid-19 Corporate Finance Funding (CCFF), a commercial paper programme set up in collaboration with the Bank of England, business rate holidays for nurseries, deferral of self-assessment payment and the HMRC Time To Pay Scheme. In addition, new IR35 tax reforms due to come into effect in April will be pushed back by one year.
For more information please contact a member of the Spectrum Debt Advisory team, alternatively email CBILS@spectrumcf.co.uk and we will be in contact to arrange a convenient time to discuss your particular circumstances.