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Government support for Covid-19 - update

Government support for Covid-19

This current situation is now quite unprecedented. The government has updated the measures introduced to help businesses through these difficult times.

Here is an list of the main measures:

Coronavirus Job Retention Scheme

HMRC will reimburse 80% of employee’s wage cost, up to a maximum of £2,500 per month for ‘furloughed workers’. This covers workers who are sent home because there is no work for them to do because of the effects of the virus. They should not carry out any work from home. There will be an online portal to enable claims for reimbursement. The business can either reduce their salaries to 80% or continue paying at the current level.

We estimate that we will have an update early April and that the system will be operational by the end of April. Small companies where a director takes a small salary and the rest in dividends will struggle to benefit from this.

Deferring VAT and Income Tax payments

HMRC will allow all UK businesses not to pay any VAT until 30th June 2020. If you are self-employed then payments on account due on 31st July 2020 are deferred to 31st January 2021. All businesses and self-employed people who have difficulty with outstanding tax liabilities of any kind may be eligible for support through HMRC's 'time to pay' service on a case by case basis.

Statutory Sick Pay relief package for SMEs

The government will pay two weeks’ worth of SSP per eligible employee who has had to self-isolate because of Covid-19, but only for employers with less than 250 staff. The employer should maintain records of staff absences and payments of SSP. This system is not set-up yet and we will know more once the repayment mechanism is introduced. As per the first point, we estimate that we will know more about this by 6th April 2020.

12-month business rates holiday for all retail, hospitality and leisure businesses

This is automatic, if your business is eligible. You will know if you qualify once the local authority in which you are based, sends you a revised Non-Domestic Rates demand. If you believe that your business falls within the above sectors but the council has not applied the “holiday”, you should contact them direct.

The Retail and Hospitality Grant Scheme

If your business qualifies, your local authority will write to you. We estimate this to be some time towards the end of April/beginning of May. There are 2 levels of grants as follows:

  • For businesses in these sectors with a rateable value of under £15,000, the business will receive a grant of £10,000.
  • For businesses in these sectors with a rateable value of between £15,001 and £51,000, the business will receive a grant of £25,000. According to latest Government advice this is for each qualifying property.

£10,000 Grant Support for businesses that pay little or no business rates

Your local authority will write to you if your business qualifies. We estimate this to be towards the end of April and the scheme will provide a grant of £10,000 for all business in receipt of small business rate relief or rural rate relief. This covers businesses with rateable values up to £15,000.

If your business runs from premises that are not rateable (e.g. your home) then it seems unlikely that you would be eligible for this grant. A grant is just that - not repayable.

Assistance from your bank

Although this is not a government measure it is clear that all banks are being encouraged to provide assistance in a number of different ways, including increasing or granting bank overdrafts and allowing capital (and sometimes interest) holiday on loans and mortgages.

In many cases this will be a short-term solution whilst the Government sorts out its systems for delivering cash. Cash management during this crisis will be even more important than normal.

Coronavirus Business Interruption Loan Scheme

This scheme commenced from Monday 23rd March 2020 and an eligible business will be able to raise a loan from their bank at 0% interest for the first 12 months. You should contact your bank directly to discuss funding. We will be happy to help you with this as the bank will expect you to have some sort of a plan, so please speak to one of us beforehand.

Previous experience with these government guarantee schemes has not been very good so we are hoping the scheme will be far more streamlined and less bureaucratic than previous efforts.

Self-employed

There is nothing specific yet in place to support the income of the self-employed, other than universal credit, deferral of tax liabilities and the ability to take defer mortgage payments. However, there has been talk about rolling out a similar income support scheme as applies to employees based on average previous earnings.

We understand the importance of your business to your livelihood. We will all be working to help, guide and support you during this time, so please do not hesitate to call or email us.

Hugh Davies & Shirley Hollis
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To keep up with published details of Government support click here

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35 Chequers Court,
Brown Street,
Salisbury,
Wiltshire,
SP1 2AS

Telephone: 01722 336647

Fax: 01722 421799
Email: enquiries@hugh-davies.co.uk

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