• Dylan Roberts

What COVID-19 support is available for businesses?

Updated: Apr 3

While the scale of state assistance and government intervention is unprecedented in the modern era, reflecting the current and future economic impact of the coronavirus pandemic, it is fair to say that it isn't always easy to understand what specific help there is for you and your business.



However, the Chartered Insurance Institute has published an article which sets out exactly what assistance is available, and which businesses are eligible:


CBILS is a new scheme, announced by The Chancellor in response to the coronavirus outbreak, which can provide finance facilities of up to £5m for smaller businesses across the UK who are experiencing cash flow disruption and loss of earnings.


New Coronavirus Business Interruption Loan Scheme (CBILS):

Key features:

  • Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.

  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.

  • No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.

  • Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

  • Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.

  • Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.


Eligibility criteria

Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must:

  • Be UK-based in business activity, no more than £45m annual turnover

  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.


CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website.

Businesses should approach their own provider first – ideally by way of the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.

Decision-making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks, to challenger banks, asset-based lenders and smaller specialist local lenders.

Note: if the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Additional application notes:

Due to expected high demand it is recommended to consider the following:

  • Apply through the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing

  • Do you need “emergency finance” or long-term financial assistance? There will be firms that need the former and therefore will be prioritised


What types of finance are available?

CBILS supports a wide range of business finance facilities, including:

  • Term loans

  • Overdrafts

  • Asset finance

  • Invoice finance


Note: Not every lender can provide every type of finance listed.

Support for businesses through deferring VAT and Income Tax payments

The government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 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.

Support for businesses who are paying sick pay to employees

The government is bringing forward emergency legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Eligibility Criteria:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19

  • employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020

  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19

  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, 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

  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force

  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible


Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

Eligibility criteria

You are eligible if your business:

  • pays tax to the UK government

  • has outstanding tax liabilities


How to access the scheme

If you have missed a tax payment or you might miss your next payment due to COVID-19, you can call HMRC’s dedicated helpline: 0800 0159 559. HMRC prefers if you call nearer to the payment you believe you will miss.

There is a new HMRC dedicated helpline for the self-employed and SME’s to help spread capacity, which is: 0800 024 122.

Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Eligibility

All UK businesses are eligible.

How to access the scheme

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation

  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

  • HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.


Support for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), 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.

Eligibility

You are eligible if:

  • your business is based in England

  • you are a small business and already receive SBBR and/or RRR

  • you are a business that occupies property


How to access the scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly.

Support for larger firms through the COVID-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities.

It will also support corporate finance markets overall and ease the supply of credit to all firms.

Eligibility

Companies - and their finance subsidiaries - that make a material contribution to the UK economy are able to participate in the facility. Companies must do this via a bank.

In practice, firms that meet this requirement would normally be: UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK; companies with significant employment in the UK; firms with their headquarters in the UK. We will also consider whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK.

The facility is open to firms that can demonstrate they were in sound financial health prior to the shock, allowing us to look through temporary impacts on firms’ balance sheets and cash flows from the shock itself.  This means companies that had a short or long-term rating of investment grade, as at 1 March 2020, or equivalent.

To discuss eligibility, you can contact CCFFeligibleissuers@bankofengland.gsi.gov.uk.

How to access the scheme

If, after speaking with your bank, you believe you are eligible then you will need to complete the following documents.


Further details for the scheme, FAQs and how to apply can be found on the BoE website – CCFF landing page.

Support for self-employed through the Self-employment Income Support Scheme

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80% of your trading profits for up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Eligibility

You can apply if you’re a self-employed individual or a member of a partnership and:

  • You have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19

  • traded in the tax year 2019-20

  • are trading when you apply, or would be except for COVID-19

  • intend to continue to trade in the tax year 2020-21

  • have lost trading/partnership trading profits due to COVID-19

  • Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment.


This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income

  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

  • If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

  • 2016 to 2017

  • 2017 to 2018

  • 2018 to 2019


To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount. It will be up to a maximum of £2,500 per month for 3 months. They will then pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online, individuals do not need to contact HMRC now.

Note: You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits, you’ll need to include the grant in your claim as income.

Other help you can get

The government is also providing the following additional help for the self-employed:

  • deferral of Self-Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020

  • grants for businesses that pay little or no business rates

  • increased amounts of Universal Credit

  • Business Interruption Loan Scheme

  • If you’re a director of your own company and paid through PAYE, you may be able to get support using the Job Retention Scheme


For Welsh firms, you will note that the section of the Chartered Insurance Institute article above on support for businesses that pay little or no business rates is specific to England only, as this is administered through local authorities.


However, there is assistance available to Welsh businesses, including the 'Economic Resilience Fund' targeted at micro-businesses and SMEs, and the 'Welsh Government Business Grants' available to firms that pay business rates.


You can read more about this here.



Other links that may be helpful:



The above piece from the CII is really valuable in understanding the support that is out there for businesses, employers, and the self-employed.


However, if anybody is still unsure and would like to chat then feel free to call me on 02921 880 523.


Keep well and safe 💪


Important note: all blog posts are written by Dylan Roberts in a personal capacity and do not necessarily reflect the views of Lighthouse Financial Advice Ltd, Lighthouse Group, Quilter Financial Planning, or Quilter plc.


#coronavirus #covid19 #business #cardiff #wales #financialadviser

 

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©2020 by Dylan Roberts, Professional Financial & Mortgage Adviser at Lighthouse Financial Advice Ltd