Covid-19 financial support
Here’s a guide to some of the main pieces of financial support that the government is offering to support businesses, employers, employees and the self employed during the coronavirus (COVID-19) crisis. Each of these has detailed specific eligibility criteria and some of the criteria and application processes are still being worked out.
(last updated 07/04/2020)
Support for employers
Furlough – employee wages
The aim of the Job Retention Scheme is to keep employees at home and at the same time allow employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will help businesses to get back on their feet quicker as they will be able to retain experienced and knowledgeable staff.
The Scheme applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise known as ‘furloughed workers’.
All UK employers with a PAYE scheme can claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
The Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but the government say it will be extended if necessary.
The online service you’ll use to claim is expected to be available by the end of April 2020.
You won’t be able to submit more than one claim every 3 weeks, this is also the minimum length of time an employee can be furloughed for.
If your employees are working reduced hours, or for reduced pay, they will not be eligible for this scheme.
Wages of furloughed employees will continue to be subject to Income Tax and National Insurance. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.
Guidance from HMRC:
- Guidance for employers on the Coronavirus Job Retention Scheme
- Support for employees on whether they are covered by the Coronavirus Job Retention Scheme
Sick pay
Businesses with fewer than 250 employees may be able to claim a refund of up to 2 weeks Statutory Sick Pay per eligible employee who has been off work because of COVID-19.
The repayment mechanism hasn’t yet been set up and we are waiting for further information from the government.
Annual leave
Many staff will have had holidays booked that they are unable to take due to travel restrictions. They may want to take this annual leave later in the year instead. Employers in turn may be concerned about staff concentrating all of their annual leave in the 2nd half of the year.
The government have announced that workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.
https://www.moneysavingexpert.com/news/2020/03/coronavirus-self-employed-and-employment-help/
Cash flow support – tax deferrals
VAT deferral
The VAT deferral is a measure which means that all UK VAT registered businesses can defer VAT payments due between 20 March and 30 June.
They will have until 31 March 2021 to pay this VAT.
Businesses do not need to inform HMRC if they want to defer payment. They simply have to not make VAT payments to HMRC in this period. If your business pays by Direct Debit you should cancel this with your bank. You should do so in sufficient time so that HMRC does not attempt to automatically collect on receipt of your VAT return. You must continue to submit VAT returns as normal.
Of course the VAT deferral is just an option and if you want you can continue to pay as normal.
https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
Deferring income tax payments (self assessment)
If you are due to pay your second self-assessment payment on account on 31 July you can defer this until 31 January 2021. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. No application is required. No penalties or interest for late payment will be charged if you defer payment until January 2021.
Time to Pay service
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.
If you have missed a tax payment or you might miss your next payment due to COVID-19, you should call HMRC’s dedicated helpline: 0800 0159 559.
Cash grants and business rates holidays
Cash grants
Businesses in the retail, hospitality and leisure sectors, based in England, could be eligible for a cash grant of up to £25,000 per property, this is a grant and not a loan.
In addition there are grants of £10,000 for businesses who qualify for small business rate relief (SBRR), rural rate relief (RRR) and tapered relief.
In both cases, your local authority will write to you if you are eligible for this grant, you do not need to apply for it.
Business rates
Businesses in the retail, hospitality and/or leisure sectors may be eligible for a business rates holiday for 2020/21 tax year.
More info and eligibility details are available here.
A similar scheme is available for nursery businesses with specific guidance here.
Self employed
The Self-employment Income Support Scheme (SEISS) may allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months.
There are specific eligibility criteria that you can find here.
It is not possible to apply for the SEISS yet and HMRC will contact you if you are eligible to invite you to apply online.
You may also be able to apply for Universal Credit and other benefits.
Business loans
The Coronavirus Business Interruption Loan Scheme is now open for applications. All major banks are offering this scheme. The scheme will support your business to borrow up to £5 million for up to 6 years. Your business must be UK based, with turnover up to £45 million per year and meet the other eligibility criteria (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/).
The full rules of the scheme are available here.
Accounts filing and admin
The UK Government and Companies House have announced that businesses affected by COVID-19 can apply for an extra three months to file their accounts. This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of Coronavirus.
You can apply here.
MTD
HMRC has confirmed an extension to the deadline for implementing digital links for MTD for VAT. Businesses now have until April 2021 to meet the digital links requirement.
Business must still comply with the other elements of MTD for VAT as the original implementation deadlines have already passed.