What you need to know
Since his debut budget on 11 March, Chancellor Rishi Sunak has announced an unprecedented package of support measures for UK businesses.
To keep our clients informed and up to date with the latest information, we’ve prepared this easy-to-understand briefing, which we’re committed to keeping updated as new developments arise.
Our focus is on cutting through the noise – getting to the information that’s most important to you.
To discuss any of these measures further, and the challenges your business is facing during these challenging times, do get in touch.
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Summary of Government support for business
Between Spring Budget 2020 on 11 March and Friday 20 March the Government announced a series of measures designed to counter the threat posed to the UK economy by the outbreak of the coronavirus that causes the respiratory disease COVID-19.
This paper summarises all measures so far announced and provides up-to-date information on how Account Tax clients can:
a. find out more about each measure from reliable sources and b. access the support on offer.
It will be updated as new information emerges on eligibility and how businesses can access each service or fund.
Updates from 25 March Further to the news below that Companies House would automatically be giving those who need it a two-month extension on filing their accounts, the Government has now confirmed an automatic three-month extension:
As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
Note, though, that the application must be made before the original filing date has passed.
A new note has been added to the guidance on deferral of VAT payments reminding businesses that pay by direct debit to cancel if they want to defer payment:
Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return
The Scottish Government has published guidance on its support for businesses in Scotland, with some specific differences: 3
● The threshold for £25,000 grants for small business is £18,000 rather than £15k, as in England. ● All non-domestic properties in Scotland will get 1.6% rates relief, applied automatically. ● Retail, hospitality and leisure businesses will get 100% rates relief, as in England, also applied automatically.
Guidance from the Welsh Government is also now available. One notable difference is that the threshold for the £25,000 grant payment for retail, leisure and hospitality businesses is £12,001 – lower than in England or Scotland.
Businesses in Wales can also access loan and equity funding via the Development Bank of Wales.
Updates from Tuesday 24 March There is now a clearer, more user-friendly government website covering the full range of coronavirus support: businesssupport.gov.uk
Fuller detail of the retail, hospitality and leisure grant (RHLG) fund has been published by the Department of Business, Energy and Industrial Strategy (BEIS). The guidance document, intended to help local authorities administer the scheme, is available on the Government website. ● Payments will be made to the person listed in local authority’s records as the ratepayer for the business premises on 11 March 2020. ● There is a strong warning against fraudulent claims with a promise of prosecution and clawback for any such payments. ● Certain premises are excluded on the grounds of private use, such as private stables and beach huts. Car parks and parking spaces are also ineligible. ● Businesses in liquidation or dissolved as of 11 March aren’t eligible either. The Coronavirus Bill currently before Parliament now includes an amendment calling for support for the self-employed and freelancers in line with that being provided for employees under PAYE via the coronavirus job protection scheme. It was passed by the House of Commons and will now go to the House of Lords for scrutiny. The Chancellor is expected to announce provision for the self-employed tomorrow, 25 March. Updates from 23 March The scheduled 5pm press conference was cancelled and the Prime Minister instead addressed the nation at 8:30pm announcing, to all intents and purposes, a total lockdown of the UK. Movements are to be restricted and non-essential shops are to close.
This means expected clarifications on how businesses can access support are likely to be delayed until later in the week. As scheduled, however, the British Business Bank has published comprehensive details of how the coronavirus business interruption loan scheme (CBILS) can be accessed: ● Eligibility: an SME must be UK-based with annual turnover of no more than £45m and have a proposal which would be considered viable by the lender under normal circumstances. ● Types of finance available: Term loans, overdrafts, asset finance, invoice finance. ● How to apply: via one of the accredited lenders on this list. In the first instance, the British Business Bank is urging businesses to apply online and asking those who don’t need emergency finance to ‘consider the urgency of your need’. More detail is available here. In other news, Companies House has confirmed that, in line with its existing rules, firms that were unable to file accounts on time can apply for a deadline extension, with an automatic two-month extension for those in isolation. There’s more information on that at AccountingWEB.
Measures announced on 20 March On the evening of 20.03.2020 the Prime Minister announced further restrictions on the compulsory closure of bars, cafes, pubs and restaurants.
Alongside these new measures, the Chancellor announced a further package of support for businesses facing the prospect of having to reduce staff numbers.
Coronavirus job retention scheme ● Grants of up to £2,500 per employee where those employees are unable to work (are ‘furloughed’) because of coronavirus, covering 80% of salary costs. ● Intended to run for three months in the first instance with the first payments expected in early April and the scheme fully up and running by the end of that month. ● The grants will be paid via HMRC. ● All UK employers will be eligible. ● What next? At present, no information has been provided on how to apply. Though it is generally understood to mean ‘stood down but still employed’, there is as yet no official definition of ‘furloughed’. It is unclear whether employers will be expected to make up the remaining 20% of salary.
Extension of the coronavirus business interruption loan scheme (CBIL) ● Maximum turnover for eligible businesses was previously set at £41 million per year; it has now been increased to £45m. ● The interest-free period has been increased from six months to twelve. ● The scheme is being managed by the British Business Bank but businesses will access them via one of 40 accredited lending providers, including most major banks. ● The maximum value of a facility provided under the scheme will be £5 million – higher than the £1.2m announced initially. ● What next? Discuss business plans with existing lending providers. Loans will be available from Monday 23 March 2020.
Deferral of tax and VAT payments currently due ● VAT payments from UK-based VAT registered businesses due between 20 March and 30 June 2020 won’t need to be paid to the usual deadlines, with payment deferred until the end of the tax year. ● Self-assessment income tax payments for the self employed which were due on 31 July 2020 can now be deferred until 31 January 2021. ● What next? Both deferral schemes apply automatically with no application required.
Access to welfare for the self-employed ● The minimum income floor for access to universal credit has been suspended for self-employed people affected by the economic impact of coronavirus.
Measures announced on 17 March At a press conference on 17 March, the Chancellor announced a package of support worth £350 billion – around 15% of the value of the entire UK economy.
It came upon the heels of a statement from the Prime Minister on 16 March which urged people to stop visiting cafes, pubs and restaurants.
It was intended to send a strong signal to British businesses not to act hastily in downsizing because support would be forthcoming. Extension of business rate discount ● All hospitality, leisure and retail venues in England, regardless of rateable value, can now claim a 100% discount on business rates for 12 months from 1 April 2020 to 31 March 2021.
● Unoccupied properties that become vacant in the next 12 months will be charged 100% full rates from three months after they become empty. ● What next? The discount will be applied automatically to the next council tax bill, due in April 2020.
Cash grants for very small businesses ● Hospitality, leisure and retail businesses operating from units with rateable values between £15,000 and £51,000 will receive a grant of £25,000. ● Businesses in these sectors with a rateable value of less than £15,000 will receive a grant of £10,000. ● Those with a rateable value of more than £15,000 will receive £25,000. ● Your local authority will contact you if you are eligible for this grant. ● What next? Await notification from local authorities.
Measures announced in Spring Budget 2020 In what the Office for Budget Responsibility called the “largest Budget giveaway since 1992”, Rishi Sunak announced business support measures worth billions. Events have moved quickly, though, and many of the specific measures announced have now been superceded or further extended.
Grants for businesses receiving SBRR or RRR ● Businesses in England eligible for small business rate relief (SBRR) or rural rate relief (RRR) will receive a one-off cash grant of £10,000. ● What next? This will be processed automatically by local authorities.
Statutory sick pay reclaim scheme for SMEs ● Small-and medium-sized businesses and employers will be able to reclaim statutory sick pay (SSP) paid for sickness absence due to COVID-19. ● The refund will cover up to two weeks’ SSP for each member of staff off work because of COVID-19. ● It applies to all UK businesses that employed fewer than 250 employees as of 28 February 2020. ● What next? Legislation needs to pass before details of how to apply can be published.
Interest rates ● On 19 March 2020 the Bank of England cut interest rates to a historic low of 0.1%, having previously reduced them to 0.25% on the day of the Spring Budget.