21 Mar

Help for Small Businesses during the Coronavirus Covid-19 Outbreak

Last updated 5th May 2020

During the Coronavirus Covid-19 outbreak many small business are going to be understandably concerned about their cash flow. We've put together some help that will get you through the toughest times.

Speak to your mortgage company and ask to defer payments

Many mortgage companies are offering payment holidays for mortgages during this time. As your mortgage is often one of your largest outgoings, this is the first place to start when you look at preserving cash. 

Speak to your bank

Many banks are offering emergency loans to small businesses, loan repayments breaks, increased credit limits and waiving penalty charges if people need to access fixed savings early. Many credit card companies are also offering relief on payments for businesses and individuals.

Government support

Statutory Sick Pay

The Department of Work and Pensions announced additional support for individuals, employees, self-employed and employers. Employers with fewer than 250 employees will be able to reclaim Statutory Sick Pay for employees unable to work because of coronavirus. This refund will be for up to 2 weeks per employee. If we do your payroll then we will handle this for you

There is full advice around the support the government has put in place for small businesses which covers rates, SSP and paying your tax bills. You can read the full advice here.

Grants

In the budget the Government announced a £3K grant to businesses eligible to 100% business rates relief.  This has been increased to £10K (£25K if in eligible industries).  This will be claimed direct from local authorities and we are told that they will contact you directly soon if you are eligible.

Coronavirus Job Retention Scheme

The government has announced that employers of any size will be able to apply to HMRC for a grant that will cover up to 80% of the salary of workers who have has to be furloughed due to the Coronavirus, up to £2500 a month.

Pay going back to 1 March 2020 will be covered by the scheme.  The payment scheme will initially run to 31 May 2020.

Affected workers are designated as “furloughed”.  This means that they cannot work for the employer but are kept on payroll.   The employer has to inform the employee in writing that they have been furloughed - and it's important that you check with your HR advisors that you are fulfilling the legal requirements as per your staff contracts.

The Coronavirus Job Retention Scheme went live on the HMRC portal on 20th April.
 
To claim, you will need:

  • ePAYE reference number
  • number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number
     

The calculation will need to be done in advance, including;

  • 80% versus £2,500
  • pro rata calculations
  • min auto enrolment employer pension contributions
  • employer National Insurance (excl. voluntary top ups)
  • past overtime, fees and compulsory commission payments

Discretionary bonus (including tips) and commission payments and non-cash payments cannot be claimed.

Whatever you claim for the grant as gross pay, must be paid to the employees.

IMPORTANT - you may need to take action now

You must have:

  • created and started a PAYE payroll scheme on or before 28 February 2020
  • enrolled for PAYE online - this can take up to 10 days
  • a UK bank account
 

Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

***Very Important*** - you may need to enroll for a PAYE online account.

Do this now to avoid delays to your payments. You can enrol here.

If we do your payroll for you, then we will do the calculation and if HMRC allows, submit the claim for you.

There are still areas of this that are unclear, we'll keep you updated as instructions are released by HMRC.

In the mean time, you can check the official guidance here

Many of you may be running small Ltd Companies and it may just be you on the payroll. Understandably you'll be wanting to know if you count as an employee for the purposes of the 80% relief. As of 6th April we understand that a sole director of a Ltd Company  can claim the grant if their work dries up due to the effects of Covid-19.

Self Employed Support

On 26th March Rishi Sunak announced that self employed people will be eligible for support of up to 80% of their average monthly net profit based on the information submitted in their prior 3 years tax returns, up to a maximum £2500 per month. The grant will be available from the beginning of June and will be paid in one lump sum to eligible tax payers.

You can check if you are eligible for the Self-Employment Income Support Scheme here.

There are restrictions though. Self employed income must make up the majority of your income, your annual net profit must be less than £50,000 and you have to be up to date on your tax return filing.

Anyone who has not yet filed their tax return that was due on 31st January 2020, will have 4 weeks to submit it in order to make use of the new support. But this comes at a price, the Chancellor has hinted that there will be a future review of self employed taxation.

As a company we have been involved in several campaigns to lobby the government to provide more for sole traders and the self employed. Our Co-Founder Lucy Cohen has been involved in the Covid Credit project. It is potentially one of the fastest ever implementations of a FinTech project and has pulled together experts across the sector to demonstrate how technology could help with a self-certification tool for sole traders and the self employed. You may have seen an article about it in Forbes

Deferred Tax and VAT Payments

VAT payments have been deferred until June (but will still eventually be payable)

July's self assessment payment on account has been deferred until January 2021 (but will still eventually be payable)

This isn't a break in tax and VAT submissions though - those will still have to be done on time. However, if we are handling this for you then we will ensure that you informed what to pay and when, making use of every relief possible for you to support your business through this time.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary loan scheme delivered by the British Business Bank launched on 23rd March 2020 to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap) to give lenders further confidence in continuing to provide finances to SMEs. The government has pledged not to charge businesses or banks for this guarantee and the scheme will support loans of up to £5m in value. Loan repayments will be interest free for 12 months. Details can be found here.

What do we know about the loan scheme so far? Well, it's not as easy as you may have been led to believe. There are currently only around 40 approved providers of the loans (banks etc) and you have to use one of those. They will also be asking you for a viable business proposal and financial information such as up to date management accounts and forecasts (we can help with that bit). You'll need to be able to demonstrate that you have a viable business and that the loan is required due to the effects of the Covid-19 outbreak. And here's the tricky bit; you'll need to also demonstrate then when things go back to normal (whenever that may be), that your business will return to normal too. The loan is there to plug a gap in cash flow due to business interruption. So if your business was on a downward turn before the virus hit, you may have difficulty in accessing the loan scheme.

It's also worth bearing in mind that the 80% guarantee is between the government and the lender. So if you can't repay the loan then the lender will chase you for repayment first and foremost. It's only after they have proved that you have nothing left to give, that the government guarantee kicks in for them, not you!

Ultimately taking out one of these loans should be considered in the same way as taking out any loan for your business. You will be asked to repay the money eventually. It will be appropriate for some businesses, but not for all. And it may not be a particularly easy or quick process (although some lenders are swifter than others).

Bounce Back Loans

Bounce Back Loans went live on 4th May 2020. These loans are for small businesses who may not have been successful in applying for a CBILS loan. They are 100% guaranteed by the government.

You can borrow £2000 - £50,000 through the scheme (up to 25% of turnover). The government will cover the first 12 months of interest payments and we've heard rumours of low rates like 2.5% after that.

The application will comprise of a 2 page simple self-certified application form. No personal guarantee is required and the cash should be in your account within 24 hours.

Cash up front

Where possible see if you can take deposits for future bookings and work and make full use of your supplier credit terms. Companies like Morrisons have announced that they will be paying their small business suppliers immediately - see who you supply and if they can accelerate your payments.

Delay tax payments to HMRC

A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

If we are handling your accounts and tax affairs, we can let you know any potential future liabilities so that you can effectively budget for your cash flow in the future.

Support other Small Businesses

It's really easy to cut payments to businesses during this time - your local takeaway, local shops and cafes, smaller suppliers or memberships and subscriptions to services from other businesses. Remember that if you want those businesses to survive after this, you need to support them through it. They have staff and bills to pay too - if you pay it forward by helping them then it will come full circle back to you. 

Our hope is that the advice we have supplied here will allow you to seek emergency support from government and banks before you need to look inside the small business community. 

Don't fall behind on your admin

If you need to report to an external body for your business, make sure you keep on top of it. It's easy to let things like that slide when times get tough and you're focused on surviving, but organisations like HMRC and Companies House still expect you to file things on time. Save yourself an extra headache amongst everything else and make the time to get your admin sorted.

Keep in touch with your accountant, HR advisor, IT support company etc. These are professionals who will go above and beyond to help your business succeed - use their expertise in times of crisis, you may be surprised how much they can put your mind at ease and provide practical advice for you.

Talk to us

We're here to help you through this tricky time. If you need clarity on your financial situation, potential liabilities or advice on how to make it work, then pick up the phone or drop us an email. 

Now more than ever it is vital that you remain financially engaged. Many payment dates have changed and access to funding and grants has shifted. We will help you navigate it during this difficult period - please don't struggle through it alone.

For us, it is business as usual - we're constantly in touch with HMRC and our clients to make sure that everything is filed on time and without penalty - the last thing anyone needs right now is HMRC to send a scary letter!

We have clients to support, taxes to file and bills to pay. Our team will do all that they can to not let you down at this difficult time for us all.

We will keep updating this page as more information becomes available.

 

Get a quote now
Start Your 2 Month Free Trial, get a quote!

Take 30 seconds to get a quote and see how we can help you.

Get a Quote