What can you claim in the COVID-19 crisis? VIVA sets out the latest financial news courtesy of Summit Chartered Accountants

Jessica Ward | 23rd March 2020

VIVA’s teamed up with Summit Chartered Accountants to help you with regular updates on the latest financial policies that will help guide you through this crisis which we hope you’ll find useful in the coming months.

 

And whilst we’re at, come on Rishi, help the self-employed!

 

We’ll bring you relevant updates and links on where to find help. Please find below a breakdown of the measures announced, to date, in relation to Covid-19, from HMRC.

 

The first thing Summit told us is that although these have been announced, very few are in place yet, details not announced, and no processes in place to apply.

 

 

At the moment the announcements are as below and we have more detail in the sections that follow.

 

  • Coronavirus Job Retention Scheme
  • Deferring VAT and Income Tax payments
  •  Statutory Sick Pay relief package for SMEs
  • 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • HMRC Time To Pay Scheme

 

 

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.  Please be aware that we do not know if Directors are eligible, if employees still being paid are eligible or what the system will be.  Below are the only details to date.

 

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.

 

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan. Please be aware, that even the banks don’t know the process for this yet, so applications cannot be made yet.  As soon as they are available, we will let you know.

 

Support for businesses through deferring VAT and Income Tax payments

 

HMRC will support businesses by deferring Valued Added Tax (VAT) payments for three 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.

 

Income Tax

 

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. (They are referring to your July payment on account here.  It will still need to be paid in January if you defer)

 

Eligibility

 

If you are self-employed you are eligible.

 

How to access the scheme

 

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities. (Time to pay, is when you set up a monthly payment plan with HMRC)

 

 

Support for businesses who are paying sick pay to employees

 

HMRC will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

 

  • This refund will cover up to two 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 As stated here, this does not exist yet and there is no process to reclaim the sick pay until this process has been put in place

 

Eligibility

 

You are eligible for the scheme if:

  • Your business is UK based
  • Your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

 

How to access the scheme

A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.

 

Support for businesses that pay business rates

 

Business rates holiday for retail, hospitality and leisure businesses

 

HMRC will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible. Eligibility

You are eligible for the business rates holiday if:

 

  • Your business is based in England
  • Your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

 

  • As shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • For assembly and leisure
  • As hotels, guest & boarding premises and self-catering accommodation

 

How to access the scheme

 

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

 

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

 

Further guidance for local authorities is available in the expanded retail discount guidance.

 

Cash grants for retail, hospitality and leisure businesses

 

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

 

Eligibility

You are eligible for the grant if:

  • Your business is based in England
  • Your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

  • As shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • For assembly and leisure
  • As hotels, guest and boarding premises and self-catering accommodation

 

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. As you can see, this is a waiting game.  It seems there is no application process, you just have to wait for it to arrive if you meet the criteria.

 

Guidance for local authorities on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

 

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 (Same applies to Wales)
  • 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. Again – no time scale given and no application process.  A waiting game.  As with most things Government based, they usually need a nudge.  Once we have details of estimated time scales, we’ll know when to chase.

Guidance for local authorities on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

 

Support for businesses through the Coronavirus Business Interruption Loan Scheme

 

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized 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 on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

 

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

 

Eligibility

You are eligible for the scheme if:

  • Your business is UK based, with turnover of no more than £45 million per year
  • Your business meets the other British Business Bank eligibility criteria

 

How to access the scheme

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

 

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.

 

The scheme will be available from early next week commencing 23 March. As you can see, the scheme does not exist yet.  Summit has spoken to the Directors of the main banks and they are currently in the dark.  They hope to receive details on Monday (23rd March) and will then know how the process will work.  This is the point at when applications can start.  No one knows how long the application process is, the criteria, or the lead time for money, but banks are hoping it is less than 4 weeks.  Businesses of course, need it now.

 

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

All UK businesses are eligible.

 

How to access the scheme

The scheme will be available early in week beginning 23 March 2020.

More information is available from the Bank of England and HMRC.

 

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. This is basically a payment plan to spread the tax liability into monthly repayments.

 

Eligibility

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,  call HMRC’s dedicated helpline: 0800 0159 559.

If you’re worried about a future payment, please call us nearer the time.

 

Insurance

 

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

 

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

 

Now that most businesses including, food, drink and leisure have been forced to close, this may trigger the ability to claim from your Insurance company.  Prior to this, it would have been your own decision to close, and no claim would have been available.  Please check your policy documents and phone your insurance provider to see if you can make a claim.

 

Summary

 

It is extremely frustrating at present, that we are hearing of financial help that we may or will be able to access in the future.  Realistically, we are looking at mid to late April until the major funding hits, and, as business owners, it is going to be important to establish the facts of what you will be able to claim for, and what the process will be.

Use the time to plan how you will improve and develop your business, to put plans and strategy in place.  Often as business owners, you are so busy running your business and working in it, that you don’t get time to work on it and to reflect.

And if you come out of this crisis with a business still intact, your business can make it through anything.

 

BEEN LAID OFF – CAN I GET MY JOB BACK AFTER RECENT GOVERNMENT ANOUNCEMENTS?

 

VIVA and Summit Chartered Accountants answer that and other Covid 19 key money questions

There’s still a lot of uncertainty on what people are entitled to during the crisis and we will get the answers to you as soon as we can.

Below are the most common questions VIVA and Summit Chartered Accountants have been asked and you can also see our full article at XXX, with details on delayed tax payments and other money matters.

 

Q: I’ve been laid off – can I ask my boss for my job back now they can get an 80% contribution to my pay?

 

There are no details on how this system will work yet, But, If you haven’t had an official P45 and it hasn’t been processed via payroll, you have not officially left and your employer may be entitled to the 80% contribution.

It is worth raising this with you HR department or employer directly and seeing what they can do as the Government has pledged this money and is urging businesses to retain their workers.

 

Q: How do I get a mortgage holiday?

 

A: To get a mortgage holiday, contact your mortgage provider directly.  This does not rely on any Government application process.  Only apply if you need to.  It is as it says, a holiday. That means the mortgage payments get added to the end of the payment term and accrue interest over the length of your mortgage.

Try to avoid it but we realise that may not be a luxury you can afford and for many people this will help in the immediate short term.

 

Q: Is there help for renters?

 

A: There’s nothing in place yet, but it is worth renters approaching landlords and seeing if they are willing to give them a rental holiday or delay payment.

In reality this is hard to administer as, unlike mortgages, when a tenant leaves, they stop paying, so it is difficult to add the payments on to the end of a term.  New agreements would need establishing to continue paying rent to cover the rental holiday, after they leave.

But we’ll keep you posted and there is help via Universal Credit and other benefits. Remember, the government has said no-one can be evicted for the next three months because of payment issues, so if you’re really struggling, that is at least some peace of mind.

However, it’s always good to have raised this with your landlord and sorted an agreement if you can in the first instant.

 

Q: Should I still be paying my bills?

 

Again, unless you need to stop paying them to survive, it is always better to try where possible to meet ongoing overheads.  By not paying, you can snowball the issue and end up with double payment and large debts to pay off.

Look at cancelling non-essential subscriptions and payments now and also if you’re not working, it’s a good opportunity to shop around for better deals on everything from your electricity to Wi-Fi.

 

Q: What about sickness pay?

 

With Covid-19, Statutory Sick Pay (SSP) will be available from day one rather than day four of your illness, and employers will be able to claim a contribution back from the Government.  There is no system in place for the employer to reclaim this yet but act as if this is the case.

 

Q: I’m self-employed what can I do?

 

There is a lot of pressure on the government to help the self-employed and the Chancellor says he will make an announcement on help for the self-employed in a matter of days.

At the moment, the only help is to claim Universal Credit which is just short of £400 per month and you can apply here https://www.gov.uk/apply-universal-credit but the waiting list is huge at the moment.

In our previous article we also outlined how there is help with delaying tax and other payments which may help at the moment.

Hopefully there will be good news soon on this and we’ll keep you posted.

For more financial business help, visit  www.summitaccountants.co.uk