Help for Companies and Businesses Affected by Coronavirus (COVID-19) and Lockdown

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Coronavirus (COVID-19) has meant that the Government banks and other organisations are having to act quickly to offer help and support to companies and businesses affected. The government shut down of whole sectors of the economy is having a profound impact. So what has been done?

The UK Government

Businesses can apply for a Coronavirus business interruption loan. The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. Revised measures have been made to this scheme to ensure small businesses get the loans they need. The need for personal guarantees for loans up to £250,000 has been removed.

There is a package for the self-employed. They will pay 80% of profits, averaged out over 1-3 years, up to a maximum of £2500. Tax authorities will get in touch with them directly about the grants. Due to the complexity payments are likely to be in June as a lump sum. Those self employed will be able to claim universal credit. If your business has profits of over £50k you will not be able to claim. (Please be clear that dividends taken out of a company are not included as these are taken out at a low tax rate so these payments do not qualify you for additional help. If you have taken out dividends when there was no profit (distributable reserves) then you actually owe the government taxes. Please take this up with your accountant.

The insolvency rules are likely to be changed. Please see this page for details

Under the Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis.

An online system for making claims under CJRS (Coronavirus Job Retention Scheme) launched on 20 April: Employers can expect to receive their furlough grant within 4 to 6 days of submitting their claim with the first payments due to come through by the end of April.

Employees, who have not taken all of their statutory annual leave due to COVID-19,are able to carry over up to four weeks into the next two leave years. However, only if the outbreak has made it impossible to take time off.

Employees are able to take emergency volunteer leave to help support essential health and social care workers.

Income Tax payments due 31 July 2020 under the Self-Assessment system will be deferred to 31 January 2021, automatically without any applications needed. There will be no penalties or interest for late payment in this period.

£330bn for all companies to access state-backed loans paying rent, salaries, purchase stock or suppliers - allowing companies to meet fixed cost needs.

For those in financial difficulty due to the virus, mortgage lenders offer a three-month mortgage holiday.

Tens of thousands of England’s retail, leisure and hospitality firms have been made exempt from paying any business rates in the coming year (eligible for the ‘tax holiday’).

Businesses with less than 250 employees can reclaim the cost of having to pay Statutory Sick Pay whilst eligible employees take the 14 isolation days off, due to the coronavirus. Those who are not eligible to sick pay (the self employed) are able to claim Employment and Support Allowance from the first day of illness rather than having to wait until day eight.

Cash grants of up to £30,000 have been allowed for small businesses depending on rateable values (The grant for companies with a rateable value of less than £15,000 has been increased to £10k). Here is some more information on rates. Be aware though that if you pay your rent with rates included then you will not receive any help, you have to be billed directly by the rating authority. Also, if you do not have a business premises ( i.e. you work from home) you are not eligible for a cash grant. The Government has published guidance to Local Authorities on who is eligible.

HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes.

HMRC’s Time to Pay service has been expanded. This includes a new helpline 0800 0159 559 so that businesses and those who are self-employed can arrange to defer tax payments. Breathing space is therefore given to SMEs around paying taxes

The Bank Of England

an emergency cut in interest rates from 0.75 per cent to 0.1 per cent, taking levels back down to the lowest level in history.

pump an extra £100bn into the UK economy to help fight the "unprecedented" coronavirus-induced downturn.

Commercial Banks and Financial Companies

Allowing business and mortgage customers to not have to pay back the capital on their loans for a period of 3 months, meaning they will only be paying the interest on their loans.

£5 billion in funds for small and medium sized UK businesses was announced by NatWest, backed by the government.

Extension to overdraft facilities.

Barclays and Natwest announced (26th March) that they will NOT be requiring a personal guarantee on Business loans of less than £250k.

Commercial banks are NOT paying dividends to shareholders to preserve cash.

Santander launched a £40m fund, via its Fintech provider Ebury, to provide loans to SMEs.

The British Business Bank that is funded by the government is in the process of accrediting other finance providers to allow them to offer loans under CIBLS.

MarketFinance has launched a scheme that will enable it to lend against applications made for the furloughing of staff.

HSBC, Barclays, Santander and Natwest announce a number of supportive measures for its customers

The main banks have released a press statement on how they are handling applications for CBILS. "Following the changes to the scheme announced today lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability."

Source: CompanyRescue

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