Help available for small businesses during the coronavirus crisis – A quick summary…

Help available for small businesses during the coronavirus crisis – A quick summary…
Help is available for small businesses during the coronavirus crisis - A quick summary...

Throughout the pandemic, the government have announced a number of measures to help small businesses cope with coronavirus, including support for those that need to pay statutory sick pay and changes to the benefits system to help employees on zero-hour contracts, here is a quick breakdown of what you may be able to benefit from…

Business loans:

The government is encouraging finance providers to continue lending to small businesses throughout the coronavirus crisis, via the Business Interruption Loan Scheme. The funds are accessible via loans and other types of financial support though nearly 40 business lenders. If you think a loan could be the right solution to help keep your business ticking over throughout the crisis, you need to be aware that the market for business finance is moving fast – some lenders are asking for security, while others are pulling out of the small business market completely. The government has also announced the ‘bounce back’ loan scheme to give small business owners access to credit. Loans are available up to 25% of a businesses annual turnover and up to a maximum of £50,000. Crucially, it appears that there will be no viability check and the government has agreed to take on 100% of the default risk, which means there is no risk to the provider and arguably the biggest barrier to lending has been removed.

Help with tax and VAT:

If your business is having trouble paying any tax it owes because of coronavirus, call HMRC’s new dedicated COVID-19 helpline on 0800 0159 559 to talk about Time to Pay support. If you are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. The government has also announced a VAT deferral scheme, which means no business will pay VAT between 20th March 2020, and 30th June 2020.

Business rates holiday:

The government has introduced a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. If your business paid discounted rates in the 2019 to 2020 tax year, you will be rebilled by your local authority as soon as possible.

Help with salaries:

The government has announced that it will pay grants covering up to 80% of the salary of workers kept on by companies, up to a total of £2,500 per month, just above the median income. Known as the Coronavirus Job Retention Scheme, employers who can’t cover staff wages due to COVID-19 may be able to access support to continue paying part wages for staff. There’s still little detail available on how to access the scheme, but if you plan on applying you’ll need to classify your staff as furloughed workers, which you’ll be able to do once the online application form is up and running. Being a furloughed worker means employees are kept on the payroll, rather than being laid off, and they must not do ANY work for you during this time – this is really important as it will allow you to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month. You can make up the shortfall between this payment and your employees’ salaries, but you don’t have to. If you’re the director of a business and you pay yourself a salary through PAYE, you’ll also be able to claim this benefit, so long as you classify yourself as a furloughed worker and don’t do any work while claiming this benefit.

Sole traders and the self-employed:

The government has announced that it will be launching the Self-Employed Income Support Scheme, to pay self-employed business owners, including freelancers and sole traders, who don’t qualify for the Coronavirus Job Retention Scheme, which pays up to 80% of employees’ wages. The scheme will pay self-employed people who have been adversely affected by the coronavirus, a taxable grant worth 80% of their average income over the last three years, up to £2,500 per month, for at least three months. The scheme will be open to business owners with an income of £50,000 or less, who make most of their income from self-employment, and will be based upon your previous three years’ tax returns to confirm income. If you only have one years’ worth of tax returns, this will be used to work out your income. It was initially thought that business owners who pay themselves via dividends would be eligible to apply, it seems this is no longer the case, as dividends aren’t regarded as income. It’s also possible that you won’t qualify if your income is a mixture of part-time income and self-employment, and you’ll not be eligible if anyone in your household earns more than £50,000. If, on the other hand, everyone in your household earns £49,000, you will all get full support. If your application is successful, another issue is that the money won’t be available until the start of June.

The welfare system has also been adjusted so that self-employed people can now access Universal Credit in full. For instance, a self-employed person with a non-working partner and two children, living in the social rented sector, can receive welfare support of around £1,800 per month. Anyone in this position is being urged to apply for any relevant benefits as soon as possible, including Universal Credit and any associated housing benefits, and look into business interruption loans or other financing options, including payment breaks and mortgage holidays.

These measures are open to change so we hope that what is currently available is helping you to keep your business running.