COVID-19 Government schemes to help
I have compiled this document to help people understand what schemes are available to you from the government.
These are desperate, strange times that we live in. It goes without saying that your priority is for your health and the health of your family and others. Therefore, stay at home and work from home where possible. We at Banner & Associates are doing this and our staff are working from home. We will still be servicing you our clients as best we can, and any necessary phone calls can be arranged via email to the relevant team member.
Job Retention Schemes
If you cannot cover staff costs due to COVID-19 then the government will help via the Coronavirus Job Retention Scheme. This is available to a furloughed employee (someone who would have been laid off as a result of COVID-19). This would mean that the employee is kept on the payroll and will allow the employer to claim 80% of their wage up to £2,500 from the government. Your employer could choose to fund the difference but there is no legal obligation to do so.
You have one employee earning £2,000 a month, so you will be able to claim 80% of this which is £1,600. If you have a second employee earning £3,500 per month then 80% would be £2,800 however this would be capped at £2,500.
Points to note;
- The scheme is expected to start from the 1st April 2020 and last for 3 months. You can backdate claims from the 1st March 2020.
- All UK businesses regardless of size will be eligible for this scheme.
- You will need to designate any of your affected employees as furloughed workers and then you will need to notify your employee of this. Then, you will need to make the claim through HMRC’s portal. We expect the reimbursement portal to be available from 1st April 2020.
Statutory Sick Pay (SSP)
Statutory sick pay is currently £94.25 per week. If you have had employees on sick due to COVID-19 then you will be refunded the first 2 weeks of statutory sick pay paid to your employee.
The relief will be available to UK businesses with fewer than 250 employees as at 28th Feb 2020. As an employer, you should maintain records of staff absences and payments of SSP made.
This rebate of SSP is still being developed and as more information is given by the government, I will share this with you.
Any VAT liabilities accumulated between 20th March 2020 until 30th June 2020 will not need to be paid over to HMRC until the 5th April 2021.
Please note that this is a deferral and not a relief. So eventually, this VAT liability will need to be paid to HMRC.
No penalties or interest for late payment will be charged in the deferral period.
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period.
Deferrals of other taxes
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. No penalties or interest for late payment will be charged in the deferral period. This is an automatic offer with no applications required.
If you already have an outstanding tax liability with HMRC and you have or may miss your next tax payment due to COVID-19, then please call HMRC on 0800 0159 559. These arrangements are agreed on a case by case basis and are tailored to individual circumstances and liabilities.
There will be a business rates holiday of 12 months for all retail, hospitality, leisure and nursery businesses in England.
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.
Mortgage Payment Holiday
Your mortgage payment may be one of your highest expenses. On the 17th March 2020 it was announced that homeowners including landlords of buy to let mortgages affected by COVID-19 can apply for a mortgage payment holiday of up to 3 months.
Many banks will have different approaches, speak to your bank to discuss your concerns.
On the 18th March 2020, the government confirmed it would offer interest free payment holidays to borrowers struggling to pay back their help to buy loans.
Please get in touch with your bank for more details, alternatively you may be able to apply online to speed up the process. Please note that some lenders may recalculate your monthly mortgage payments after 3 months and this may result in higher capital & interest payments.
The Coronavirus Business Interruption Loan Scheme (CBILS)
A temporary loan scheme should be available from 23rd March 2020 to support small and medium sized businesses.
CBILS: KEY FEATURES
Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
The borrower always remains 100% liable for the debt.