COVID-19 guide for businesses

COVID-19- GUIDE FOR SMALL
BUSINESSES AND EMPLOYEES

COVID-19 affects all of us, but we know that as a business owner you are likely to find the coming months more difficult and have some very specific questions about the support and advice available to you.

Lanop Accountants can advise and help get you the grants, and business relief you need.

What this guide includes

1. 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. All UK businesses are eligible and can access this scheme:

Businesses will need to:

  • Designate effected employees as ‘furloughed workers,’ and notify these employees of this change – changing the status of employees remains subject to existing employment law and, depending on their employment contracts, may be subject to negotiations.
  • 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)

Under Job retention Scheme, 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 yet set up to facilitate payments to employers.

2. Deferring VAT and PAYE Tax payments

VAT

    •  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 will then have
      until the end of the 2020-21 tax year to settle any liabilities that have accumulated
      during the deferral period.
    • The deferral applies automatically, and businesses do not need to apply for it. VAT
      refunds and reclaims will be paid by the government as normal.
    • All VAT registered UK businesses are eligible for VAT Payment Deferral.

PAYE

  • Businesses can defer PAYE between 1 and 3 months (they will need a valid reason –
    for example if the business has temporarily shut)
  • Expectation is that the deferral will apply up to and including April 2020 payroll
  • If the business can’t pay its PAYE liability at this point a formal payment plan can be
    set up between 3 – 9 months

3. Statutory Sick Pay relief package for SMEs

The Government has confirmed that employees will not need to provide a fit note in order
to receive STATUTORY SICK PAY (SSP) when self-isolating due to coronavirus. Small-and
medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) paid for
sickness absence due to COVID-19.

Eligibility criteria will be as follows:

  • Refund will cover up to 2 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. 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.
  • Government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
  • A rebate scheme is being developed. Further details will be provided in due course once the legislation has been passed.

4. 12-month business rates holiday (for all retail, hospitality, leisure and nursery businesses in England)

Business rates holiday for retail, hospitality and leisure businesses will be available for
businesses in England for tax year 2020/21.

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 premises 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.

You do not need to do anything to get this relief, this will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible.

5. Small business grant funding of £10,000 for all business. (in receipt of small business rate relief (SBRR) or rural rate relief (RRR)

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.

Your business will be eligible if:

  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies property

If you are not aware of SBRR and RRR please follow the link

https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

Again, you do not need to do anything. Your local authority will write to you if you are eligible for this grant. The Guidance for local authorities can be found at the link below.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment

6. Grant funding of £25,000 and £10,000 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.

Your business will be 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 premises 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

Cash grants will be administered by local authorities and should be delivered
automatically, without businesses needing to claim. From early April Local authorities will
start approaching businesses as per latest updates

7. Coronavirus Business Interruption Loan Scheme (CBILS)

  • Coronavirus Business Interruption Loan Scheme delivered by the British Business
    Bank.
  • 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.

Eligibility Criteria for (CBILS):

  • Be UK based, with turnover of no more than £45 million per annum
  • Be able to confirm that they have not received de minimis State aid beyond 200,000 equivalent over the current and previous two fiscal years
  • Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term

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 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 week commencing 23 March 2020.

Complete range of financial products that are expected to fall within the CBIL scheme:

  • Term facilities
  • Overdrafts
  • Invoice finance facilities
  • Asset finance facilities

8. New lending facility from the Bank of England to help support liquidity among larger firms.

  • 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 Criteria:

  • All UK businesses are eligible.
  • The scheme will be available early in week beginning 23 March 2020.
  • We will provide information on how to access the scheme here shortly.
  • More information is available from the Bank of England official website.

9. HMRC Time To Pay Scheme

  • 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.

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 COVID19, please call HMRC’s dedicated helpline: 0800 0159 559.

10. Relief on Income tax

  • For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred
    until the 31 January 2021.
  • If you are self-employed you are eligible to defer your income tax payment.
  • 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.

Self-employed people can now access full universal credit at a rate equivalent to
statutory sick pay.

11. 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.

12. Three- Month Mortgage holiday

Government is going to pass emergency legislation to protect private and social renters.
There are currently 4.6 million privately renting households in the UK. Legislation will
ensure that landlords cannot evict tenants who struggle to pay rent for three months.
Where landlords have “buy to let” mortgages, banks should be able to offer them the same
deal as homeowners.

  • Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday.
  • Borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
  • Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.

13. Late filing of company accounts

  • If, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to your company being affected by Coronavirus (COVID19), you may make an application to companies house to extend the period allowed for filing.
  • If you do not apply for an extension and your accounts have been filed late, an automatic penalty will be imposed. The registrar has very limited discretion not to collect a penalty.
  • Each appeal is treated on a case-by-case basis, and Companies house already have policies in place to deal with appeals based upon unforeseen poor health. Appeals based upon COVID-19 will be considered under these policies.

14. Self-employment Income Support Scheme (SEISS)

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.

  • The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
  • HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
  • HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account.
  • HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.
  • Directors are not covered under SEISS as they are the employees of their own companies. Please refer to Section-1 of this document- Coronavirus Job Retention Scheme.

To qualify for SEISS you need to:

  • Be self-employed or a member of partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
  • Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
  1. Your trading profits and total income in 2018/19
  2. Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
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I’d almost given up trying to find someone who’d be able to manage my affairs as hoped, but Lanop are nothing short of amazing. Their hard work, tenacity and attention to detail have made an enormous difference to my accounts. ’10/10′.

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Lanop changed my perception of accountants. They’re professional, relaxed and I can take comfort in knowing they are always available to help when I need them. Now, I recommend them to family, friends and clients.
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Business Owner, Kink London
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Lanop have been a great find for all my business needs. They place customer satisfaction at the top of their agenda – and back this up with a wealth of knowledge. Crucially, they give me the freedom to focus on my job…without breaking the bank.
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Founding Director, Tiipoi Ltd
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Lanop understand that accounting is time-consuming for business owners, like me – and they’re dedicated to alleviating this burden. They first helped me with a tax return in 2011, so the fact they now run all of my accounts, both personal and professional, speaks volumes. “I can’t recommend them highly enough”.
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Giles Adams
Partner and President, 3rd Home
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Lanop have reduced my costs and maximised my profit through vital tax planning from the outset. They’re always on-hand to help me understand the latest terminology or legislation by communicating clearly, without jargon, and in a timely fashion. I can’t thank them enough!

Francesca Depledge
Business Owner, Found In Ltd
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We first engaged Lanop when our business first moved from concept to start-up. But, while we initially needed their help with bookkeeping, they went far beyond that – giving us mentor support and making valuable introductions to industry contacts. This helped us avoid a number of potential pitfalls in the tricky first few months of operation
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Founding Director, UKCharge Ltd
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Lanop understand that accounting is time-consuming for business owners, like me – and they’re dedicated to alleviating this burden. They first helped me with a tax return in 2011, so the fact they now run all of my accounts, both personal and professional, speaks volumes. “I can’t recommend them highly enough”.
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Giles Adams
Partner and President, 3rd Home
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We first engaged Lanop when our business first moved from concept to start-up. But, while we initially needed their help with bookkeeping, they went far beyond that – giving us mentor support and making valuable introductions to industry contacts. This helped us avoid a number of potential pitfalls in the tricky first few months of operation
Visit website

Andrew Werner
Founding Director, UKCharge Ltd
foundin-613

Lanop have reduced my costs and maximised my profit through vital tax planning from the outset. They’re always on-hand to help me understand the latest terminology or legislation by communicating clearly, without jargon, and in a timely fashion. I can’t thank them enough!

Francesca Depledge
Business Owner, Found In Ltd
tiipoi-469

Lanop have been a great find for all my business needs. They place customer satisfaction at the top of their agenda – and back this up with a wealth of knowledge. Crucially, they give me the freedom to focus on my job…without breaking the bank.
Visit website

Spandana Gopal
Founding Director, Tiipoi Ltd
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Lanop changed my perception of accountants. They’re professional, relaxed and I can take comfort in knowing they are always available to help when I need them. Now, I recommend them to family, friends and clients.
Visit website

Khethan Heyer
Business Owner, Kink London
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I’d almost given up trying to find someone who’d be able to manage my affairs as hoped, but Lanop are nothing short of amazing. Their hard work, tenacity and attention to detail have made an enormous difference to my accounts. ’10/10′.

Visit website

Richard Gunter
Sole Trader/Engineer, Hearth Glow
alforno-115

Really nice guys who look after their customers. Very easy to talk to and have given me very good support.

Visit website

Giuseppe Prestigiacomo
Restaurant Owner, Alforno Putney

What this guide includes?

FAQ

About the Mortgage Payment Holiday

What is the Mortgage Payment Holiday?
A mortgage payment holiday provides you a 3-month break from paying your mortgage without affecting your credit rating.
Frequently Asked Questions

What is a mortgage payment holiday?

 

A mortgage payment holiday provides you a 3-month break from paying your mortgage without affecting your credit rating.

 

What are the requirements for a three-month mortgage payment holiday? You are eligible for this 3-month holiday if:

 

·       Your business has been affected by COVID-19

·       You have been making your prior mortgage payments on time

·       All parties named on the mortgage give their consent for this holiday

 

Is there any amount of benefit that a landlord must pass onto their tenants to be able to claim mortgage holiday? Yes, during this tenure, Landlords cannot evict tenants who struggle to pay rent.

 

What else should I consider before applying for this 3-month mortgage holiday?

 

You need to consider the following before deciding whether/when you should take this holiday:

 

·       The most appropriate time for you to take out a mortgage payment holiday will depend on your individual circumstances.

·       Once your payments restart after 3 months, they’ll be recalculated, and it might result in an increase in your monthly payments.

·       The total amount of interest you pay over the term of the mortgage will increase.

·       You will not be able to switch your mortgage to any other products whilst on a payment holiday.

·       If you have an overpayment reserve, you might underpay instead.

 

Is there any support available for commercial tenants as well who are affected by the COVID-19 outbreak? Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.

 

About the Business Rates Holiday & Cash Grants

What is a Business Rates Holiday?
A business rate holiday means that no rates payable for the 2020-2021 tax year for any business in retail, hospitality or leisure sectors.
Frequently Asked Questions

What exactly is implied by the term “holiday”. Does that mean a complete exemption or accumulation of tax? “Holiday” in this context refers to a complete exemption for 12 months, and there is no accumulation.

 

Who is eligible to receive a business rates holiday? Businesses in the retail, hospitality & leisure sector are eligible for this holiday.

 

What are the subcategories of the retail, hospitality and leisure industries which can enjoy this holiday? As defined by the government, business rates holiday will for properties that are 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 do you apply for this holiday? There is no need to apply, this will automatically be adjusted in your next council tax bill in April 2020.
Who is eligible to receive a grant from local authorities? There are two types of business which qualify for a grant from the government:

·       Businesses in the retail, hospitality & leisure sector which pay business rates

Businesses in this category with properties of rateable value below £15,000 will receive a grant of £15,000, whereas those with rateable value between £15,000 and £51,000 will receive a grant of £25,000.

·       Small business that pay little or no business rates

Business in this category that also occupy a property will receive a one-off grant of £10,000

To check the rateable value of your property please follow the link below: Link

 

How does my business apply for the cash grants? The cash grants will be given by local authorities who will directly contact the businesses.

 

When will the local authorities contact businesses for these grants?

 

Based on the latest updates, Local Authorities will start contacting businesses from early April onwards.

 

Is there a minimum number of employees that a business needs to employ to be eligible for loans/grants from government? No, there is no limit.

 

About the Statutory Sick Pay (SSP)

What is Statutory Sick Pay
Employers can reclaim Statutory Sick Pay (SSP) paid for sick leaves by employees due to COVID-19, covering up-to 2 weeks of SSP per employee.
Frequently Asked Questions

What is the eligibility criteria for a business to claim SSP? UK based businesses with fewer than 250 employees (as of 28 February 2020) are eligible for this scheme.

 

For self-employed workers who are not eligible for SSP, how can they claim the Employment Support Allowance?
Is SSP only available for certain types of industries? No, SSP is available for businesses of all industries.

 

Are employees who are parents of school going children entitled to SSP if they need to stay home to look after their children?
From which day onwards of your sick leave is SSP applicable? SSP will be paid from the first day of leave onwards (rather than the 4th day of leave), if you are absent from work due to COVID-19.

 

Do I need to maintain a record of my employees who are taking Statutory Sick Pay due to COVID-19? Yes, employers should maintain records of staff absences. If employers request for some evidence of being unwell, then in that case:

·       employees with symptoms of coronavirus can obtain an isolation note from NHS 111 online.

·       employees who live with someone that has produced symptoms can obtain a note from the NHS website.

 

About the Coronavirus Job Retention Scheme (CJRS)

What is included in CJRS?
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.
Under Job retention Scheme, HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Frequently Asked Questions about CBILS

What is meant by the term “furlough”? Furlough means temporary leave of absence from work. This may be due to economic conditions affecting an organization or matters affecting the country. Until now the expression has not carried any meaning in U.K Employment Law.

The government has used this terminology to support employees who are struggling to retain their jobs in the wake of COVID-19.

Which businesses are eligible to apply for CJRS? All businesses no matter the size qualify for the CJRS scheme including charitable and non-profit organizations.

However, the scheme is aimed at businesses which are unable to cover staff costs due to COVID-19. The employers can request for support to continue paying a portion of their employee’s wage to avoid redundancies.

What is meant by £2500/Month threshold in Coronavirus Job Retention Scheme? A maximum amount will be calculated per employee and is the lower of:
• 80% of ‘wages. The information released by the government so far uses the phrase ‘wage for all employment costs up to a cap of £2,500 per month’. It is our understanding that this incorporates employer’s NIC and pension contributions. Wages will be determined by reference to a defined period which hasn’t been announced yet.
• £2,500 per month.
How businesses can claim salaries (higher of £2500 or 80% of salary) of the furloughed employees under Coronavirus Job Retention Scheme?

Employers will be required to access the scheme through an online portal. The employer will simply need to insert the details of the affected furloughed employees and then submit information to HMRC about the wage and any other data required, which will likely include the employee’s NI number. Employers should probably:

  • Reasonably select employees affected for being furloughed
  • Determine whether to pay 80% of salary or to supplement it.
  • Obtain the employees’ written agreement unless employment-contractual provisions already incorporate lay off.

The CJRS is a reimbursement to the employer therefore the employer will need to make payment to the furloughed worker, before then being reimbursed by HMRC.

The latest correspondence from HMRC suggests that the portal will be open for claims from 20 April, with an expected minimum processing time for the grants of at least four working days.

Prohibit the employees from working from the workplace or even from home. For further details please see the Link

Is payment from government for furloughed employees a grant or a loan?

 

Payments will be made as grants which employers do not have to repay. The scheme will run for a period of three months but may be extended if necessary. The details made available by the government are as follows:

  • HMRC will pay 80% of furloughed workers’ wages, up to a cap of £2,500 per month.
  • HMRC are in the process of setting up a new online portal for reimbursement.
  • The payment will be backdated to wages payable from March 01, 2020.
Is the business liable to top up the salary of a furloughed employee over and above the 80% or £2,500 limit? Businesses may cover the additional pay but they are not required to do so.

For employees who have been furloughed businesses can choose whether to:

  • Only pay the wages reimbursed by the government.
  • Make up the difference between the grant and the employee’s normal salary.
  • Partially cover the difference between the grant and the employee’s normal salary.

Under ‘Coronavirus Job retention scheme, how long will the government cover salaries of employees and which employees are eligible?

The scheme, open to all employers, will cover for the cost of wages backdated to March 01, 2020. It will continue for a minimum of three months and can include workers who were in employment on or before March 19, 2020  and which were notified to HMRC on an RTI submission on or before 19 March 2020.

This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.

How are employees’ pension contributions and employer’s NI going to be affected during the furloughed period?

Employers will still need to pay employer National Insurance and pension contributions on behalf of their furloughed employees, and employer can claim for these too.

Employers cannot claim for:

  • additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
  • any pension contributions you make that are above the mandatory employer contribution

However, logically speaking employees should opt out from pension for the furlough period and opt in when they no longer regarded as furloughed.

 

Is the 80% paid to employees gross or net? 80% is gross and you will pay net pay after tax and NI like you normally did in the past.

The scenario below explains this further:

X Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.

Each month, Mr A currently receives net pay of £1,665 which is after deducting PAYE of £191 and employees NIC of £144. On this salary, the employer pays employers’ NIC of £174.

The available grant for the employer is the lower of:

(a) 80% of (£2,000 + £174), and

(b) £2,500

So, a grant of £1,739.

 

Can employees work for the employer when furloughed?

In order to qualify, employees must not undertake any work for the employer while furloughed. The grants do not cover the wages of employees working a reduced schedule due to COVID19. However, you must pay your Apprentices at least the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

How will employers choose which employees to furloughed? Workers who cannot work from home and who currently have no work allocated will be the primary candidates for furloughing.
If I furlough my employee, then do I need to process his/her payroll?

The employer will pay the employee through payroll as usual, using the Real Time Information (RTI) system, as required by the employment contract.

Can directors be furloughed under CJRS?

Yes, Directors can be furloughed provided they meet the definition of who can be furloughed e.g. must be an employee on PAYE and on the payroll on or before 19 March 2020, hence, directors are eligible for the Coronavirus Job Retention Scheme as long as they take a salary through a PAYE scheme on or before 19 March 2020.

Being a director will my dividend payments also factor in the calculations for claiming relief under CJRS?  

No, dividend payments will not be taken into account.

Remuneration through PAYE is proving to be a dilemma for numerous directors, as to be tax efficient, most directors of limited companies take a small salary from the company, with the majority of their income being from dividends which translates into relatively smaller salary elements, which further dwindle once reduced to 80%.

Being a director, if I furlough myself, can I continue working?

If the director is furloughed, he/she cannot continue working like any other employee but furloughed directors can perform particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose.

About the VAT & Self-Assessment Payment Deferral

What is included in VAT & Self-Assessment Payment Deferral?
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 will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period
Frequently Asked Questions about VAT & Self-Assessment Payment Deferral?

How long will the VAT payments be deferred?

 

Any VAT payments due on April 07,2020/ May 07, 2020 and June 07,2020 have been deferred until after June 30, 2020 but you have until April 05, 2021 to make payment.
Do I need to cancel my Direct debit with HMRC If I want to defer my VAT payment? According to HMRC’s guidelines, customers who normally pay their VAT by direct debit should cancel their direct debit with their respective bank if they are unable to make payment. Please do so as soon as possible so that HMRC do not attempt to automatically collect on receipt of your VAT return.
How long have the income tax self-assessments been deferred? Second payment on account due on the 31 July 2020 will be deferred until the January 31, 2021.
Will there be any interest be charged by HMRC because of late payment of income tax? No interest or interest for making late payment will be charged in the deferral period.
About the Coronavirus Business Interruption Loan Scheme (CBILS)

What is CBILS and how does it work?
Coronavirus Business Interruption Loan Scheme is delivered by the British Business Bank and is designed to support long-term viable businesses who may need to address cashflow pressures by seeking additional finance.
Frequently Asked Questions about CBILS

What are the minimum and maximum loan limits under CBILS? Minimum amount £25,001 – maximum £5,000,000.

 

Are all businesses eligible to apply for CBILS? All businesses that are U.K based, with turnover less than £45 million per annum are eligible.
What specific documents are required in order to apply for the CBILS with the bank? Lenders may require the following documents, but the requirements vary from lender to lender.

·       Recent set of management accounts and data highlighting key performance indicators

·       A copy of latest full accounts

·       A summary of aged debtors and creditors, if available

·       Financial forecast for a period of at least one year with assumptions clearly stated and applied

·       A business plan or strategy formulated in response to COVID-19, if any

Following links can be accessed for further details: Barclays, Lloyds, Santander, NatWest

 

Are loan applications guaranteed to be accepted? If your business performance shows you couldn’t afford the loan in 2019 then you may not be eligible.

 

The lender must show that they can’t lend to you under normal circumstances i.e. your business wouldn’t qualify for a normal interest-bearing loan.

Which financial institutions will be extending credit under CBILS? Please click on the Link to access the complete list of accredited financial institution
Can the government act as my guarantor if I do not qualify under a lender’s normal lending criteria Yes, the government the act as your guarantor if you do not qualify under the normal lending criteria.
If I take a loan under CBILS, will I be liable for 100% of the loan. You will remain liable for 100% of the outstanding debt.
What interest rate will I be charged after the initial 12-month interest free period? After the first 12 months, interest at an agreed margin over the Bank of England Bank Rate** will be payable.
What else does CBILS offer?
  • Apply for a loan from £5k to £5m for up to 6 years
  • Variable and fixed rates are available
  • The first 12 months are interest-free
  • A capital repayment holiday will be available at the start of the loan

For further information please click on the Link

Is there a term limit on CBILS loans? Loans will be extended for up to 6 years.
Which trades and organizations are not eligible to apply for loans under CBILS? The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions.
Links for further information British Business Bank, Bank of England
Is there an option for capital repayment holiday as well? A capital repayment holiday can be requested (subject to application) at the start of the loan or mid-term.

 

Monthly capital repayments will be payable at all other times.

Can I repay early, and will that result in prepayment fees? You may repay the loan early in full or in part, without incurring prepayment fees.

 

For fixed rate loans, breakage costs will be charged for prepayments after the first 12 months.

What happens if I repay my fixed rate loan early?

An amount equal to 10% of the loan balance as calculated on each anniversary of the first drawdown date of the loan can be prepaid without attracting any breakage costs.

Any prepayment in excess of the 10% annual allowance will incur a breakage cost. The breakage cost you will have to pay is a percentage amount of the prepayment (or required prepayment) linked to the number of full years of the fixed rate remaining.

Will each business be assessed differently for CBILS? To assist customers during this unprecedented time, each business will be assessed on their individual circumstances to ensure that they are offered an appropriate lending facility.

 

Pricing will be consistent for all customers and not based on an assessment of risk.

Will the fixed interest rate loan cost me more than the variable interest rate loan or vice versa?

It is difficult to predict future interest rates so there is no way of knowing if a fixed or variable interest rate will cost you more or less over the life of your loan.

Several factors need to be considered including how large a payment you can afford, the length of the borrowing term needed and the level of certainty over costs that you require.

You also need to consider any possibility of early repayments, such as that resulting from the sale of a property.

What is the process that needs to be followed to secure funding under CBILS?

1. FIND A LENDER by following the Link

2. APPROACH A LENDER

You should approach a lender yourself, ideally via the lender’s website.

3. THE LENDER MAKES A DECISION

The lender has the authority to decide whether to offer you finance. If it can do so on normal commercial terms without having to make use of the scheme, it will.

The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000.

4. IF THE LENDER TURNS YOU DOWN

If one lender turns you down, you can still approach other lenders within the scheme.

Do I need evidence that I am a viable business to access loan under CBILS?

Yes. You must show in your borrowing proposal that were it not for the COVID-19 pandemic, your business would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty.

Are sole-traders and freelancers eligible for CBILS? Yes, if the business activity is operated through a business account. The scheme is open to sole traders, freelancers, body corporates, limited partnerships, limited liability partnerships or other legal entity carry out a business activity in the United Kingdom, with annual turnover of up to £45m.

 

The business must generate more than 50% of its turnover from trading activity.

Can I still get the loan if I am receiving other kinds of aid? Yes. The eligibility criteria for CBILS does not require Lenders to consider the other forms of government support that SMEs may be benefiting from e.g. business rate reliefs or grants unrelated to the CBIL scheme.
About the Self-employment Income Support Scheme (SEISS)

What is SEISS and how does it work?
The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19.
Frequently Asked Questions about SEISS

Is the support available to self-employed individuals grant or a loan? Support extended to self-employed individuals is a grant and not a loan.

 

Is the support available to partnerships as well? Yes, the scheme will provide a grant to self-employed individuals as well as partnerships.
Is there any limit on the support extended to self-employed individuals? The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
How will HMRC calculate the size of the grant. HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant.
What is the eligibility criteria for SEISS?
  • Be self-employed or a member of partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so until 23 April 2020.
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
  • Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018/19
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
How can an individual access SEISS?

Individuals will not be required to contact HMRC.

HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account.

HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks’ notice from the date of the announcement to file their returns and therefore become eligible for this scheme.

Please click on the  for Link more updates.

Do directors of private limited companies also qualify for SEISS?

Directors miss out on the Self-employed Income Support Scheme (SEISS), as they are, technically, the employees of their companies.