Associate WHA provides update on Govt support

Summary of Government support for business during Coronavirus

 

Coronavirus Bounce Back Loan

Launch 4 May 2020

The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and £50,000.

The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.

Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.

 

Coronavirus Future Fund

Launch in May 2020.

The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.

The scheme will be delivered in partnership with the British Business Bank.

 

Coronavirus Job Retention Scheme

Claim for 80% of your furloughed employee’s wages plus any employer NIC and pension contributions – up to £2,500 plus any employer NIC and pension contributions a month.

Effective for 4 months starting 1 March 2020.

This is an online process.

 

Coronavirus Statutory Sick Pay Rebate Scheme

The current rate of sick pay repayment will cover up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:

Employees do not have to give you a doctor’s fit note for you to make a claim.

Effective from 13 March 2020.

 

Deferral of VAT payments due to Coronavirus

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

You can only defer:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

If you choose to defer your VAT payment as a result of coronavirus, you must pay the VAT due on or before 31 March 2021.

 

Deferral of Pay your Self Assessment tax bill

Because of coronavirus you can delay making your second payment on account due on 31 July 2020 – you’ll have until 31 January 2021 to pay it.

 

Coronavirus Self-employment Income Support Scheme

Online service available from mid-May 2020 – payments by early June 2020.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 a month. It will be available for 3 months, but may be extended.

You can claim if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Self Assessment tax return for the tax year 2018 to 2019
  • traded in the tax year 2019 to 2020
  • are trading when you apply, or would be except for coronavirus
  • intend to continue to trade in the tax year 2020 to 2021
  • have lost trading profits due to coronavirus

Your trading profits must also be no more than £50,000 and more than half of your total income for either:

  • the tax year 2018 to 2019
  • the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019

 

Business rate relief and business support grants

Business rate relief – apply to local council.

The relief will apply to your business rates bills for the 2020 to 2021 tax year.

Small business Grants Funds (“SBGF”) and the Retail Hospitality and leisure Grant Fund (“RHLGF”)

 

Coronavirus Business Interruption Loan Scheme (“CBILS”)

CBILS supports small and medium-sized businesses, with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.

The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to small and medium-sized businesses.

The scheme is delivered through commercial lenders, backed by the government-owned British Business Bank.

 

Coronavirus Large Business Interruption Loan Scheme (“CLBILS”)

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) supports large businesses, with an annual turnover of over £45 million.

All viable businesses with turnover of more than £45 million per year can apply for up to £25 million of finance. Firms with a turnover of more than £250 million can apply for up to £50 million of finance.

The scheme is available through a series of accredited lenders, which are listed on the British Business Bank website. The government provides lenders with an 80% guarantee on individual loans. This gives banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS are offered at commercial rates of interest.

This scheme allows lenders to support businesses that were viable before the coronavirus outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.

 

COVID19 Corporate Financing Facility

Under the COVID-19 Corporate Financing Facility (CCFF), the Bank of England will buy short-term debt from large companies.

This scheme will support your company if it’s 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.

The scheme is delivered through commercial lenders, backed by the Bank of England.

It will operate for at least 12 months, and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy.

 

Christopher Photi
Head of Travel and Leisure
WHA
Chartered Accountants and Statutory Auditors