Covid-19 Business Support Resources

Coronavirus Business Support

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Coronavirus Business
Support provided by
Modus Accountants

Modus Accountants is not your typical accountancy practice owned by entrepreneurs for entrepreneurs we own and operate businesses just like our clients and know first-hand the challenges we all face right now.

Within this Business Support Section we go through the latest information on the government support and funding available, breaking it down so it’s easier to digest and understand whether your particular situation is applicable to any of the schemes.

Business Rates Discount

No rates are payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors. On top of this, the following cash grants are available from your local Council provided you are eligible.

Any business eligible for Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR)

£10,000

A retail, hospitality and leisure business with a rateable value of up to £15,000

£10,000

A retail, hospitality and leisure business rateable value of over £15,000 and less than £51,000

£25,000

It was originally thought that Councils would be contacting eligible Businesses to arrange payment, however some Councils have an application form on their website that needs submitted so it’s worth checking.

Coronavirus Job Retention Scheme

Under the new 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. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months and can include workers who were in employment on 28 February.

To claim under the scheme employers will need to:

  • Employers may claim a grant of up to 80% of the salaries of employees plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage, provided they keep the worker employed who have been laid off during this crisis.
  • This is subject to a cap of £2,500 per month.
  • Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change.
  • To qualify for this scheme workers should not undertake work while furloughed.
  • Employers submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. Claims will be able to be made every three weeks.

HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Also, further details behind the scheme will be clarified which will be keeping close tabs on.

Coronavirus Business
Interruption Loan Scheme

These is available from Monday 23 March and are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.

To be eligible for a facility under CIBLS, your business must:

  • Be UK based in its business activity with annual turnover or no more than £45m
  • Have a borrowing proposal which, were it not for the COVID-19 pandemic, 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 difficult
  • Smaller businesses can apply for the full amount of the facility.

How to apply

Business should approach their own provider in the first instance, ideally through their website as phone lines are likely to be very busy. It may also be worth approaching other lenders if this is unsuccessful.

We can assist in the application for loans, so please call or email to discuss.

Mortgage and rent holiday

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. It is important to remember that 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.

Company Cashflow

We understand that cashflow will inevitably be an issue for businesses in the coming weeks. It is important that you plan your cashflow carefully and where shortfalls are predicted we can assist with these.

Invoicing

  • Issue invoices more regularly and consider invoicing upfront or sending interim bills.
  • Look at offering discounts, for example 5% if payment is made within 7 days to bring forward receipt of the money.
  • If taking on any new customers ensure you use a credit check report for example, Experian.

Capital Expenditure

  • Look at offering discounts, for example 5% if payment is made within 7 days to bring forward receipt of the money.

Cash

  • Transfer any excess cash into a deposit account

Payment to creditors

  • Contact your suppliers to discuss extending terms or agreeing a payment plan
  • If offered an early payment discount by individual suppliers, look at settling their invoices first

Stock

  • Look at your various stock lines and operate a just in/just out system

Debt Collection

  • If you use a cloud-based accounting package, look at the possibility of automating your debt collection system (eg. Chaser).

  • If you have debts beyond your payment terms look at placing the invoice with a debt collection company.
  • Look at financing your debtors using invoice discounting
  • If you have individual large sum invoices look at single invoice finance
  • If customers are struggling to pay be flexible and allow a payment plan by way of monthly direct debit

Self-employment Income Support Scheme

A taxable grant of 80% of average monthly profits over the past three years.

Capped at £2,500 per month.

Initially payable for 3 months.

Applies to self-employed individuals with trading profits up to £50,000 per year whose majority of income comes from being self-employed.

Note that:
Company directors are employees for PAYE purposes and not self-employed, therefore aren’t eligible for this scheme. Instead they are eligible for the Job Retention Scheme for the Salary they pay themselves.

Qualifying conditions

  • Have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, or you will submit your return by 23 April 2020.
  • Traded in the tax year 2019-20
  • Trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • You have lost trading/partnership trading profits due to COVID-19
  • Your self-employed trading profits must also be less than £50,000.
  • Additionally, more than half of your income come from self-employment.

At least one of the following conditions being true:

  • Your trading profits/partnership trading profits in 2018-19 was less than £50,000 and these profits constitute more than half of your total taxable income
  • Your average trading profits in 2016-17, 2017-18, and 2018-19 are less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between the years 2016 to 2019, HMRC will only use those years for which you filed a Self-Assessment tax return. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

You must be registered as self-employed and have filed a 2019 tax return.

The scheme is expected to commencing paying out in June 2020. The grant will be paid directly into your bank account, in one instalment.

Bounce Back Loan Scheme

The CBILs haven’t panned out as the Government had hoped with banks simply rejecting the majority of applications. This has led to the Chancellor announcing a new scheme last night for small to medium-sized businesses.

Eligibility criteria for a business that:

– is based in the UK

– has been negatively affected by coronavirus

– was not an ‘undertaking in difficulty’ on 31 December 2019

This will provide loans of £2,000 up to £50,000.

The government will pay the interest on the loans for the first 12 months. No repayments will be due for the first 12 months.

The scheme will provide lenders with a 100% government guarantee.

It is to be available from 4 May through a simple online application form with no forward looking test or criteria for lending.

Statutory Sick Pay

Businesses with under 250 employees will be able to reclaim the cost for any employee, who for a period of up to two weeks, has claimed SSP because of coronavirus. This includes self-isolation.

As existing systems are not setup to accommodate employer refunds of SSP, the government is working to set up a mechanism. This means that there is likely to be an unquantified delay in receiving the refund and therefore it is crucial that businesses keep records of phone calls or emails from employees confirming reason for sickness.

VAT Payments

Although VAT Returns are still required to be filed on time, Businesses can defer VAT payments until 30 June 2020. Business will then have until the end of 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. No application or verification is required. VAT refunds and reclaims will be paid by the Government as normal.

Income Tax Payments

Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.

HMRC Time to Pay

HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.

Universal Credit

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

In need of assistance? We can help...

We understand this is a troubling time for businesses and knowing what help is available to you is crucial. Drop us a message and a member of one of our teams will be in touch with you right away.