COVID-19 ASSISTANCE
You must have heard the word UNPRECENTED almost as much as Coronavirus recently! Well it is –never has there been so much POTENTIAL support from the Government for business. The team here at Lyness are focused on helping you through these times – stay positive , keep focused and don’t panic- help is at hand. Here you will find a summary of the financial packages made available by the Government to help businesses through these difficult times. However it’s not always as easy as it seems – talk to us about how you can access help for you and your business.
New announcements are being made daily!!
So check with us first on any of the help available below as it may have changed!
Job Support Scheme
The Job Support Scheme is a six month initiative, replacing the Coronavirus Job Retention Scheme which ends on 31 October, running from 1st November 2020 to 30th April 2021.
Unlike the July 2020 extension of the furlough scheme this replacement is open to all businesses across the UK whether or not they used the furlough scheme.
When announcing the scheme Chancellor Rishi Sunak said the furlough scheme must end and the Job Support Scheme act as replacement because the support must “adapt and evolve” to support viable jobs as he said “I can’t save every job, no Chancellor could”.
To be eligible for the Job Support Scheme an employee must do at least 33% of their normal weekly hours for which the employer will pay them in full as normal.
The remaining unworked hours will be split three ways:
- The government will pay 1/3
- The employer will pay 1/3
- The employee will cover 1/3 (through a wage reduction)
The scheme will guarantee an employee working the minimum qualifying 33% of their hours will receive 77% of their weekly wage with the percentage rising the more hours they do.
As with the furlough scheme the level of grant will be calculated based upon an employee’s usual salary and will be capped at £697.92 per month.
This means government support of 22% rather than the 80% via the Job Retention Scheme of an employee’s unworked hours.
There is no contribution to either Employer’s National Insurance or pension which must be covered by the employer.
This support is flexible with employees being able to come in and out of the scheme, however each period of support must be 7 days minimum and employees must be notified of the claim.
Job Retention Bonus
The Job Retention Bonus is a £1000 one of taxable payment made to the employer for each employee who undertook a period of furlough (via the Job Retention Scheme) and has remained in continuous employment with that business until 31 January 2021.
The bonus will be claimable between 15 February and 31 March 2021 and does not have to be paid to the employee.
Employers can claim this bonus whether they use the replacement Job Support Scheme or not.
Corona Virus Job Retention Scheme (Furlough)
The Coronavirus Job Retention Scheme (CJRS) was initially launched by the Government in March 2020 to help businesses affected by Covid-19 support their workforce in the event they were unable to provide work for them.
The scheme allowed employers to furlough their workforce and apply for a grant covering 80% of each employee’s wages costs up to a maximum of £2500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
Initially intended to run until 30th June the scheme was extended to provide assistance up to 31 October 2020 however during the extended period it began to taper off with the employer becoming responsible for an increasing share.
The amount of government support was directly related to the period of claim as follows:
From 1 August 2020, the level of the Coronavirus Job Retention Scheme grant was reduced each month. To be eligible for the grant employers had to continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
From 1 August, no grant was available for Class 1 employer National Insurance contributions or pension contributions so they once again became the responsibility of the employer.
From September 1, the government grant towards the employee wages was reduced to 70%.
From October 1, the government grant was again reduced to 60%. During these months employers were asked to contribute towards the cost of furloughed employees’ wages to ensure they continued to receive at least 80% of their wages for their time on furlough.
Why You Should Check
Every Furlough Claim You Made
The end of the Coronavirus Job Retention Scheme on 31 October 2020 will coincide with a huge push from HMRC to investigate incorrect and fraudulent claims. They are under pressure to recoup incorrectly claimed money as soon as possible as this will help support the funding of the ongoing schemes.
Many companies making large claims have already received HMRC “nudge letters” advising them to check their claims to avoid penalties.
A 90 day window has been given from the date of a claim to make corrections.
The 90 day window began when the Finance Act gained Royal Assent and this means the date by which you can make an unpenalised correction is the latter of:
- 20th October (90 days from Royal Assent)
- 90 days from the date of each claim
It is important to check your claims before 20th October therefore.
Taxability and Penalties
As was originally announced the grants each company correctly received will be treated as taxable income and you will pay tax on it at your normal relevant rate.
The rate of tax on fraudulent or incorrect claims is 100% plus penalties, ie you will pay back the money in full and face penalties for fraudulent claims.
Penalties will be a maximum of 100% depending upon notification and behaviour, potentially doubling the repayment.
Repaying Over-claimed Funding
Over-claimed grants can be repaid within the notification period with no penalty and no need to notify.
Where an employer finds they cannot repay any over-claim due to their current situation they must notify HMRC within 90 days and include 100% of their tax on the 20/21 tax return. If the tax is then paid in full by the return payment date no penalty will be charged.
Errors Discovered After the Correction Window
Where an employer doesn’t discover their error and it comes to light further down the line HMRC have said if the tax payer therefore has a reasonable excuse for non-disclosure there will be no penalty.
At this time we do not have details of what is a reasonable excuse but possible issues such as carelessness would be deemed unreasonable.
Summary
The issue of incorrect claims has already become massively important to HMRC and they have confirmed they’ve already received 8,000 fraudulent claim tip offs and are actively following up 27,000 cases.
At the time of writing 3 arrests have been made and more are expected to follow, so please ensure you are confident the claims you’ve made are correct.
Tax Payment Deferrals
Self-Assessment Tax payers were initially offered the opportunity to defer their second payment on account for the 2019/20 tax year from the usual 31 July deadline to 31 January 2021 when the tax payer would be making their balancing payment for that tax year.
As part of the Winter Economy Plan it was announced that tax payers with up to £30,000 of Self-Assessment liabilities due on 31 January 2021, whether or not they chose to defer could be paid in 12 month instalments under the time to pay arrangements meaning the final payment would not be due until 31 January 2021.
It should be noted that tax payers using this self-serve time to pay will be required to pay interest on owed tax from 01 February 2021.
If you wish to set up a self-serve time to pay arrangement you must meet the following criteria for the 2019/20 tax year.
- You have no outstanding tax returns
- You have no other tax debts
- You have no other HMRC payments set up
- your Self-Assessment tax bill is between £32 and £30,000
- it is no more than 60 days since the tax was due for payment.
If you do not meet these requirements, or need longer than 12 months to pay in full, you may still be able to set up a ‘Time to Pay’ arrangement by calling the HMRC Self-Assessment payment helpline on 0300 200 3822.
VAT Deferral
The government announced temporary changes to VAT payments due between 20th March 2020 and 30th June 2020 to help businesses to manage their cashflow.
Between those dates you could choose whether to defer the payment to a later date or pay the VAT due as normal.
The period covered meant every business had one quarter of VAT which they could defer with no penalties or interest on deferral.
It has now been further announced as part of the Government’s Winter Economy Plan that rather than paying the deferred VAT on 31 March 2021 as required by the original announcement businesses can instead make 11 equal instalment payments during 2021-22.
This arrangement WILL NOT BE AUTOMATIC and participants will need to “opt in” with the actual opt in process to be announced in early 2021.
HMRC will not charge interest or penalties on amounts deferred as per the original announcement.
Corona Virus Business Interruption Loan Scheme (CBILS)
It was announced in the Winter Economy Plan that the deadline for applications for CBILS has been extended to 30th November 2020.
CBILS was introduced to provide financial support to businesses who are losing revenue and seeing their cash flow disrupted due to the Covid-19 pandemic.
Through CBILS the government guarantees 80% of the loan.
Eligibility:
- You must be a UK-based SME with an annual turnover of up to £45m. This includes sole traders, freelances, body corporates, limited partnerships and limited liability partnerships. For sole traders to be eligible it is expected that sole traders will need to have a business account with its funders and not be operating via a personal account
- Your business must generate at least 50% of it’s turnover from trading activity
- Your facility will be used to support primarily trading in the UK
- You wish to borrow between £5,000 and £5m
- You will need to demonstrate you had a viable business prior to the pandemic and that with the assistance of the loan facility you will be able to trade out of it.
Key Features:
- The first 12 months will be interest free
- A capital repayment holiday may be available at the start of the loan
- Loan and Asset Finance terms extended from the original 6 years to 10 years.
- Overdrafts and invoice finance facilities up to 3 years
- The borrower always remains 100% liable for the debt
The Government has indicated that a new scheme will be launched in January 2021 to replaced CBILS but no further details have been announced.
Talk to us as we have already processed many applications for this facility.
Call 0121 544 0240 or submit your details below and we will contact you by return.
Bounce Back Loan Scheme
Applications for this scheme will close on 30th November 2020.
The Bounce Back Loan Scheme was announced on 27th April 2020 to provide further government assistance for small businesses.
Under this scheme businesses can apply for loans covering 25% of their turnover up to a maximum of £50,000.
And this time they are 100% government backed, with no repayments and no interest or fees for 12 months!
The main features of these loans are:
- Businesses will be able to borrow between £2,000 and £50,000
- Up to 25% of annual turnover
- 100% Government guaranteed
- Access to the funds within days
- 12 months interest free
- No repayments during the first 12 months
Changes to the scheme announced as part of the Government Winter recovery Plan
- If you are struggling to repay your loan you can now apply to extend the original 6 year repayment term up to ten years. There is currently no flexible 7, 8 or 9 year option your loan term will be agreed at either 6 or 10 years.
- The extension option will result in additional interest but should greatly reduce repayments.
- If you are struggling to repay your loan you can make up to three requests for interest only payment periods for up to 6 months.
This is not an extension of the loan term so would lead to increased future payments.
- In cases where companies are experiencing serious difficulties in making loan repayments they can request a payment holiday, pausing your payments altogether for a maximum of six months.
This will lead to additional interest and increased future payments as it is not an extension of the loan.
Application is via a short and simple online form
Eligibility:
- UK based business
- Negatively affected by coronavirus
- Not an undertaking in difficulty on 31 December 2019
The government has provided lenders with a 100% guarantee for the loans to give lenders the confidence they need to process applications quickly, all the lenders need to assess is whether the business WAS viable pre COVID-19.
You cannot apply for the bounce back loan if you already have a Coronavirus Business Interruption Loan Scheme loan in place but if that loan is less than £50,000 you can transfer to the Bounce Back Loan Scheme before 4th November 2020.
Lyness Cash Flow Planning Tool
Download this great tool to plan your cash flow- identify if you think you will have a shortfall in the crucial next few months and beyond. Then if you need a cash flow gap to be filled talk to us!
Self-Employed Income Support Scheme (SEISS)
This scheme was announced to support people who are self-employed or a member of a partnership and have been adversely affected by coronavirus. The initial grant was available to claim no later than 13 July 2020 with a second grant announced a s claimable no later than 19th October 2020.
Only applicants who received the initial grant were made eligible to receive the second grant. available.
The second taxable grant is worth 70% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £6,570 in total.
You must make your claim for the second grant on or before 19 October 2020.
Government Winter Economy Plan
On 24 September as part of the Winter Economy Plan Chancellor Rishi Sunak announced an extension to the SEISS so that it now comprises 4 grants rather than the original two.
The two further grants will cover the following periods:
- 1 November 2020 – 31 January 2021
- 1 February to 30th April 2021
The first of these grants covering November to January will entitle claimants to a lump sum covering 20% of three months average profits up to a total of £1,875.
You must be able to declare that your business has been impacted by the pandemic between 1st November and the date of your claim.
The government will very likely be looking closely at declarations, as with the furlough scheme as it is believed many millions of pounds of false claims have been made across the Coronavirus support and penalties will be severe.
The government are yet to confirm the value of the final of the four grants announced today as it will depend upon the situation at the time so they have said it could change.
How the grant works
If you receive the grant you can:
- continue to work
- start a new trade or take on other employment including voluntary work and duties as a military reservist
The grant does not need to be repaid if you’re eligible, but will be subject to Income Tax and self-employed National Insurance.
Who can claim
All of the following must also apply:
- You traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- You traded in the tax year 2019 to 2020
- You intend to continue to trade in the tax year 2020 to 2021
- You cannot claim the grant if you trade through a limited company or a trust.
Local Restrictions Support Grants (LRSG)
The Local Restrictions Support Grant supports businesses that were trading normally and providing services in person to customers from their business premises before being ordered to close for at least 3 weeks due to local restrictions imposed by government.
LRSG is for businesses will normally be paying rates on their premises although local councils can at their discretion also provide funding for businesses that don’t pay business rates.
Eligibility
Your business may be eligible if it:
- occupies property on which it pays business rates
- is in a local lockdown area and has been required to close because of the formal publication of local restrictions guidance that resulted in a first full day of closure on or after 9 September. This funding is not retrospective
- has been required to close for at least 3 weeks because of the lockdown
- has been unable to provide its usual in-person customer service from its premises
Eligible businesses will get a grant for each property liable for business rates within the lockdown zone.
Businesses that have been required to close but do not pay business rates and businesses not actually required to close but that have been severely affected should contact their local council as they could be eligible at the discretion of the council.
The Grant
Eligible businesses that have a property with a rateable value of less than £51,000 will receive a grant of £1,000 for each 3-week period of enforced closure.
Eligible businesses that have a property with a rateable value of £51,000 or above will receive a grant of £1,500 for each 3-week period your business is closed.
Grants will be extended to cover each additional 3-week period, so if your business is closed for 6 weeks it will receive £2,000 or £3,000, depending on the rateable value of the property.
Visit your local council’s website to find out how to apply.
Covid 19 Small Business Grants
The Government announced a new grant funding programme on 30th July providing £20 million of funding for small businesses to help them recover from the effects of Covid-19.
The support gives small businesses access to grants of £1,500 - £3000 or £5,000 in exceptional circumstances to help them access new technology and other equipment as well as professional, legal, financial or other advice to help them get back on track.
The support is fully funded by the government from the England European Regional Development Fund and distributed through Growth Hubs, embedded in local areas across England. You should contact your regional growth hub to find out whether funding is currently available as different parts of the country are rolling this out at varying speeds, with some launching immediately at the beginning of August and others having no launch date by early October.
Eligibility
Your business must meet ALL of the following criteria:
- Fewer than 250 employees
- Annual Turnover of less than 50 million euros
- Balance Sheet less than 43 million euros
- Able to evidence at least 1 year trading history
The money is a 100% government grant containing no obligation for businesses to contribute financially. Businesses can use the funding to pay for the following activities:
- Access to specialist professional advice e.g. human resources, accountants, legal, financial, IT / digital
- Purchase of minor equipment to adapt or adopt new technology in order to continue to deliver business activity or diversify
Please note: these are not cash grants and funds are paid directly to the supplier.