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What help is available for small businesses, gig workers, and the self-employed affected by coronavirus (COVID-19)?

Posted by Jake Smith on Apr 6th, 2020 | Running a business

Covid-10 | What help is there for small businesses, gig workers, and the self-employed with coronavirus (COVID-19)? | Crunch

Announcements by the government (jump to the relevant section)

  • 28th March 2020 – Changes to insolvency rules to help companies trade
  • 26th March 2020  – Support for self-employed announced – taxable grant of up to 80% of trading profits capped at £2,500 per month
  • 25th March 2020 – three-month extension period to file company accounts, confirmation on some details of VAT deferral
  • 23rd March 2020 – Lockdown – details on how businesses are affected
  • 20th March 2020: (Job retention scheme, 80% employee wages promise, deferral of income tax and VAT payments, SSP relief and update to loan scheme)
  • 17th March 2020: (£330bn support package, Mortgage payment holiday, help for renters and Buy-to-Let landlords, changes to Statutory Sick Pay (SSP) for employees, and Employment Support Allowance and Universal credit changes)

 

Measure Targeted at: How to apply Status
Coronavirus Job Retention Scheme Employers.

Please note we are awaiting HMRC’s detailed guidance on whether the scheme applies to sole directors of limited companies.

HMRC online Online service available with detailed guidance by end April 2020
Self-employment Income Support Scheme Self-employed (sole traders or partnerships only – not directors of limited companies) HMRC will check potential eligibility and invite applications once the scheme is operational. Online service available early June 2020
Deferral of Self Assessment payment on account due on 31st July to 31st January 2021 Anyone with a self-assessment payment on account due on 31st July 2020 Applies automatically Live
VAT deferral until 30th June All UK businesses who are VAT registered Deferral applies between 20th March and 30th June – applies automatically Live
Additional time to pay your tax bills All UK businesses Contact HMRC Live
Suspension of wrongful trading rules to help companies trade All UK businesses TBC TBC
Small Business Grant Scheme £10,000 one-off grant Small businesses paying little or no business rates in England No application needed – eligible businesses to be contacted by their local authorities Live
Statutory Sick Pay Rebate UK small or medium-sized businesses employing fewer than 250 employees as of 28 February 2020. TBC Being developed
Lending facility for larger firms Large UK businesses Apply via company banks Live
Business Interruption Loan Scheme UK businesses with turnover less than £45 million per year Apply via company bank or one of the 40 accredited finance providers Live
Support for retail, hospitality and leisure businesses that pay business rates Businesses based in England

in the retail, hospitality and/or leisure sector

Applies automatically for the 2020/21 tax year Live
Cash Grant for Retail, Hospitality and Leisure Property that has a rateable value of:

  • up to £15,000 may be eligible for a grant of £10,000
  • over £15,000 and less than £51,000 may be eligible for a grant of £25,000.
No application needed – eligible businesses in the retail, hospitality or leisure sector to be contacted by their local authorities Live
Support for nursery businesses that pay business rates Business rates holiday for nurseries in England for the 2020/21 tax year. No application needed – eligible nursery businesses to be contacted by their local authorities Live
Support for businesses in Scotland Measures specific to Scottish businesses Various in additional to UK wide measures Live
Support for businesses in Wales Measures specific to Welsh businesses Various in additional to UK wide measures Live
Support for businesses in Northern Ireland Measures specific to Northern Irish businesses Various in additional to UK wide measures Live
Three month extension period to file accounts with Companies House All UK companies Online – must apply before company statutory filing deadline for accounts Live

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Business Secretary, Alok Sharma MP, announced changes to the insolvency rules enabling businesses going through a restructure to continue trading and avoid insolvency. The new rules are backdated to 1st March 2020 and means that businesses seeking a rescue package cannot be put into administration by creditors and can continue to trade without the threat of personal liability to company directors.

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The Chancellor Rishi Sunak announced a further package of support targeted at the self-employed.

We’ll bring you more detail as it emerges but the highlights were:

  • Measures expected to support 95% of self-employed people (also partnerships)
  • A new self-employed taxable grant of up to 80% of trading profits up to a maximum of £2,500 per month for at least three months
  • You’ll be able to claim these grants and continue to do business
  • Trading profits to be averaged over up to last three years
  • The scheme will be open for at least three months
  • HMRC will contact eligible businesses

Eligibility for the Self-Employed Income Support Scheme.

HMRC have said that to be eligible for the scheme you must meet all the criteria below:

  • Be self-employed or a member of partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for the 2018/19 tax year 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 27th March 2020 to do so;
  • Have traded in the 2019/20 tax year; 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 2020/21
  • 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 the 2018/19 tax year
  • Your average trading profits and total income across up to the three years between 2016/17, 2017/18, and 2018/19

The scheme should be set up and making payments by early June 2020, HMRC will make payments directly into bank accounts. This is expected to be a lump sum payment covering the three applicable months.

For those who do not meet the eligibility criteria, there is still support available in the form of Universal Credit and other measures announced previously.

Importantly the scheme does not appear to cover limited company directors who pay themselves through a combination of salary and dividends. The government has said these people may be covered through the Coronavirus Job Retention Scheme.

There are some further details on the government’s Business Support website.

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Further details on how and when to claim available in our Knowledge article.

On Monday 23rd March the Prime Minister, Boris Johnson announced that the government was introducing further restrictions on the movement of people – urging people to stay at home, except for very limited purposes, and away from others, and ordering more businesses to close.

The moves are intended to curb the spread of the COVID-19. All ‘non-essential’ businesses and premises must shut and gatherings of more than two people have been banned. The government has said it will review these measures in three weeks.

The full government guidance is on gov.uk

The government has also published a list of businesses that it classes as essential.

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On Friday 20th March the Chancellor set out a package of measures to support public services, people and businesses through the COVID-19 emergency.

Crunch has reviewed the measures as published by HMRC and we have reproduced the following information which we believe directly affects our freelancer, contractor, and small business customers:

Crunch will provide updates on these, and any other measures announced by the government over the coming weeks.

The government also announced:

  • A 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

The full list of measures is available on the gov.uk website:

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Coronavirus Job Retention Scheme

The government has announced a new ‘Coronavirus Job Retention Scheme’, available for at least three months, starting from 1st March 2020. 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.

To be eligible for the support businesses will need to:

  • have a PAYE payroll scheme operating on 28th February 2020.
  • designate affected employees as ‘furloughed workers,’ and notify each employee about this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC has said it will publish details on the information required in due course).

The government also stated the following:

  • A ‘furloughed worker’ is one who has been granted leave of absence or laid off for usually a brief or temporary period
  • Employers can top up salaries if they choose to
  • The scheme will be open initially for at least 3 months, but the Chancellor said that it would be extended if necessary

The government will cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.

As a minimum, employers must pay their employees the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

HMRC are still working to implement a system for reimbursement. This is expected to happen by the end of April 2020.  We’ll publish more details as these become available.

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The Government announced it is deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments on account due in July 2020 under the Self Assessment system will be deferred to January 2021.

For VAT, the deferral will apply from 20th March 2020 until 30th June 2020. All UK businesses are eligible. Helpfully, the deferral is automatic. Businesses will not need to make a VAT payment until after 30th June 2020.

Businesses will be given until the end of the 2020/21 tax year (5th April 2021) to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Until further details of the scheme are published by the government, including a full list of the VAT periods covered, there is no official guidance on how HMRC will manage this, currently, our advice to our customers is:

  • continue to submit your VAT returns on time – HMRC’s regime for late submission will likely still apply
  • plan to have sufficient cash available in your business to settle any deferred payments by the end of the tax year (or whichever future date HMRC specifies when the detailed guidance is published)
  • if you are due a refund, you don’t need to do anything, this should be provided in the normal way
  • If you pay by direct debit, and you wish to defer your VAT payment, you should cancel your direct debit and reinstate it after 30th June 2020
  • if you wish to keep paying VAT during the deferral period, it’s likely HMRC will allow you to do so. You can pay using HMRC VAT payment systems
  • If you are a Crunch client we’ve got further detail on how to manage you VAT reporting and deferring payments in our Crunch VAT deferral Helpcentre article.

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For Income Tax Self Assessment, payments on account due on 31st July 2020 will be deferred until 31st January 2021. The deferral is automatic. You do not need to be self-employed to be eligible for the deferment. No penalties or interest for late payments will be charged in the deferral period.

The deferment is optional. You can still pay your payment on account on 31st July you’re able to do so.

Our advice to our customers is to submit your Self Assessment by the deadline date. If you haven’t yet submitted for the 2018/19 tax year (due on 31st January 2020) you are already incurring fines and penalties – do not let these mount up. Ensure you submit your Self Assessment for the 2019/20 tax year (due on 31st January 2021) in the usual way.

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The Government announced it will introduce legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme is as follows:

  • the 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 at 28th 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, but employees will not need to provide a GP fit note. 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
  • the 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
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

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The government announced a new temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, launched on 23rd March 2020  to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The scheme is for businesses with viable borrowing proposals, up to £5 million in value, that the COVID-19 outbreak has ‘interrupted’. Businesses can access the first 12 months of that finance interest-free, as the government will cover the first 12 months of interest payments. Businesses are eligible for the scheme if they:

  • are UK based, with a turnover of no more than £45 million per year
  • meet the other British Business Bank eligibility criteria.

When the scheme was announced it was not open to businesses who could access loans on commercial terms. However, the government agreed these businesses can access the scheme if they self-certify the impact coronavirus has had on them and they have a viable borrowing proposal. Another change to the scheme means lenders cannot ask directors for personal guarantees on any loans under £250,000. Businesses with loans over £250,000 will have recoveries capped at 20 percent of the outstanding CBILS facility amount.

The changes are backdated to 23rd March 2020.

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:  https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

The scheme will be available from 23rd March 2020.

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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 and has outstanding tax liabilities.

Our advice to any of our costumes who have missed a tax payment, or who believe they are at risk of missing the next payment due to COVID-19, is to call HMRC’s dedicated helpline on 0800 0159 559. If you’re worried about a future payment, call HMRC nearer the time.

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You can see tweets from the Chancellor Rishi Sunak announcing these measures by clicking on the tweet below.

If the COVID-19 outbreak has taught us anything, it’s that all those unexpected eventualities which we thought would never happen to us can happen to us after all, and we should all be prepared for any eventuality.

Crunch offers a free Business Continuity Plan template, which you can find out more about in our “Save your bacon with our free business continuity plan template” article.

Business Continuity Template banner

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The government has announced financial measures amounting to £330bn to support businesses through the COVID-19 emergency from 16th March 2020. This is in addition to a package of measures announced in the 11th March 2020 Budget.

Chancellor Rishi Sunak announced the huge package of measures on 17th March 2020 and said that the UK had “never, in peacetime, faced an economic fight like this one” adding that we faced an “economic emergency” in the face of the coronavirus pandemic.

The government have already announced support by way of loans, cash grants, business rates holiday and other measures, targeted at the retail, leisure and hospitality sectors.

Mortgage holiday announced for some homeowners – help for renters and buy-to-let landlords also announced

The government announced a three-month mortgage payment ‘holiday’  to help those in difficulty as a result of COVID-19. Personal credit ratings for delaying payments for up to three months will not be affected. The repayments would still need to be made in the future and interest would still be payable.

On 18th March 2020, the government announced emergency legislation to suspend new evictions from social or private rented accommodation while this national emergency is taking place.

No new possession proceedings will commence during the crisis. Landlords will also be protected as the three-month mortgage payment holiday includes Buy to Let mortgages.

Read more on Gov.uk site.

Additional measures to support jobs and incomes are expected.

If you qualify for Statutory Sick Pay (SSP)

If you have employees, they should be covered by Statutory Sick Pay (SSP). There have been a number of immediate changes to Statutory Sick Pay for coronavirus (COVID-19) self-isolation:

  • you can now claim SSP from the first day you’re self-isolating and cannot work.
  • the government will cover the SSP payments of all businesses with under 250 employees for up to 14 days per employee
  • employees who need to be off work to care for those within the same household who have been told to self-isolate will also be eligible for SSP. In these circumstances, the normal ‘fit’ note will not be required by a GP – there will be a temporary alternative available from NHS111.

ACAS have released advice for employers and employees when it comes to sick pay.

The government also has a COVID-19 section on Gov.uk with guidance for employees, employers and businesses.

If you don’t qualify for SSP

If you’re self-employed you will not usually be covered by SSP. You should be able to claim either Employment and Support Allowance (ESA) or Universal Credit.

The Chancellor announced “quicker and easier” access to Universal Credit for the self-employed and those working in the gig economy, as well as to ‘new style’ ESA. The government will also be temporarily relaxing the requirements of the minimum income floor in Universal Credit for those directly affected or self-isolating according to government advice for the duration of the outbreak.

Government-backed loans for small businesses

The government has also announced a new coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank. The scheme will enable businesses to apply for a loan of up to £5 million, with the government covering up to 80% of any losses with no fees. Businesses can access the first six months of that finance interest-free, as the government will cover the first six months of interest payments.

Cash grants for small businesses

The government has announced that there will be a £10,000 cash grant to around 700,000 of the UK’s smallest businesses, delivered by local authorities. This was initially announced as a £3,000 grant in the Budget, but was increased in the Chancellor’s 17th March announcement.

Small businesses that pay little or no business rates and are eligible for small business rate relief (SBBR) or rural rate relief will be contacted by their local authority – they do not need to apply. The funding will be made available to local authorities in early April. Guidance for local authorities on the scheme will be provided shortly.

Delaying tax bill payments

A dedicated government helpline has been set up to help businesses and self-employed individuals in financial distress, and with outstanding tax liabilities, to receive support with their tax bills.

Through this, businesses may be able to agree a ‘Time to Pay’ arrangement with HMRC. During the coronavirus outbreak, the usual 3.5% annual interest on deferred tax payments should be waived. If you’re concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

Other measures announced include:

  • giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months
  • providing a further £25,000 in direct grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000
  • Ensuring pre-payment and pay-as-you-go customers remain supported with energy through challenging times and supporting all customers in financial distress. An industry-wide agreementwas signed by all UK domestic suppliers and will come into force immediately.

We’ll be keeping this article up to date with new information as it becomes available. You can also follow us on Twitter @TeamCrunch for the latest updates.

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