Covid-19 pandemic has turned the world upside down in the last few months and some of you may be worrying what this means for your business whether you’re a limited company or not in the UK. The government has announced a raft of loans, tax relief grants and wage support to help businesses through the pandemic.
The UK government has at its disposal £330bn of government-backed loans which will come under programmes including the Coronavirus Business Interruption Loan Scheme, along with £20bn of tax breaks. Added to that their Coronavirus Job Retention Scheme to help take care of wages hoping this will prevent many from laying individuals off.
Here is a rundown of what we know so far:
Job retention program
80 percent of wages of any employee who pay through the pay as you earn (PAYE) system, Will be paid by their employer, the government will then reimburse employers if those employees are temporarily not working, the maximum payment from the government will £2,500 per month, this will only be for 3 months pending extension.
The government will be backdating payments from 1st March 2020, with the possibilities of employers bringing back staff who have had to be laid off due to the coronavirus pandemic. Employers will not have to pay back this money , the also have the option to top up the 80% of the wage contributed by the government to full payment.
How will payment be calculated? Payments are calculated based on the amount each furloughed employee earned in February. People who have a regular wage this is straight forward, though people with hours which change, it maybe a little more challenging, as it could work out that you receive more or less than your average monthly wage.
Statutory Sick Pay during Covid-19.
Businesses with 250 or less employees the government will reimburse 14 statutory sick paydays per employee. Staff will not have to provide a medical certificate from the doctors if they have taken days off due to showing signs of coronavirus or those who may live with someone who may have the symptoms.
How to apply?
How do Companies apply? You may do so on the HMRC website. Employers need to log in to the portal and select employees who will temporarily not have work. Once the process is done, it may take a few weeks in order to receive payment from the government.
What about zero-hours contract workers?
People who are on PAYE system including people on zero-hour contracts will qualify for the coronavirus job retention scheme. The government will contribute 80 per cent of what you have earned in February if you are on PAYE
People who are self-employed workers are not covered as of this far; more information is expected to be announced this week, we will update this when new help has been announced.
Potential Issues
Employers are able to choose whether or not to take up the scheme. At current, there is no requirement to retain staff and place them on furlough if employers do not think that they are needed anymore. In the worst case, it would be to terminate employees’ contracts.
At present, an employer must make a binary choice between keeping somebody employed paying 100 per cent of there wage or placing them on furlough with the government covering 80 per cent of the costs
Employers may need a staff member to work, for example, half of their hours during the outbreak, but can’t afford to pay them for the hours worked. Then they may need to choose between furloughing the worker, trying to raise the money to pay the total amount of their wages, or making them redundant.
Loans
Businesses who have a turnover of up to £45m can borrow up to £5m for a maximum term of six years falling under the Coronavirus Business Interruption Loan Scheme.
23rd March will be the date which the loan scheme will begin via 40 participating lenders. Businesses who are after shorter-term finance due to coronavirus outbreak can access overdrafts and invoice finance for a maximum of three years through the scheme.
Businesses can apply via any participating lender, up to 80 per cent of the bank’s losses will be covered by the government. Loans will be interest-free for the first twelve months. Businesses are advised to apply online as soon as possible as loans will be on high demand due to the effect that Covid-19 has had on us all.
VAT deferral
VAT payments for all businesses can be put on hold for three months from 20 March 2020 until 30 June 2020. Self-employed, Income tax payments will be due January 2021 which was previously due July 2020.
No applications are required. Businesses don’t need to make a VAT payment during this time. You will be allowed until the end of the 2020 to 2021 tax year to pay anything which has accumulated during the deferral period
Business rates
Hospitality, retail, nursery and leisure businesses do not have to pay business rates for a year starting as of April 2020. These include restaurants, pubs, cinemas, music venues, hotels, all shops, guesthouses, cafes, bars along with others
Businesses who operate in Leisure, Retail, hospitality and will be able to apply for a cash grant of up to £25,000 for each property. Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000. People with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.
If you are a receipt of small business rate relief or rural rate relief you will receive a grant of £10,000.
Need more information?
There will be a helpline dedicated business who need support with what is happening during the pandemic.