Coronavirus Business Interruption Loan Scheme
On 2 April 2020, the Chancellor announced a revamp of the Coronavirus Business Interruption Loan Scheme (CBILS), to make it easier for SME companies to access loans and give them more confidence in applying. The Treasury said it had received more than 130,000 loan enquires from firms but fewer than 1,000 had been approved.
Many companies reported that they have not been able to take up the loan scheme because they met the requirements for a standard commercial loan.
However, following changes to the scheme, applications will not be limited to businesses that have been refused a loan on commercial terms. Although the Treasury did not put in place restrictions on the interest rates that banks can charge for loans.
Banks will also be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000.
There has also been an extension to the loan scheme announced on April 3 for larger businesses referred to as the Coronavirus Large Business Interruption Loan Scheme (CLBILS), which will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m. (More details to follow from the Government).
CBIL Scheme for SME’s – a reminder of the main summary points
The Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so 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 SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
For more information, please click here.
UK Government COVID-19 Business Support
This is a reminder of some of the main support currently available to businesses.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least 3 months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Who can claim?
Any UK organisation with employees can apply, including:
- businesses
- charities
- recruitment agencies (agency workers paid through PAYE)
- public authorities
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
Employees you can claim for:
- Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer. This scheme is only for employees on agency contracts who are not working.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Employers need to make a claim for wage costs through this scheme. You will receive a grant from HMRC to 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.
At 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.
Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months before the claim, you can claim for the higher of either: the same month’s earning from the previous year or average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
How to Claim
The online service you’ll use to claim is not available yet. The Government expects it to be available by the end of April 2020. You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until 1 March 2020, if applicable.
For more information, please click here.
Self-employment income support scheme
You can apply for this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus. This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.
The criteria for applying can be accessed here.
Deferring VAT and Self-Assessment payments
You can defer Valued Added Tax (VAT) payments for 3 months.
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 or pay the VAT due as normal.
Find out how to defer a VAT payment by clicking here.
HMRC Time to Pay Service
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.
If you are experiencing financial difficulties more help is available from HMRC’s Time to Pay service.
For more information, please click here.
Support for businesses through deferring Self-Assessment payments on account
If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.
How to access the scheme
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021. During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.
Statutory Sick Pay relief package for small and medium-sized businesses (SMEs)
The government will bring forward legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
This 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 of 28 February 2020
The government will work with employers over the coming months to set up the repayment mechanism as soon as possible.
12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
There will be a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. You don’t have to take any action to access the scheme.
However, local authorities may have to reissue your bill to provide this support. For more information, please click here.
COVID-19 Corporate Financing Facility
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 new COVID-19 Corporate Financing Facility (CCFF) means that the Bank of England will buy short-term debt from larger companies. This will support companies that are fundamentally strong but have been affected by a short-term funding squeeze. It will also support corporate finance markets overall and ease the supply of credit to all firms. The scheme will be funded by central bank reserves – in line with other Bank of England market operations. 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.
For more information, please click here.
Companies to be given an extension to file accounts
Under normal circumstances, companies that file accounts late are issued with an automatic penalty. As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension.
Applications can be made through a fast-tracked online system which will take just 15 minutes to complete
For more information, please click here.
Protection from eviction for commercial tenants
Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction.
These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is an option for the government to extend this period if needed. This is not a rental holiday. All commercial tenants will still be liable for the rent. Commercial tenants are protected from eviction if they are unable to pay rent.
Other schemes include:
- Support for nursery businesses that pay business rates.
- 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
- Support for businesses that pay little or no business rates
For more information on these schemes, please click here.
Support for businesses in Scotland, Wales and Northern Ireland
Because some elements of business support are devolved, the measures you can access may differ if your business is in Scotland, Wales or Northern Ireland.