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Coronavirus: Update for Businesses

This article provides historical information regarding funding available to businesses in the UK as a result of the coronavirus pandemic.All of these schemes are now closed to new entrants. 

New funding was announced on Thursday 24th September 2020 and information about that can be found here.

Employee Wage Support (Job Retention Scheme)

This scheme applies to employees and directors who receive a salary through PAYE.

The Coronavirus Job Retention Scheme (CJRS) is a temporary scheme open to all UK employers. The scheme started on 1st March 2020 and will cease on 31st October 2020. 


The scheme can cover employees on payroll at 19th March 2020. The last date an employee can be furloughed is 10th June 2020. 
 
From 1st March 2020 to 30th June 2020 the scheme will cover 80% of employee wages up to a cap of £2500. It also covers employer National insurance and pension contributions. 

From 1st July 2020 the scheme will change and the contribution made by the government will decrease. Employers will be required to pay more. 
 
July
The government will continue to pay 80% of the wages for furloughed employees up to £2500. They will also pay the employer NI and pension contributions. 
Employees will be allowed to return to work part-time from July. Details on calculating pay and grants for employees who have returned part time is yet to be published. 
 
August 
In August the government will pay 80% of wages up to a cap of £2500. 
EMPLOYERS will pay employer national insurance and pensions contributions. 
 
September 
The government will pay 70% of wages to a cap of £2187.50. 
Employers must pay 10% to make this up to 80% of wages. With the total cap at £2500 as before. 
Employers must also pay employer national insurance and pensions contributions. 
 
October 
The government will pay 60% of wages to a cap of £1.875.00
Employers must pay 20% to make this up to 80% of wages. With the total cap at £2500 as before. 
Employers must also pay employer national insurance and pensions contributions. 
 
The portal for making an application to this scheme launched on Monday 20th April 2020, though a new portal will be released for use from July. 
 
You must furlough your employee (temporary lay off) to be able to access this grant. You MUST get express agreement from each employee confirming they understand and accept furlough. We have a template letter you can use to do this. If you would like a copy of the template please email us on getminted@mintaccounting.co.uk 
 
Make sure you read all the details here  https://www.mintaccounting.co.uk/page/job-retention-scheme/

Funding Available to Business with Premises

You must be required to pay rates on your premises to qualify for the below funding. This includes businesses who get the small business bonus relief so don’t end up paying their rates. Basically, if you receive a bill for rates and you meet the criteria below, then you are eligible for grant funding:

  • a full year’s 100% non-domestic rates relief for retail, hospitality and tourism
  • Grants of up to £10,000 for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief 
  • Grants of up to £25,000 for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
  • 1.6% relief for all properties, effectively freezing the poundage rate this year

What if you have more than one business property?

In England and Wales you can apply for grant support for each of your properties. 

In Scotland you can currently only claim a grant against one property. This will change on May 5th when you will be able to claim an additional 75% grant per additional property. Depending on which grant you are eligible for, you can claim £7,500 or £18,750 for each additional property.

These grants are administered by local councils.

Scottish Businesses can apply here https://www.mygov.scot/non-domestic-rates-coronavirus/

The application process is different across each council in Scotland. It can also be hard to find the information on your local council page, so ensure you look at the pages providing information and updates on Coronavirus. Below are some direct links for the areas where we have a number of clients:

https://www.aberdeencity.gov.uk/services/people-and-communities/coronavirus-covid-19

https://www.aberdeenshire.gov.uk/business/business-covid-19/#grants

https://my.dundeecity.gov.uk/service/Coronavirus_Business_Support_Fund

https://www.east-ayrshire.gov.uk/CouncilAndGovernment/Coronavirus/Business-support.aspx

https://www.angus.gov.uk/business/coronavirus_outbreak_business_updates

https://www.fife.gov.uk/kb/docs/articles/health-and-social-care2/coronavirus-covid-19/businesses-and-employers

https://www.argyll-bute.gov.uk/coronavirus-information-businesses

Business based in England will have to wait for the council to write to them at the rateable address. This is not ideal so we hope they change this. You can keep up with the process in England here https://www.businesssupport.gov.uk/coronavirus-business-support/

Funding for Businesses without Property (Scotland only)

Scotland will release additional funding, 'Lifeline Support', for businesses that did not meet the criteria for the small business grants.  Additional funding will be available in the form of:

Creative, Tourism & Hospitality Enterprises Hardship Fund
 
This fund is for small Scottish creative, tourism and hospitality businesses who have experienced at least 50% loss of current or projected revenue as a result of COVID-19. It will provide £3,000 hardship grants or larger grants up to £25,000 where it can be demonstrated support is needed.
 
You must meet these criteria in order to apply:
  • Your company has up to 49 employees
  • You have experienced at least a 50% loss of current or projected revenue
  • You were not in financial difficulty before 31 December 2019
  • You are not in receipt of other COVID-19 government support, except the Furlough Scheme
  • You are not a pre-revenue company
  • You have a business bank account

The application requires you to complete a 3 month cash flow table in order to provide details on the performance of this business. 
 
If you require support in accessing this grant please do get in touch. 
 
You can apply here: https://customerexperience.weareumi.net/supportbiz/Application.aspx
 
Pivotal Enterprise Resilience Fund

This is for businesses that will make an impact on the Scottish economy on a local, regional or national level. 

Businesses must be involved in or meet the following conditions:
  • Can drive economic prosperity through wages, employment, exports, supply chain etc
  • Be a supplier or potential supplier to NHS or other COVID-19 vital services
  • Be a supplier to other essential businesses
  • Can scale up or diversify due to COVID-19 opportunities
  • Have a plan to continue to trade in the coming months, taking account of any hibernation or reduced operations as a result of Covid-19
  • Can use the grant for working capital to help meet a cash flow gap or can be used to augment other funding from Government and other sources
  • Can use the grant to contribute to cashflow items e.g. rent, wages, directors’ salaries, heat, light and power, materials, transport, financing osts-VAT/HMRC, creditor payments
Businesses must also meet the following criteria to apply:
  • Your company has up to 249 employees that have been trading successfully before Covid19
  • Less than €50 million turnover or balance sheet total of €43 million
  • Can demonstrate the funding will support business to be viable
  • You were not in financial difficulty before 31 December 2019
  • You are a Fair Work employer or working towards becoming a Fair Work employer
  • You have a business bank account

The application for this grant requires you to complete a 12 month cash flow table in order to provide details on the performance of this business. 
 
Support and larger grants will be made available for pivotal SME enterprises who are deemed vulnerable at this time. The level of grant available will depend on the specific need of the business and be developed by the relevant enterprise agency. This fund will be managed by the Enterprise Agencies. 
 
You can apply here: https://customerexperience.weareumi.net/supportbiz/Application.aspx

Loan Funding for all Businesses

Small Business 'Bounce Back' Loan 

The Chancellor announced a new ‘bounce back’ loan for small businesses on Tuesday 27th April 2020. 

What are the bounce back loans?

  • Businesses will be able to borrow between £2,000 and £50,000
  • The maximum loan will be the lower of £50,000 or 25% of a business’s turnover 
  • Loans will be interest free for the first 12 months
  • Repayments will not start for 12 months
  • Loan term will be up to 6 years
  • Loans will be 100% government backed so there will be no requirement for directors to sign personal guarantees 
  • Fixed Interest rate of 2.5% after 12 months (though lenders may add a monthly repayment charge)
  • You can pay the loan back at any time with no repayment fees

You can apply if your business:

  • Is based in the UK
  • Has been negatively affected by the coronavirus 
  • Was not in difficulty on 31 December 2019

Ineligible businesses:

  • Banks, insurers and reinsurers (not insurance brokers) 
  • Public sector bodies 
  • Further education providers that are grant funded
  • State funded schools 
  • Businesses who already received funding through the Coronavirus Business Interruption Loan Scheme (though if you borrowed less than £50K some banks are letting you transfer the loan to this scheme)

How do you apply?

Applications for these new loans can be made to your own business bank or any of the third party lenders offering this. There are a number of alternative banks such as Funding Circle and Newable offering this loan. You will need to complete an online form with the lender. 

Business Interruption Loan 

All businesses will be eligible for the government's Business Interruption Loan Scheme, offering loans of upto £5million. Loans will be interest free for 12 months and available from Monday 23rd March 2020.

This is a loan and we strongly recommend you consider your other funding options before applying for this loan. The loan may be the best option for businesses who do not meet the requirements of the grants and who have to retain the majority of their staff during this time. 

The loans are proving difficult to secure and businesses are expected to provide detailed cashflows to the bank though there have been some advances on this in recent weeks.

Loans of up to £250,000 do not require a personal guarantee and a guarantee is only needed on the 20% of funds borrowed above this level.

Funding for Sole Traders / the Self-employed

The self-employed income grant is available to self employed individuals and will cover a percentage of their profits if they have been adversely affected by coronavirus. The first grant covered 80% of profits (up to £7500) and the second will cover 70% of profits (up to £6570). 

Who is eligible 

  • This grant will be available to the self-employed/sole traders and partnerships who have profits of up to £50K per year. This is based on an average over 3 years.
  • Self-employed income must be more than half of your total income.
  • You must have traded in 2019-20; 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 2020-2021.
  • You MUST have submitted a 2019 tax return to access this support. 


Grant 1 - Application opened in May

This grant is available to cover profits in March, April and May 2020. Application for this grant opened on the 12th May. If you have not yet applied please do so asap. 

There will be a taxable grant of 80% of profits for self-employed people. 

The grant will be up to a maximum of £2500 per month

How much will you get?

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable): 2016 to 2017, 2017 to 2018 and 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.


Grant 2 - Application will opened in August

This grant is available to cover profits in June, July and August 2020. Application for this grant will open in August.  

  • There will be a taxable grant of 70% of profits for self-employed people. 
  • The grant will be up to a maximum of £2190 per month.

How much will you get?

You’ll get a taxable grant which will be 70% of the average profits from the tax years (where applicable): 2016 to 2017, 2017 to 2018 and 2018 to 2019
 
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
 
It will be up to a maximum of £2,190 per month for 3 months.
 
How to Apply 

Grant applications are made through your self-assessment account which is access through the government gateway. You can login and sign up here: 
https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme
 
What is a taxable grant?

The grant money you receive will be included as income in your 2020-2021 tax return. HMRC are essentially replacing your average monthly profits and therefore will tax the grant in the next tax year.  As this is a grant, you do not need to repay this.
 
If you do not meet the criteria above we suggest you seek support from universal credit ASAP. 
 
Don't forget If you are due to pay a personal tax bill in July 2020 you can defer this payment until January 2021. 
 
Note this all applies to partners in partnerships too. 
 
This scheme does not apply to personal service companies. It is only for the self-employed and does not apply to directors of limited companies. 


Newly Self-Employed Hardship Fund (Scotland Only)

If you became self-employed on or after 6 April 2019, you are not eligible for the UK Government scheme. So, you can apply for this scheme but there are still eligibility requirements. 

You must sign a declaration confirming that you meet all of the following criteria:
  • you became self-employed on/after 6 April 2019 (did not submit a tax return including income from self-employment for 2018-19)
  • over 50% of your individual income is from self-employment
  • your trading profits were below £50,000 in financial year 2019-20
  • you have lost business due to coronavirus and are suffering financial hardship as a result
  • you are ineligible for other COVID-19 related business support (including the Business Interruption Loan Schemes, Corporate Finance Fund, Job Retention Schemes, Future Fund, R&D Focussed SMEs Fund, HMRC Self-Employment Income Support Scheme, Non-Domestic Rates relief, Small Business Grant or other business support)
  • you do not receive working age benefit payments (Universal Credit, Statutory Sick Pay, Employment and Support Allowance, Job Seekers’ Allowance, Income Support) or have applied for but not yet started receiving Universal Credit
  • you trade as self-employed, not as a limited company or partnership
  • you have taken steps to limit costs and expenditure (including through schemes such as VAT deferral and seeking a mortgage payment holiday)
  • you do not have access to sufficient savings or other sources of income to meet basic needs

How to apply:
You can apply directly through your local authority's website. We have linked some of these below: 

Aberdeen

Aberdeenshire

Angus

Argyll and Bute

Dundee

Glasgow

East Ayrshire

North Ayrshire

South Ayrshire

Funding for VAT Registered Businesses

VAT payments for the next quarter can be deferred. This deferment applies to VAT due from now until the end of June. Any VAT due from returns generated during this time will need to be paid by 31st March 2021. 

If you pay VAT by direct debit you must cancel this. 

If you are considering paying this anyway it would be worth discussing this with us. Though you may currently have the cash to pay your VAT bill and though you will need to pay this at a later date, it is important to consider whether you may need this money for salaries or director drawings during this time. This is especially important for director only businesses as even if you are eligible for the 80% salary funding, you are likely to be on a low salary so may not have access to all of the funds you need.  

Personal Tax Payment on Account July 2020

The Self-Assessment payment on account, that is ordinarily due to be paid to HMRC by 31 July 2020 may now be deferred until January 2021.

Anyone due to make a payment on account by 31st July 2020 can opt to defer. 

HMRC would like those who can pay to pay. Although deferring means you will need to find the money later in the year we would highlight that this cash may be required over the coming months. 

Reducing Costs

It is important that all businesses try to reduce their costs as much as possible. You need to strike a balance between paying for what you need to support your business and paying for things that do not provide actual support to your business. 

If you rent a property you should contact your landlord immediately to see if they will reduce your rent or even give you a rent holiday (this has happened for some clients). 

Other things to look at cancelling payments for:

- Marketing support services 
- Advertising costs
- Music streaming services / commercial licences 
- Business TV licence 
- Subscriptions for online magazines, newspapers, industry updates etc