COVID-19 (also known as Coronavirus), and the measures undertaken to prevent its spread, present significant challenges for businesses, charities and individuals.
There is help available:
We will do what we can to support our clients and the wider business community over the coming months. We offer services to examine your organisation and to improve cashflow management.
Business financial diagnostic
We are offering a free business financial diagnostic to help you manage your response to COVID-19. It will help to identify your cash pinch points and methods to mitigate these, and we can also advise on approaching available funders to get the grants and reliefs available to help you.
The process involves a simple questionnaire for you to complete and return, followed by a telephone discussion with us. This is a free service, designed to help businesses survive – it is important that we all help each other.
Contact our team, led by Corporate Finance Partner Paul Mason, on firstname.lastname@example.org and we will get back to you within 24 hours.
Support during illness – businesses and charities
We can provide secondment support to organisations in the event of staff shortages, from the short to the long term.
Support for other accounting firms
We can support other firms if they become unable to deliver a full service, for example due to illness. If your firm needs cover, we can help you to deliver with a white-labelled service.
Even though there is a lack of visibility and information regarding how deep and how long the impact of this will be, we are helping our clients to model different scenarios and the consequent impact on their financial position. As new information comes to light it is important to refresh these forecasts using new data as it becomes available. We will advise on and carry out forecasting for your business.
Use tax reliefs
Cash flow will be significantly impacted for many organisations over the coming weeks and months. It therefore makes sense to claim any relief to which you are entitled. This could lead to cash in your account, or reliefs on your tax bill – all vital support at this time. We will check whether you can claim Research and Development tax relief, creative industry tax reliefs, or capital allowances, for instance.
Review last years’ tax return
We will review your previous tax return to check if there any changes we could make to help you – perhaps you’ve been overpaying Class 4 NICs, or there are capital allowances you could claim.
Change your accounting period
You may be able to change your accounting period to balance revenue over different time periods – this could have benefits when it comes to tax and your year-end reporting. We will advise you on this.
The UK and Scottish Governments continue to announce measures to support people and organisations. You may be able to use:
The Coronavirus Business Interruption Loan Scheme (CBILS)
(Information posted 23/03 and updated 03/04)
The CBILS scheme is now open and will provide loans of up to £5m to SMEs (including charities whose trading activities makes up more than 50% of total revenue) subject to certain criteria. CBILS will be provided by the British Business Bank to participating lenders, who will then administer and sanction the loans in line with their normal lending criteria. To find out more about CBILS including an eligibility checker, frequently asked questions and how to apply, please visit the CBILS website here – https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/for-businesses-and-advisors/
We are helping clients prepare their funding propositions to their existing banks. Ensuring the right information is presented in the right way will increase the likelihood of credit approval, and also shorten the time taken to reach that decision. Please contact our team today for advice on 0131 558 5800 or email email@example.com.
- CBILS – the details – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-details/
- CBILS Frequently Asked Questions – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-faq/
- Quick Eligibility Checklist – https://www.chiene.co.uk/resources/coronavirus-business-interruption-loan-scheme-cbils-quick-eligibility-checklist/
The Chancellor has updated the terms of the CBILs scheme to offer support to large and small businesses. Changes made during his announcement include:
- A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) that will provide a Government guarantee of 80% for loans of up to £25 million for organisations with an annual turnover of £45-500 million.
- A ban on banks demanding personal guarantees on loans of less than £250,000 in order to speed up the process of lending and reduce financial risk for applicants.
- “Viable” small businesses affected by COVID-19 don’t have to search for finance before they apply for the Coronavirus Business Interruption Loan Scheme (CBILS).
Further details of these updates can be found on the HM Treasury website here.
Bounce Back Loan Launched
(Information posted 29/04)
The UK Government’s Coronavirus Business Interruption Loan Scheme (CBILS) has been amended to include loosened criteria for applications as well as a new, expedited ‘Bounce Back’ loan programme for smaller businesses. CBILS applications should still be made to your existing bank first (if it is an approved lender on the CBILS panel), but the information a bank will require to approve a loan has been reduced. Banks will no longer be asking for forward-looking projections and will instead base their credit decision on historical financial metrics.
This change will apply to all new and current CBILS applications, with immediate effect. Banks are no longer required, for regulatory purposes, to evidence they have sought to carry out a reasonable assessment of the creditworthiness of a business when considering a CBILS application. We understand it has been this continuing requirement that has caused significant conflict between the aims of the CBILS loans – to provide finance to businesses in a time of need – and the banks’ own regulatory or compliance requirements. This issue should henceforth be resolved, resulting in hopefully more successful credit applications under CBILS. Further details about the Bounce Back Loan can be found in our briefing here.
New support for innovative companies announced
In a move aimed at helping support innovative companies, the Government has announced that it will match up to £250m of private investment and add £550m to an existing loan and grant scheme for smaller firms that focus on research and development.
However, this new package does come with some strings; to qualify to receive these funds, a company must have raised £250k privately in the last 5 years, plus any money from the Government must be matched by private investors. Finally, if the money is not repaid, the Government will take an ownership stake in the company.
Business Loans Extended
(Information posted 29/04)
Bounce Back Loans will be extended from six years to 10, cutting monthly repayments by nearly half. Coronavirus Business Interruption Loan Scheme lenders will also be able to extend the length of loans from the current maximum of six years to 10 years. The Chancellor is also extending the deadline for the Government’s coronavirus loan schemes to the end of November.
Businesses that are struggling can choose to make interest-only payments for six months and those “in real trouble” can apply to suspend repayments altogether and take a repayment holiday for six months without seeing their credit rating fall as a result.
Sick pay funding and Coronavirus Job Retention Scheme
(Information posted 23/03, updated 20/04 and updated 28/06)
The Government will fully fund the cost of two weeks’ Statutory Sick Pay (SSP) for employers with fewer than 250 staff. SSP will be paid from day one where people have the virus or have to self-isolate, or care for those who do.
There will be support through Universal Credit and Employment and Support Allowance for self-employed people and others not entitled to SSP.
HMRC has also published guidance on the Government’s Coronavirus Job Retention Scheme, which includes a package of measures that would see companies receive grants to pay their workers 80% of their salaries – up to a limit of £2,500 a month.
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.
How to access the scheme
Employers will need to designate affected employees as ‘furloughed workers,’ and notify the employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. Employers should submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments.
Employers may need to seek legal advice on changes to an employment contract and the furlough process. Employers that look to make a claim will need:
- Thier ePAYE reference number
- The number of employees being furloughed
- The claim period (start and end date)
- Amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- Bank account number and sort code
- Contact name and phone number
Employers will need to calculate the amount they are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
HMRC will check the claim, and if you organisation is eligible, pay it by BACS to a UK bank account.
Employers must pay the employee all the grant received for their gross pay, no fees can be charged from the money that is granted.
Other information about claiming can be found on the HMRC website here – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
Who can claim?
Any entity with a UK payroll can apply including businesses, charities, agencies and public authorities (but not public sector organisations). Organisations must have:
- Created and started a PAYE payroll scheme on or before 28 February 2020
- Enrolled for PAYE online – this could take up to 10 days – https://www.gov.uk/paye-online/enrol
- A UK bank account
Organisations will need to claim for:
- 80% of employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.
- Minimum automatic enrolment employer pension contributions on the subsidised wage.
Employers can choose to top up an employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary. Grants will be prorated if an employee is only furloughed for part of a pay period. Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.
Employers will still need to pay employer National Insurance and pension contributions on behalf of furloughed employees, and they can claim for these too.
Employers cannot claim for:
- Additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
- Any pension contributions you make that are above the mandatory employer contribution
The way employers work out their employees’ wages is different depending on what type of contract they’re on, and when they started work.
Apprentices can be furloughed in addition to other employees and can continue to train whilst furloughed although you must continue to pay at least the Apprentice Minimum Wage. Other details of the furloughed employees, including those on maternity leave, company directors, agency workers and others, that an organisation can claim for are here – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
More information on this scheme will follow, when information is available to us. Details can be viewed on the Government web page here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Coronavirus Job Retention Scheme (CJRS) changes from 1st July
Following the launch of the Coronavirus Job Retention Scheme (CJRS) earlier this year, the Scheme will change from 1 July onwards. From 1 July, employers can bring furloughed employees back to work for any amount of time and any work pattern.
Employers will still be able to claim the furlough grant for the hours the flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.
Coronavirus Job Retention Scheme Bonus – Information released 3rd August 2020
In a recently announced step by the UK Government to encourage employers to retain staff, further details about the Job Retention Bonus Scheme have been publicised. The plan will see businesses receive a one-off payment of £1,000 for every previously furloughed employee that earn at least £520 a month on average, if they are still employed at the end of January 2021.
To claim the bonus, employers will need to have relevant up-to-date payroll RTI records for the period to the end of January, and for an employee to be eligible employees must have been paid at lease £520 a month on average between 1 November 2020 and 31 January 2021. Details guidance on the process of how to claim the bonus will be issued in September 2020.
Job Retention Scheme Bonus – Update 11/10/20
Further information about the Job Retention Scheme Bonus has been released. Details about the Scheme including which companies can apply and how to apply can be found in our news article here.
COVID-19 Jobs Support Scheme Announced
(Information posted 25/09/20)
The Chancellor has announced the launch of a new COVID-19 Job Support Scheme, following the end of the UK furlough scheme in October.
The new Scheme will run for six months starting in November 2020, following the end of the current furlough scheme. Those who used the furlough scheme will be able to claim the job retention bonus and also support from the Job Support Scheme.
Jobs Support Scheme
Under the Job Support Scheme, the UK Government will subsidise the pay of employees who are working fewer than normal hours due to lower demand. For a business to claim for a workers’ wages, the employee must work at least a third of their normal working hours and be paid as normal for these hours by their employer. For the hours employees can’t work, the government and the employer will each cover one third of the lost pay.
- Employee works 33% of their hours
- Of the 67% of hours left:
- UK Government will pay 22% of the employees’ wages
- Employer will pay 22% of employees’ wages
- = Employee receives no less than 77% of their wages
The grant will be capped at £697.92 per month, and all small and medium sized businesses will be eligible for the scheme; larger business will be eligible if their turnover has fallen during the crisis.
It will be open to employers across the UK even if they have not previously used the furlough scheme and it will run for six months starting in November through to the end of April 2021.
More details will be released in due course.
Support for the self-employed
The Chancellor will also extend the Self-Employed Income Support Scheme on similar terms to the Jobs Support Scheme. A grant will be available to those eligible for the Self Employment Income Support Scheme Grant that will cover three months’ worth of profits for the period from November to the end of January 2021. It will cover 20% of average monthly profits up to a total of £1,875. A further grant will be available to the self-employed to cover February 2021 to the end of April 2021.
COVID-19 Redundancy Levels Protected as at 3rd August 2020
The UK Government has confirmed that in the event of redundancy, workers’ wages will be protected regardless of being on furlough.
In response to a minority of firms taking advantage of the current COVID-19 pandemic to pay a lower rate of redundancy, any furloughed workers that lose their jobs will now be eligible for redundancy pay based on normal wages, rather than the furlough rate. The UK’s 95 million furloughed workers are currently only being paid 80% of their normal wage, raising the anomaly in redundancy pay level. Further details can be found in our article here.
Make use of extensions and ‘holidays’
(Information posted 19/03)
The Government and regulatory bodies have already announced some deadline extensions, and more may be forthcoming.
- Companies House is granting a three-month extension to file company accounts. The extension needs to be applied for in line with Companies’ House usual procedure, but will be granted automatically when COVID-19 is given as the reason for the request. More information can be found here: https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts
- Organisations and self-employed individuals in financial distress will be able to negotiate ‘time to pay’ arrangements with HMRC without incurring late payment penalties. This is agreed on a case-by-case basis so will be tailored to individual circumstances and needs
- For individuals in difficulty due to coronavirus, mortgage lenders will offer at least a three-month mortgage holiday during which people will not have to pay towards their mortgage
- The government announced that it is postponing the reforms to the off-payroll working rules, IR35, until 6 April 2021
(Information posted 26/03)
HMRC has confirmed that for Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.
The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.
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 January 2021.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities. For more information visit the HMRC website here – https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-deferring-vat-and-income-tax-payments
(Information posted 24/09)
Self-assessment taxpayers with up to £30,000 of income tax and capital gains tax liabilities due will be able to use HMRC’s Time to Pay facility to secure a plan to pay over an additional 12 months. This means that self-assessment liabilities originally due in July 2020 and deferred until January 2021 will not need to be fully settled until January 2022.
COVID-19: VAT Payment Deferral
(Information posted 25/03)
On 20 March, the UK Government announced that it would be deferring VAT payments for 3 months until 30 June 2020 in an attempt to ease the tax burden on businesses affected during the COVID-19 pandemic. This is an automatic offer with no application to HMRC required. All UK businesses are eligible, and businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 tax year to pay any VAT deferred during this period.
Any VAT refunds and reclaims during this period will continue to be paid by the Government to VAT registered businesses as normal.
UK VAT returns should still be submitted on time and as per the normal filing deadline which is 1 month and 7 days after the period end.
We would advise all clients to consider their cashflow position to determine whether they wish to defer any VAT payments within the deferral period. If clients do wish to defer a VAT payment and they usually pay HMRC by direct debit, we would advise that the direct debit is cancelled to avoid HMRC automatically taking the payment as normal.
(Information added 24/09)
Business that deferred their VAT bills will be able to pay back their taxes in 11 smaller interest-free instalments to help with cashflow management.
VAT Rate Cut
(Information added 10/07)
Chancellor Rishi Sunak has announced a temporary 5% VAT rate which will come into effect from 15 July to 12 January 2021. For further details, visit our VAT page here.
(Information added 24/09)
The 15% emergency VAT cut for the tourism and hospitality industries will be extended from January 2021 to 31 March 2021.
Self-Employed Income Support Scheme
(Information posted 26/03, updated 05/05, updated 13/05, updated 23/06 and 30/10)
Self employed individuals are not eligible for the Coronavirus Job Retention Scheme, where the Government committed to pay up to £2,500 each month in wages of employed workers who are furloughed during the outbreak. SEISS is intended to bring parity for self employed workers.
SEISS is the Government scheme to support individuals who are self employed, or members of trading partnerships whose businesses have been adversely affected by COVID-19. Eligible individuals can claim a taxable grant worth 80% of their trading profits, up to a maximum of £2,500 a month, or £7,500 in total (equivalent to three month’s profit). It will be available for 3 months, but may be extended.
The grant counts as taxable turnover for the purposes of determining self employed profits for Income Tax and Class 4 NIC. It also counts as income for the purposes of Universal Credit and Tax Credit and may impact the amount claimants are entitled to. While the SEISS is a UK-wide scheme with no devolved variation in how the scheme operates, the rates of Income Tax payable on profits depend on the part of the UK in which you are resident. More information about the SEISS can be found in our briefing here.
The Chancellor has recently announced that the scheme is being extended. If your business is adversely affected by COVID-19 on or after 14 July 2020, and you meet the other eligibility criteria, you’ll be able to make a claim for a second and final grant 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. Find out more in our briefing here.
Chancellor Rishi Sunak has set out plans that will see the self-employed receive up to £2,500 per month in grants for at least 3 months via a new Self-Employed Income Support Scheme, with those eligible receiving a cash grant worth 80% of their average monthly trading profit over the last three years.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
To qualify, more than half of their income in these periods must come from self-employment.
To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.
The income support scheme will cover the three months to May. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.
Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.
Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. More details here – https://www.gov.uk/government/news/chancellor-gives-support-to-millions-of-self-employed-individuals.
Self-employed people whose trade has been hit by Coronavirus can now apply for a second, and final, Self-Employment Income Support Scheme (SEISS) grant of up to £6,750 from the government.
The online claims service on GOV.UK opened on 17 August and the deadline for claiming the second grant is 19 October. The claims window is open for a four-day period but anyone who thinks they may be eligible and hasn’t been contacted by HMRC has until October to make a claim. To be eligible for the Self-Employment Income Support Scheme, more than half of a claimant’s income needs to come from self-employment. Further details about the final round of funds available can be found here.
The UK Government has agreed to extend the support offered to self-employed workers via the Self-Employed Income Support Scheme Grant with an extension in the form of two grants for the three month periods November 2020 – January 2021 and February 2021 to April 2021. Details can be found in our briefing here.
Newly Self Employed Hardship Fund
(Information posted 22/05)
The Scottish Government has set up a Newly Self Employed Hardship Fund. The fund provides grants to Scottish residents who do not qualify for the COVID-19 Self Employment Income Support Scheme because they became self employed on or after 6 April 2019.
How much can I get?
Successful applicants will receive a one-off payment of £2,000.
Am I eligible for a grant?
In order to be eligible, you must meet all of the criteria set by the Scottish Government. These include:
- You became self employed on or after 6 April 2019;
- More than half of your individual income is from self employment;
- Your self employed profits for 2019/20 tax year were less than £50,000;
- 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;
- You do not receive working age benefit payments (e.g. Universal Credit).
A full list of eligibility criteria can be found on the Scottish Government’s website at findbusinesssupport.gov.scot/service/coronavirus/newly-self-employed-hardship-fund
How do I apply?
The fund is now open for applications. You should apply to the local authority for the area in which you live. A link to your local authority’s website can be found on the Scottish Government webpage above.
You will be asked to provide documentary evidence of your status and eligibility for the grant. Your local authority will determine whether you meet the eligibility criteria.
You will need to provide:
- Documentation to show you had an active business prior to COVID-19, such as your VAT registration, bank account statements showing revenue and outgoings linked to self employment, marketing materials etc.
- A self declaration that you are currently experiencing hardship;
- Evidence of being resident in the local authority area of application.
Small Business Grant Fund
(Information posted 18/06)
The Scottish Government has announced that the Small Business Grant Fund will now apply to firms occupying shared office spaces, business incubators or shared industrial units and who lease the space from a registered, rate-paying landlord. Separately, eligibility has also been extended to companies occupying multiple premises with a cumulative value of more than £51,000. This means eligible businesses will now be able to apply to their local authority for grants of up to £10,000. For more details click here.
Rates relief for retail, hospitality and leisure sectors
(Information posted 19/03)
- All businesses (not just those with a rateable value of less than £51,000, as previously announced), will pay no business rates for 2020/21
- Those businesses with a rateable value below £51,000 will also be eligible for an additional cash grant of up to £25,000 (i.e. cash payment from the government) per business, to help them through this period
- This means that every single shop, pub, theatre, music venue, restaurant, etc will pay no business rates whatsoever for 12 months and, if they have a rateable value of less than £51,000, they can now get a cash grant as well
Rates relief for others
(Information posted 19/03)
The 700,000 or so small businesses that are already eligible for 100% business rates relief will receive a grant of £10,000 (not £3,000, as previously announced) to help with business costs.
UPDATE – 15/04/20
Following pressure from business leaders, the Scottish Government has extended the Small Business Relief Grant, therefore in addition to a 100% grant on the first property, small business rate payers will be eligible to a 75% grant on all subsequent properties.
A further £100 million fund is also being made available to protect self-employed people, and viable micro and SME businesses in distress due to COVID-19. This fund will be channelled through local authorities and enterprise agencies to target newly self-employed people and businesses that are ineligible for other Scottish Government or UK Government schemes. Applications open from 5 May and no details were announced of what the eligibility criteria will be.
Further details can be found here – https://www.gov.scot/news/additional-support-for-business/
- UK Government guidance: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
- Scottish Government guidance: https://www.gov.scot/coronavirus-covid-19/
- Companies House news and guidance: https://www.gov.uk/government/organisations/companies-house
- HMRC news and guidance: https://www.gov.uk/government/organisations/hm-revenue-customs
(Information posted 26/03 and updated 30/06)
It is wise to check with your insurer (or broker) regarding the coverage you have against such events as loss of income and having to close during the outbreak of the virus. You will in particular need to check if your insurance contains Business Interruption cover, and cover for notifiable diseases. COVID-19 is a notifiable disease.
You should contact your insurer if you are in doubt or have any questions.
Much of the guidance above applies to charities – for instance, the extension to filing accounts with Companies House. There are additional charity-specific resources available too.
- OSCR’s guidance is available here: https://www.oscr.org.uk/news/charities-and-coronavirus-an-update-from-the-regulator/
- The Charities Commission for England and Wales has produced guidance which is available here: https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-the-charity-sector
- Charity Tax Group Coronavirus information hub for charity tax and finance professionals here: https://www.charitytaxgroup.org.uk/news-post/2020/coronavirus-information-hub-charity-tax-finance-professionals/
The Chiene + Tait team has also produced guidance specifically for charities during the current crisis. Please see below the latest updates:
- Ways charities can use tax to ease cash flow – posted 21/05
- Resources available to the charity sector – posted 21/05
- Charity financial management and reporting considerations – posted 21/05
- Gift Aid Emergency Relief package for charities – posted 30/03
If you have a charity related COVID-19 query, please contact our team today at firstname.lastname@example.org