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Coronavirus: Government financial support for organisations

20/03/2020
people at window
With continuing concern about whether government action taken to date was sufficient to protect the economy, the Chancellor, Rishi Sunak,  announced on 20 March an unprecedented further package of measures aimed at protecting employment and easing cashflow for business.  There is now a wide range of support to those with financial difficulties arising from the coronavirus (COVID-19) disruptions. 

Financial support for workers

  • Coronavirus job retention scheme 
    Under the new scheme, any employer will be eligible to contact HMRC for apply for a grant to cover the majority of the wages of people who are part of a PAYE scheme and who not working but furloughed and kept on payroll. The grant will be 80% of salary up to £2,500 a month (just above median income) and employers can top up this amount if they wish. The grant can be backdated to 1 March and will apply for three months; it will be extended if necessary. The Chancellor confirmed that there would be no limit on funding as the government wishes to support as many jobs as necessary. The intention is that payments should be available before end of April.
  • Support for the self-employed

On 26 March a package of support for the self-employed was announced.  Further details can be found here.

  • For the self-employed there is a suspension of the minimum income floor for everyone. This will mean they can access universal credit at same rate as statutory sick pay.
  • The next self-assessment payment date has been deferred to January 2021.

Download COVID-19 self-employed funding support flowchart     

covid 19 self employed



This flowchart is designed to point you in the right direction of what measures might be available for you and your business based on what we know at present.

Deferral of VAT payments

The government has announced an immediate deferral for UK businesses of VAT payments that would otherwise have been due between 20 March to 30 June 2020.

The vast majority of organisations file calendar quarter VAT returns which would have meant the VAT owing for the quarter to 31 March 2020 would have been payable to HMRC over the course of the next few weeks. The deferral of this payment will be welcome news to many and applies automatically. Businesses deferring this payment need not seek any additional specific agreement. Taxpayers will need to pay the deferred VAT on or before 31 March 2021. VAT returns should continue to be submitted in line with the organisation’s normal VAT return filing deadlines.

The deferral measure is for UK businesses. Overseas businesses having difficulties paying their UK VAT may need to consider applying for additional time to pay.

On 25 March, HMRC updated its guidance to highlight that organisations that normally pay by direct debit should cancel their direct debits to ensure that payment is not automatically taken.

Deferral to the payment of UK taxes

Details of the HMRC helpline for organisations that are struggling to pay their UK taxes on time is available on the GOV.UK website.

It is recommended that businesses contact HMRC at the earliest opportunity to agree tax deferrals if they are not automatic.  

We understand that it can take time to get through on the line so you should have as much detail to support your grant or tax deferral discussion.   

HMRC will discuss your specific circumstances to explore:

  • agreeing an instalment arrangement
  • suspending debt collection proceedings
  • cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.

We understand that HMRC has not been issuing either written confirmation of payment deferral agreements or even a tax reference. We therefore suggest that you keep detailed records of the conversation including the name of the person you spoke to, the date and time so that you have a record of the agreement to a payment deferral and that no interest will be charged by HMRC.

What funding support could you be eligible for?

As more measures are introduced and more detail becomes available, this tool will be updated on a real time basis.


Download COVID-19 funding support flowchart

COVID 19 flowchartDesigned to point you in the right direction of what measures might be available for you and your business based on what we know at present.

Coronavirus Business Interruption Loan Scheme (CBILS)

For small and medium-sized businesses, there may be the option of financial support from the British Business Bank. Additional government funding was announced in the recent Budget and was aimed at supporting the continued provision of finance to UK businesses during the coronavirus outbreak. The British Business Bank’s CBILS facilitates business finance to smaller businesses that are viable but unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. CBILS can provide funding from £1,000 to £5 million. The CBILS loans will be interest free for 12 months and up to £330 billion of funding that will be government guaranteed. This new temporary CBILS will be available from 23 March 2020 to support businesses to access bank lending and overdrafts.

The CBILS website details the following eligibility criteria. The business should:

  • be UK based, with turnover of no more than £41 million per year
  • operate within an eligible industrial sector
  • have a solid borrowing proposal, but insufficient security to meet a lender’s normal requirements
  • be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal years.

Business Rates Relief

Business Rates Relief include:

  • the 12 months business rates relief applies to all hospitality, retail and leisure businesses in England
  • an expanded retail discount.

The reliefs will be given automatically and will be administered by Local Authorities. Details of the reliefs can be found on GOV.UK website.

Grant funding for small business

It was announced that funding grants of the following would be provided:

  • the £25,000 grant for retail, hospitality and leisure businesses with a rateable value of between £15,000 and £51,000
  • the £10,000 grant is for any business that qualifies for Small Business Rates Relief.

There may be other funding solutions for businesses available through your current or an alternative provider. Crowe’s debt advisory team have strong relationships with a wide range of potential funders, for more details on how we can support you please contact Dave Riley or your usual Crowe contact.

 

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Jane Mackay
Jane Mackay
Partner, Head of Tax
Thames Valley