Following the outbreak of COVID-19, the Government has unveiled a number of unprecedented support schemes, aimed at both individuals and businesses. Here we look at the assistance available to limited companies.
We’ve created a summary of the main Government initiatives below. We recommend you also use the official COVID-19 financial support tool to find out what help you are eligible for.
The Coronavirus Job Retention Scheme (CJRS)
This was the first major initiative announced by the Chancellor. This allows businesses to ‘furlough’ their PAYE workers, and claim up to 80% of each worker’s salary, up to £2,500 per month.
Importantly, for company directors who pay themselves a mixture of salary and dividends, you will only be able to claim 80% of the PAYE element – IF your work is affected by COVID-19. In other words, if you claim the minimal support available to directors, you will not be able to do any of your normal work, or provide services. Directors will only be able to carry out their legal company obligations, such as filing official paperwork.
The CJRS took effect on 1st March 2020 and is currently set to last until the end of June 2020.
The Self-Employed Income Support Scheme (SEISS)
This initiative is aimed at the self-employed – sole traders and members of a partnership, rather than limited company directors.
You can apply if your trading profits are £50,000 or less, and at least half of your income comes from self-employment. The scheme will pay up to 80% of profits averaged out over the past 3 tax years.
The Chancellor has given self-employed people who have not yet filed their 2018/19 tax returns yet extra time to do so, in order to help them access the SEISS.
Coronavirus Business Interruption Loan Scheme (CBILS)
All businesses are eligible to apply for loans via commercial providers. These will be interest and fee-free for the first 12 months, with the Government underwriting 80% of each loan.
Smaller companies may be better off looking at the Bounce Back Loan Scheme (below), as commercial lenders appear to be reluctant to lend under the CBILS scheme.
Bounce Back Loan Scheme
Announced on April 27th, this scheme is aimed at micro-businesses who may have had trouble accessing the main CBILS. The Bounce Back Loan Scheme is 100% underwritten by the Government, and promises to provide up to 25% of turnover – from £2,500 to £50,000 of finance – within days with a simple application process. Loans can be paid back over 6 years.
Significantly, the Government has told lenders to waive their usual eligibility checks – which sounds good for businesses, even if this doesn’t turn out to be a prudent move by the Chancellor.
The scheme is due to open for applications from 4th May 2020.
Self-Assessment Income Tax Deferral
If you were due to make your second Self Assessment payment-on=account by July 31st 2020, you can now delay this payment until January 31st 2021. You don’t need to do anything if you want to take advantage of this deferral, as it will apply automatically if you don’t make the due payment
If your company is VAT-registered, you can defer all payments due between 20th March to 30th June until the end of the tax year. The deferral will apply automatically if you don’t make the usual quarterly payment. Don’t forget to stop your direct debit if you have set one up, as direct debit VAT payments will not automatically be cancelled by HMRC.
Business Support Grant Funding
The Small Business Grand Fund will provide one-off £10,000 grants payable to businesses which currently pay business rates, and claim either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR). This will be available to businesses which a rateable value of £15,000 or less, and will be paid by your local authority.
The Retail, Hospitality and Leisure Grant Fund will provide a similar function to businesses in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure).
Interestingly, these grants are taxable, but only if the business is profitable (including income from the grant).
Expanded Time to Pay (HMRC)
If your business is unable to pay other taxes apart from VAT and Self-Assessment (which are covered above), you may be able to receive futher relief from HMRC due to the pandemic outbreak. For example, extra time to pay your Corporation Tax bill. Any help provided by Time to Pay will be at HMRC’s discretion. Call the dedicated new number for help – 0800 0159 559.
Further support initiatives available to businesses and individuals
Alongside the headline incentives, there are a number of other schemes which may provide relief to limited compay owners, and their families.
Mortgage Holiday – Individuals should be able to apply for the 3-month mortgage holiday direct from their lenders. Of course, the delayed payment is just deferred, not cancelled.
Statutory Sick Pay (SSP) – PAYE employees (include company directors) can claim 2 weeks’ SSP if you become ill, or have to self-isolate due to a household incidence of COVID-19. Find out more.
Commercial Eviction Protection – if you’re unable to pay commercial rent due to COVID-19, you cannot be evicted until at least 30th June 2020. Find out more.
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