Covid-19 2nd Update on Small Business Financial Assistance

Date: 21st March 2020  |  Author: Sean Toomer

Here’s our second update on the Financial Assistance offered to small businesses during the covid-19 outbreak and when, and how, they’re likely to get it.

If you missed our previous post on this topic, you can see it here.

Coronavirus Job Retention Scheme

HMRC will reimburse 80% of ‘furloughed’ employees’ wages, up to a cap of £2,500 per month. Don’t worry, I’d never heard that word before last night either. Furloughed means employees who have been granted a leave of absence. Right now, it appears the 80% reimbursement will only apply to those employees who you would have let go and they need to be designated as ‘furloughed’. Employers will be required to submit information to HMRC about the employees who have been furloughed and their earnings, through a new, dedicated portal. This new system is not currently ready and it is unclear when it will be – current estimates are the end of April. Business are encouraged to seek advice from their banks or other lenders to obtain a Coronavirus Business Interruption Loan to support them in the meantime. See more information about these loans below.

Coronavirus Business Interruption Loan

Loans of up to £5m, backed 80% by the government for small businesses with a turnover of less than £41m per year. The list of accredited lenders is here. You apply to the scheme by talking to your bank, providing they are on the list, or one of the other lenders. The scheme will be available from Monday 23 March and will be interest free for 12 months.

VAT & Personal Tax Payments

The second Payment on Account for the Self-Employed usually due 31 July 2020 are now not due until 31 January 2021. You do not need to do anything to inform HMRC of this delayed payment – it is automatically available to all individuals who pay Income tax under Self-Assessment and are Self Employed. No penalties or interest will be charged for the deferral period. It is unclear at this stage if this related to ALL indivduals who are due to make a payment on account in July (e.g. Directors of Limited Companies who receive small salary and divdidends or those with rental income).

The deferral of VAT Payments will apply for the next VAT Period ending between 20 March 2020 to 30 June 2020. Business will not need to make a VAT payment during this period and will be given until 5th April 2021 to make up any VAT payments not paid. VAT refunds will be processed in the same way. This is automatic and no application is required. There will be no interest of penalties applied during the deferal period.

Business Rates Grants

There has been no further advice on this since our post yesterday that you can read here.

The Self-Employed

Whilst there has been generous assistance offered to small businesses, the 5 million self-employed in the UK have not been offered as much assistance. All that is on offer right now, is Universal Credit, which has been increased, and made easier to apply for, which will be at the current rate of Statutory Sick Pay of just over £90 per week. We expect a further announcement for assistance to self-employed people within the next few days.

Specific Advice for different types of businesses

What to do if you’re a Director of a Limited Company

The majority of our clients are all Directors of Limited Companies, who pay themselves a small salary and dividends. The majority do not have a business premises and therefore will not qualify for the grants on offer and also it does not seem their dividends will be covered under the Job Retention Scheme. As of right now, the only option available is Universal Credit, as the small businesses that operate this way would be largely in the same boat as those who are self employed. Again, we expect an update on this within the next few days.

What to do if you’re a small business with employees

If you’ve got premises, great, you’re most likely expected a grant in relation to business rates, and most of your employees will hopefully be covered under the Job Retention Scheme. For now, our advice is to keep trading however you can, and keep your staff on. It will most likely be needed for you to apply for a Business Interruption Loan to cover costs and staff wages until the grants and support for wages is released.

What else can you do right now?

Prepare to not pay any tax bills

If you’ve got a VAT or PAYE bill coming up, which could hit your cash balance and mean you can’t meet other payments, don’t pay it. Instead, call HMRC on 0800 0159 559 . HMRC are being quite generous right now in agreeing payment plans over periods as long as 12 months, with no interest or penalties. This could mean the difference between staying open and closing.

Keep going, and support other local businesses and your community as much as you can

The economy is a big circle and if one chunk goes down, it won’t be long before the rest does. We’re not saying this to instil fear; quite the opposite. As much as possible, keep going as you are. People still need to buy your products and services, and whilst some industries for now will be hit much, much harder than others, some have the potential to flourish.

If you’re self-employed think about a temporary job

At the moment, the only support on offer for the self-employed is a break in tax payments and £90 per week. This is not enough to pay the rent and put food on the table. If you can’t work, and don’t have savings to fall back on, seriously start thinking of a temporary job to cover you until all this blows over. It’s looking more and more likely given the support on offer from the government that some businesses are simply going to have to hit pause and come back when all this is over.

As always, talk to me

I’m available at the office (by myself) or on my mobile which is 07725009300. If I don’t answer, drop me an email on as I’m on the phone all day long at the moment. I’ll do all I can for small businesses, client or not, to help you stay alive during this shitty time.

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