There’s no denying that times are tough. The economic effects of COVID-19 will be with us for a long time. But fortunately there are steps you can take to mitigate the damage and emerge from the crisis in good shape.
Below you’ll find our guide to weathering the coronavirus storm. The government has announced a number of initiatives to help businesses – from grants and bounce back loans to tax deferrals and job retention schemes – but which measures can help you?
We examine what the options are, which businesses are eligible, and explain the advantages as well as some potential pitfalls. You’ll also find some broader advice about organising your finances and communicating with key people in these challenging times.
All the information below will be updated as circumstances evolve. And of course, if you have any concerns or questions, don’t hesitate to contact us.
The closing date to apply for these loans has been extended to 30th November 2020.
For BBLs, a new Pay As You Grow repayment system now allows borrowers to:
For CBILS, the lender will be allowed to extend the term of the loan up to 10 years if it will help a business to repay the loan.
The Coronavirus Job Retention Scheme (CJRS) will end on 31st October 2020 as previously planned.
From 1st November it will be replaced by a 6-month Job Support Scheme (JSS) for all UK small and medium sized businesses to protect viable jobs in businesses who are facing lower demand over winter due to COVID-19.
Neither the employer nor the employee needs to have previously used the CJRS. However the employee must be on an employer’s PAYE payroll on or before 23rd September 2020.
Employers must agree the new short-time working arrangements with the employee, notifying them in writing which must be made available to HMRC on request. Employees will also be informed by HMRC directly of full details of the claim. Employees cannot be made redundant or put on notice during the period being claimed for.
Each short-time working arrangement must cover a minimum period of seven days. The employee must be working a minimum of 33% of their usual hours over the first three months (which is subject to change for the final three months), which the employer will pay at their contracted hourly rate.
For usual hours not worked, the cost will be split between the employer (1/3rd), the Government through the JSS (up to 1/3rd capped at £697.92 per month) and the balance by the employee (through a 1/3rd wage reduction).
Additional employment costs, such as Employer’s NICs and pension contributions, will remain payable by the employer.
The Government’s contribution, which will be taxable, will be reimbursed to the employer monthly in arrears, with claims made online from December 2020.
For businesses who legally have to close their premises as a direct result of Coronavirus restrictions set by the UK Government, enhanced support will be made available under this scheme during the period they are affected by these restrictions. This does not include closures as a result of specific workplace outbreaks.
Under this temporary expansion of the JSS, if an employee has been instructed to and ceases to work at the premises for at least 7 consecutive days, the government grant will cover 2/3 of the employee’s normal pay, capped at £2,100 per month. The employer must use the whole of the grant to meet employee costs.
The remaining 1/3 will continue to be covered by the employee, although the employer can choose to cover this if they wish.
This grant is taxable and will be reimbursed to the employer monthly in arrears. As a measure to avoid fraud, HMRC intend to publish the name of employers who have used the scheme, and employees will be able to find out if their employer has claimed for them under the scheme.
The Job Retention Bonus will still be available to Employers who makes use of the JSS.
The Job Retention Bonus is a one-off £1,000 taxable payment to the employer for each eligible employee that was furloughed and claimed for, and subsequently continuously employed until 31st January 2021. There are some further criteria that need to be satisfied.
The employer does not have to pay this money to their employees.
Claims can be made between 15th February and 31st March 2021.
The SEISS has been extended to offer a further two taxable grants to self-employed individuals who continue to actively trade while faced with reduced demand due to COVID-19. Eligibility conditions remain the same as before, though you do not need to have claimed either of the previous grants.
The first new grant will cover the period from 1st November to the end of January 2021. This will be worth 20% of average monthly profits, capped at £1,875 in total (i.e. £625 per month).
The second new grant will cover the period from 1st February 2021 to the end of April 2021. The amount is yet to be finalised and may be adjusted to respond to changing circumstances.
Details of how to claim have not yet been confirmed.
Self Assessment taxpayers had been able to automatically defer their July 2020 payment on account to 31st January 2021 without interest or penalties.
The payment deadline has now been extended by a further 12 months to January 2022 if a Time To Pay arrangement is set up with HMRC, and this can now also include the payment ordinarily due in January 2021. Therefore both the July 2020 and January 2021 payments can be repaid over a 12 month period up to January 2022.
However, HMRC will start charging interest again on outstanding balances from 1st February 2021.
For balances up to £30,000, the Time To Pay arrangement can be set up online via HMRC’s self-serve service. For balances above £30,000, or if you need longer than 12 months to repay the balance, you will need to call HMRC’s Self Assessment Payment Helpline.
For business that had deferred their VAT payments due between 20th March and 30th June 2020, these were due to be repaid in full by 31st March 2021.
However, the New Payment Scheme allows those businesses to opt to spread the remaining balance by making monthly interest-free over the year to 31st March 2022. Details of how to opt in have not yet been confirmed.
The VAT rate reduction to 5% for businesses in the tourism and hospitality sectors has been extended from 12th January to 31st March 2021.
If you’re a UK employer with a PAYE scheme, the CJRS can support employees who would otherwise be made redundant.
For the period 1st March to 31st July, the government will pay 80% of a furloughed employees’ salary (up to £2,500 per month), as well as the associated National Insurance and pension costs.
Up to 30th June, employees cannot work for you while they’re furloughed.
The March-June scheme will end on 30th June. Claims under this scheme must be made on or before 31st July.
From 1st July onwards, claims can only be made for employees that you have already furloughed for at least 3 consecutive weeks up to 30th June.
You will have the flexibility to bring employees back part time and pay their wages and associated costs for the hours they work, while still being able to claim a grant for furloughed hours. Each claim made must be for a week or more.
The maximum number of employees that can be claimed for will be limited to the maximum number on any single claim up to 30th June.
From 1st August, a furloughed employee will still have 80% of their salary covered, but you’ll start to share the cost.
The July-October scheme will end on 31st October. Claims must be made on or before 30th November.
|% of salary||Max*||Plus||% of salary||Max*||Plus|
|Mar - Jul||80%||£2,500||NIC & pension||-||-||-|
|Aug||80%||£2,500||-||-||-||NIC & pension|
|Sept||70%||£2,187.50||-||10%||£312.50||NIC & pension|
|Oct||60%||£1,875||-||20%||£625||NIC & pension|
* For a fully-furloughed employee. For flexible furloughing the cap will be proportional to the hours not worked, and the employer will pay for any hours worked.
The CJRS covers all employees on your payroll between 28th February and 19th March. You could choose to fund the differences between CJRS payments and your employees’ salaries but this is up to you.
Meanwhile, any employee who was made redundant after 28th February can be re-employed and furloughed. The minimum furlough period is 3 consecutive weeks.
Please be aware that the CJRS has some conditions, notably:
If you’re an employer with fewer than 250 employees, and an employee was unable to work after 13th March due to COVID-19, the SSP can help you.
The rebate scheme allows you to claim back up to two weeks statutory sick pay per employee if they have been unable to work due to having coronavirus symptoms, have been self-isolating because they live with or have been notified they’ve been in contact with coronavirus symptoms, or have been shielding and have a letter from the NHS or a GP.
It does not include employees unable to work solely due to the 14-day quarantine period on returning to the UK.
Make sure you keep a record of staff absences and SSP payments. Thankfully you do not need GP notes from employees to make your claim, though you can ask them to provide you with an isolation note from NHS 111.
If you’re self-employed or a member of a partnership, and you’ve lost income due to the COVID-19 crisis, the SEISS could help.
You can claim a taxable grant worth 80% of your average monthly trading profits (capped at £2,500 per month for up to 3 months) if your business is adversely affected up to 13th July. The scheme will close its doors for further claims on 13th July.
If your business is adversely affected after 13th July, from August you can apply for a second and final taxable grant worth 70% of your average monthly trading profits (capped at £2,190 per month for up to 3 months). This second grant can be claimed even if you’ve not claimed the first grant i.e. if your business first becomes adversely affected after 13th July.
In each case, you will need to meet the following conditions:
Unlike employed workers furloughed during the outbreak, self-employed workers can continue working and claim SEISS.
HMRC will automatically invite you to apply online if you are eligible. The grant will be paid directly into your bank account in one instalment.
These helpful rates grants are organised by local authorities rather than HMRC. The person who (according to the authority’s records) was the ratepayer for the property on 11th March 2020 will receive the funds.
You don’t need to apply if you’re eligible – your local authority will contact you automatically. However, they’ll contact you via mail so you’ll need to check your premises on a regular basis to avoid delays.
The scheme offers two main types of support:
A discretionary fund has also been created to help small businesses with ongoing property costs outside the scope of the business grant funds scheme. This includes market traders, small charities, those operating from shared office space where they’re not the rates payer, plus B&Bs paying council rather than business rates.
These taxable grants are banded £25,000, £10,000, and under £10,000. However, it’s unlikely you will be contacted by your local authority if you qualify so please check the criteria on their website.
If you have claimed other COVID-19 grants, apart from the Job Retention Scheme (CJRS) and the Self Employment Income Support Scheme (SEISS), you will not be eligible for a top-up grant.
The BBLS is designed to give small and micro businesses a kick-start to help them recover from the COVID-19 crisis. The online application is short and simple, plus you should receive the funds in just 1-2 days.
If your business was trading on 1st March 2020, and your balance sheet was positive on 31st December 2019, then you could be eligible for the scheme. However, you won’t be eligible if you already have a Coronavirus Business Interruption Loan (see below) – although you can migrate your CBILS into a Bounce Back Loan if you wish.
Please note that the BBLS is a loan not a grant – it won’t be taxed but you’ll be fully liable for the debt. You’ll therefore need to decide if it’s the right option for your business.
We’ll make sure you have all the relevant information at hand so you can make an informed decision.
The CBILS is a new temporary loan scheme designed to support SMEs. You could obtain a loan or overdraft of up to £5 million with the government covering your interest and fees for the first 12 months.
You’ll be eligible if:
The maximum term for a CBILS loan is 3 years for overdrafts and invoice finance, or 6 years for loans and asset finance.
Personal guarantees are not needed for loans under £250,000. However, unlike BBLS support, it may take some time before you can access your funds. What’s more, the loan will be subject to affordability and you’ll be fully liable for the debt.
If you’re worried about paying your tax bill in these troubling times then help is at hand. HMRC will let you defer your 31st July 2020 self-assessment payment until 31st January 2021 without penalty or interest.
You don’t need to inform HMRC if you wish to do this. And it’s available for everyone whether you’re self-employed or not. However, you may want to think carefully before you defer.
A deferment will result in a large payment in January next year. And this may put further cashflow pressures on you down the road.
Consequently, if you’re able to pay your second payment on account on 31st July then it’s prudent to do so. Alternatively, just pay what you can before January.
Deferring your VAT payments can ease the pressure on your businesses finances. Therefore it might be worth taking up HMRC’s offer to defer VAT payments due between 20th March and 30th June 2020. All liabilities accumulated during this period must be paid on or before 31st March 2021 instead. This could include making additional payments with subsequent VAT Returns.
However, be aware that you must file your VAT return by the usual date – only the payment can be deferred.
You don’t need to apply to take advantage of HMRC’s offer. It’s automatic. All you need to do is cancel your direct debit if you pay this way.
If you usually receive VAT refunds, you could also consider moving to monthly VAT returns to improve your cashflow – although you will need to apply to do this.
This scheme has not been extended, therefore any payments due after 30th June 2020 – for VAT periods ending 31st May 2020 and after – will be payable by the usual dates. You’ll need to reinstate any cancelled direct debit arrangements in enough time for HMRC to take payment.
Businesses will get more time to file their accounts at Companies House. You do not need to apply for an extension, if your company is eligible the filing deadline will update automatically – you can check on the Companies House website here.
In addition, Companies House will, for a temporary period:
HMRC’s Time To Pay service may be able to help you with outstanding tax liabilities. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances.
Please call HMRC’s dedicated helpline on 0800 024 1222 for more information.
Local authorities are helping companies with their business rates during the COVID-19 crisis. Discounts will be applied automatically so you don’t need to do a thing.
A business rates retail holiday for retail, hospitality and leisure businesses in England is being introduced for the 2020 / 21 tax year.
HMRC are also introducing a business rates holiday for nurseries in England. Properties that will benefit include will be those:
If your nursery is temporarily closed due to the government’s advice on COVID-19 then you will qualify. However, if your premises are occupied but not wholly or mainly used for the qualifying purpose, then you won’t be eligible.
The IR35 tax reforms scheduled for April 2020 have been postponed. The legislation will now be reintroduced in April 2021 instead.
This means you have a further year to review your contracts and working practices, to have productive discussions with your clients, and ensure you remain outside of IR35 this time next year.
If you were due to be affected by the new measures, it would be sensible to speak to your end client immediately to confirm that they will also be deferring any changes to your working practices and arrangements.
If you cannot pay your rent during the COVID-19 crisis then you’ll be automatically protected from eviction.
No business in England, Wales, or Northern Ireland will automatically forfeit their lease and be forced from their premises if they miss a payment before 30th June. The government may extend this period if needed, however no new announcements have yet been made.
Remember, you’ll still need to pay the amount owed eventually. It is not a rent holiday.
If you’re insured for pandemics and government-ordered closure then it’s possible that you may be covered. The government said on 17th March 2020 that their advice for people to avoid pubs, theatres etc should be sufficient in most circumstances to make a claim.
However, in reality you may not be covered because standard business interruption insurance policies focus on property damage and exclude pandemics. Therefore you should check the terms and conditions of your specific policy. Only your insurers can tell you for sure.
Cash is vital to the health of your business so following the advice below could be key to surviving the COVID-19 crisis.
Work out where you are and what you might need. Taking out finance may temporarily boost your bank balance but it’s likely to be an unnecessary cost overall.
Ask yourself the following questions to make sure you’re managing cash sensibly:
It’s also worth helping other businesses in these difficult times. Consider helping a struggling supplier by making an early payment to them if you’re able to.
If you don’t have a cashflow forecast now is the time to create one. If you already have one, it should be frequently reassessed and adjusted.
It’s a good idea to stress test your forecast too. What if that receipt doesn’t come in? What if staff productivity falls? If you identify any problems ask yourself if they can be managed with existing facilities / resources or whether you’ll need to consider external financing.
Talk to us if you need help putting a forecast together or reassessing / testing an existing one. We’re here to help.
An overdraft is often the quickest way to access short-term funds, especially if you have an existing facility. Speak to your bank because they may be willing to extend your limit. Some banks have earmarked funds specifically to help businesses affected by COVID-19.
However, don’t forget that any extension may be temporary and could be withdrawn later on.
It’s worth thinking about invoice financing if you have a large debt book. This can be arranged quickly and will likely provide you with more cash than an overdraft.
However, this solution is potentially expensive. What’s more, the value of the debts will be discounted because your finance company will take on the risk of slow and non-payment.
Many products exist outside of banks. And some are more flexible, simpler and faster to access. Talk to us about these alternative options.
Navigating the COVID-19 crisis is a challenge for all businesses. Here are some tips to help you through these difficult times. Leadership and people skills will be key.
Everyone is feeling nervous, or at least uncertain, about the immediate future. Communication is therefore key to provide an element of certainty. As a leader in your business, people will look for you to lead with purpose, positivity and integrity.
Communicate with your customers and clients to reassure them that you’re open for business, even though it might look different for a while.
Communicate with your staff and contractors too. If you are able to remain open, reassure them that they’re needed and there’s still work to be done.
Keep communicating all the time. Evaluate how and when you need to touch base, especially if you find yourself with a home working team.
Working from home (WFH) has become more popular in recent years. In fact, many new businesses operate exclusively on a remote working model. However, this modern approach will be unsettling and new territory for many people.
If you and your staff are able to work from home then ensure you have the infrastructure to do this. If you already work off of a remote server then this may be simple to achieve. But if you have an on-site server then you may need to set up a secure remote connection.
Be clear what you expect from your team but have realistic expectations. For many it will be hard to transition from office to home working in such a short space of time. Consider giving them a framework or boundaries to help them adapt.
Although you’ll expect your staff to work like they would in the office – taking calls, replying to emails etc – appreciate they’ll have distractions too (not least children and concerned relatives etc). Tell them you understand these problems. Reassure conscientious employees and empower them to make the right decisions.
Most importantly, keep communicating. Set up a WhatsApp group so they don’t feel isolated. Arrange regular phone / video calls with your team to stay in touch on both an operational and personal level.
Don’t forget your own needs either. All the above is relevant to you too. Business can be lonely at the best of times, so find your own support through business contacts and networks. And, of course, feel free to check in with us.
Remember that the current difficulties will pass. So make sure you’re in a good position for the post COVID-19 world.
Use any downtime wisely. Work on the things you’ve been too busy to do before. Reflect on where you started and how far you’ve come. And think about ways to make your business better. What can be tweaked or improved?
Imagine what your ideal business would look like. How can you get closer to that? If you’re not already using cloud accounting software then look at your options – we recommend FreeAgent or Xero depending on your requirements.
Consider additional apps that might be useful too – for chasing debts, cashflow management, projections, stock control etc. Use free trial periods to try things that might suit your business.
The COVID-19 crisis took most businesses by surprise. So what can you do to anticipate and prepare for future difficulties?
You might consider the following:
Remember that these uncertain days will eventually pass. In the meantime we’re here to help whenever you need us.