Coronavirus West Berkshire: Guide for companies hit by the coronavirus crisis
Chartered accountant and business advisor’s advice on what help is now available
A package of unprecedented measures have been announced by the Chancellor in a bid to alleviate businesses worries during the lockdown. The coronavirus outbreak has seen all but essential businesses forced to close and Rishi Sunak has responded with a number of announcements over the past few weeks aimed at helping those most in need. During those first 14 days, almost 950,000 applied for Universal Credit, with the Department for Work and Pensions saying that figure is up from around 100,000 in a normal two-week period. Around a quarter of those who applied in the first seven days, asked for an advance payment. Woolton Hill-based chartered accountant and business adviser Jon Dennis has put together a guide for companies, which he has been circulating for free among the local SME community in their hour of need. He said he hoped to summarise what options were available to companies during this difficult and worrying time. His help is set out here:
Income replacement for the self employed What it is:
You will be able to receive 80 per cent of your average wage based on your last three years’ tax returns (or less if you didn’t trade for that long).
This will be for just three months.
You don’t have to stop work.
It is payable in June.
HMRC will know who you are and contact you – there is nothing to apply for.
But there is a sting in the tail:
You will not receive it until June 2020 (earliest).
It’s treated as taxable income so you are likely to have to pay 29 per cent tax and NI on it (depending on circumstances) next year.
You had to be self-employed at March 2019.
You had to be earning under £50,000.
Your self-employed income has to be greater than 50 per cent of your total income – ‘hobby’ incomes are excluded.
So you don’t get help if:
You started as self-employed after April 6, 2019.
You profits averaged over £50,000 pa (over the last three years).
80 per cent of a loss is nil.
For businesses Your staff
If you operate PAYE, then you can lay them off (furlough) and receive a grant worth 80 per cent of the gross salary, capped at £2,500pm, for three months. The mechanism is via a HMRC portal.
It is optional if you top up to 100 per cent. They absolutely must stop work for you.
No eviction possible by the landlord for non-payment during the crisis. Your landlord is eligible to mortgage holiday to avoid losing out.
Absolutely vital to communicate with your landlord to ensure the best possible outcome.
You will need to pay the arrears though.
You can defer payments for three months; again you must make up the arrears, albeit normally over the remaining term.
You can take a three-month payment holiday as above.
Empirical evidence suggesting that providers are being very pragmatic.
SMEs: Coronavirus Business Interruption Loan Scheme
A new Coronavirus Business Interruption Loan Scheme will be delivered by your bank via bank lending and overdrafts.
Businesses can access the first 12 months of that finance interest-free, as the Government will cover the first 12 months of interest payments.
Variety of grants available (£25,000/£10,000) depending on your sector and size.
Rates holiday (12 months) going forward for some critically hit industries.
You can claim for Universal Credit or Contributory Employment and Support Allowance.
Quarterly scheme payments deferred until end of the year.
Income Tax Payments
The ‘payment on account’ deferred from July 2020 to January 2021.