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    Coronavirus: What financial support is available?

    As the coronavirus (COVID-19) outbreak escalates and with daily government updates on announcements to help businesses and individuals, we have outlined some of the measures being introduced:

    – £330bn Government backed loans for businesses to assist in paying suppliers and employees

    – £20bn tax cuts and grants

    – 3 months mortgage holidays for those affected by the coronavirus

    The latest on these announcements is as follows:

    Support for businesses borrowing up to £5 million

    A new measure announced in the Budget 2020 was the Coronavirus Business Interruption Loan Scheme (CBILS) which will be offered to those who may need to respond to cash flow pressures by seeking additional finance under more attractive terms during the COVID-19 outbreak.

    Due to be available from next week, CBILS will facilitate 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.

    This will not only be for business loans but will also include term facilities, overdrafts, invoice finance facilities and asset finance facilities. The Government will also cover the first 6 months of interest payments, so businesses will benefit from lower initial repayments.

    Eligibility and details of scheme are currently being confirmed by the British Business Bank. However, initial suggestions are that to qualify businesses will:

    – Be UK based, with turnover of no more than £41 million per annum

    – Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – this can be viewed here)

    – 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

    – Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements

    The loan will be provided by the British Business Bank through participating providers and will offer more attractive terms for businesses applying for new facilities, with the aim of supporting the continued provision of finance to UK businesses during the COVID-19 outbreak.

    Applications will go directly through the British Business Banks’ partners, a list of partners can be found here.

    Government cash grants

    The government has announced small businesses that already pay little or no business rates will be eligible for a one-off coronavirus grant worth up to £10,000 to help them meet their business costs.

    Grants are due to be introduced in the coming weeks, more information regarding how to access will then be available.

    There will also be a further grant available between £10,000 and £25,000 to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.

    The Department for Business, Energy & Industrial Strategy will be writing to local authorities this week to outline the scheme and encourage local authorities to prepare.

    Once up-and-running, your local authority will contact you rather than having to apply yourself. Funding will not be available until April, as stated on the government website.

    Business rates holiday

    All retail, leisure and hospitality companies will be exempt from business rates for a whole year. The government will also review the long-term future of business rates.

    ‘Time to Pay’ for business tax

    All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

    ‘Time to Pay’ gives businesses a deferral period on HMRC liabilities owed and puts in place a pre-agreed plan to pay this back.

    HMRC has a set up a telephone helpline specifically for those struggling due to the coronavirus, each case will be negotiated on an individual basis with a tailored Time to Pay arrangement. Details of the helpline can be found on the Government website.

    The number to call is 0800 0159 559

    During the coronavirus outbreak, the usual 3.5% annual interest on deferred tax payments will be waived.

    For businesses considering this as an option, it is important that apply as soon as possible and make the necessary agreement with HMRC before a payment deadline.

    Sick pay costs can be reclaimed

    Emergency legislation is being passed that means employees suffering from COVID-19, or self-isolating, will be entitled to Statutory Sick Pay (SSP) from day 1, rather than observing the customary 3 waiting days. The government will refund COVID-19 related Statutory Sick Pay to small and medium-sized businesses. Refunds for employers will be limited to two weeks per employee.

    The outline criteria for the scheme includes:

    – Employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020;

    – Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19;

    – Employers should maintain records of staff absences, but should not require employees to provide a GP fit note;

    – The eligible period for the scheme will commence from the day on which the regulations extending SSP to self-isolators come into force.

    Repayment of employee sick days will not be through the payroll software. The Government is yet to set up a repayment mechanism, employers may need to wait several months before claims can be processed and for the first reimbursements to be made. It is therefore important that businesses keep good records for making an eventual claim.

    IR35 reforms delayed for a year

    The Treasury has announced the suspension of a £3bn tax avoidance clampdown for a year because of the coronavirus crisis. The reforms will now be introduced in April 2021. The changes are designed to make private sector companies take responsibility for the tax status of the contractors they hire, to reduce the use of personal service companies.

    Mortgage holidays

    Mortgage lenders have agreed they will support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to 3 months. This will give people the necessary time to recover and ensure they do not have to pay a penny towards their mortgage in the interim.

    People affected by the coronavirus should contact their mortgage providers as soon as possible to obtain details of how to access this service.

    Rental market and buy to let landlords

    Whilst the news to protect private renters with a three-month rent-free period is positive, landlords will be concerned. The government have also stressed that as they legislate to protect renters, they would not “pass on the problems” and it is widely expected that the mortgage holiday will be extended to buy to let landlords.

    It is important that landlords are being proactive and, where possible, should be contacting tenants to understand their ability to pay rent. Clearly, given these unprecedented times, tenants are likely to be extremely worried, therefore these conversations need to be carefully handled. It will be extremely important to have a good working relationship with your tenants, so that they contact you if their financial position changes. Giving you plenty of time to agree, for example, a mortgage holiday with your bank or time to pay your July income tax bill.

    What next?

    If your business is feeling the strain due to the coronavirus outbreak, it is important that you seek advice and assess the options at your earliest convenience.

    For further advice or a discussion about your personal situation, please don’t hesitate to get in touch with our team on 01254 679131.

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