Covid-19: further measures announced to help businesses

This article was last updated on 27th April 2020.

On Friday 20th March the Chancellor announced a wide range of new measures designed to help businesses through the Covid-19 crisis. Our chief accountant, Emily Coltman FCA, explains what these latest developments could mean for you and your small business clients.

Upcoming VAT payments to be deferred

If any of your clients were due to make VAT payments between 20th March 2020 and 30th June 2020, those payments won’t be collected. You must still file your clients’ VAT returns on time so that HMRC can see how much it can expect to collect once the deferral period ends, but clients won’t have to pay any VAT.

This is an automatic extension so your clients don’t need to apply for it. However, if they pay VAT by direct debit, clients should cancel the direct debit if they wish to take advantage of the deferral. If they wish to continue making payments, HMRC will not cancel your client’s direct debit.

HMRC’s guidance currently says that taxpayers will be given until the end of the 2020-2021 tax year (i.e. 5th April 2021) to “pay any liabilities that have accumulated during the deferral period”. However, the Chancellor’s statement on Friday referred to the deferral of payments until the end of the financial year (i.e. 31st March 2021). We’ll provide an update when the deadline for making deferred payments has been clarified.

If any of your clients were due to receive a VAT refund during the payment deferral period, they’ll still receive it within the normal timeframe.

Self Assessment payments to be deferred

If any of your clients were due to make a payment on account on 31st July 2020, they won’t have to make that payment until 31st January 2021, and HMRC won’t charge penalties or interest for late payment. This is another automatic extension so clients don’t have to apply for it.

Universal Credit for self-employed people

From 6th April 2020 sole traders and partners - who won’t benefit from the Statutory Sick Pay (SSP) reclaim announced in the Budget earlier this month - will be able to access Universal Credit at £94.25 per week, a rate equivalent to SSP. There’s more information about how to claim this on the government’s Universal Credit website.

Coronavirus Job Retention Scheme

All employers will be able to claim a grant to cover 80% of their employees’ wages, capped at £2,500 per worker per month. This will cover staff who were employed until 19th March, as long as both the following conditions are also met:

• They are still on their employer’s payroll or were re-employed if their employer had already let them go.
• They’re not carrying out any work as a result of the Covid-19 crisis (e.g. their employer’s business has been ordered to close).

While the scheme is in place, employees in this position will be deemed to be “furloughed workers”. They will remain employed but must not do any work for their employers. HMRC has clarified that limited company directors who are employees of their own companies will be eligible for the scheme and has provided some guidance about how it will work for them.

Grants provided through the Coronavirus Job Retention Scheme will be backdated to 1st March 2020 and will initially be available for four months. The government’s website states that HMRC is “working night and day to get the unprecedented Coronavirus Job Retention Scheme up and running” and that it expects the first grants to be paid “within weeks”. Here at FreeAgent, we’re working closely with HMRC to make sure that we implement any necessary changes to our software as quickly as we can.

More guidance on grants for businesses with properties

The government announced grants of up to £10,000 for businesses that qualify for small business rate relief or rural rate relief, and up to £25,000 for larger businesses that operate from premises.

In England and Wales these grants will be awarded automatically through local authorities. Businesses in Scotland and Northern Ireland, however, must apply for the grants. Businesses in Scotland can apply through the Scottish government website, while businesses in Northern Ireland can apply though the Northern Ireland Department for Economy website.

More on the Coronavirus Business Interruption Loan Scheme

On Friday, the Chancellor also announced that loans provided through the new Coronavirus Business Interruption Loan Scheme will be interest-free for 12 months rather than six months.

The scheme is open to businesses that make annual sales up to £45m. It covers loans, overdrafts, asset finance and invoice finance. The government will pay the first year’s interest on this borrowing, as well as any fees charged by lenders. The government will also guarantee the first 80% of the loan to the lender, though your clients will still have to repay the full 100% of the loan.

To qualify, your clients must also have a business plan and a borrowing proposal that the lender would accept if it were not for the Covid-19 pandemic.

Businesses in almost all sectors qualify for the scheme, with the exception of:

• banks and building societies
• insurers and reinsurers (insurance brokers qualify)
• public sector businesses, including schools
• employment, political, religious and professional membership organisations

If any of your clients are looking to apply, they should speak to their bank directly or to another participating bank or lender.

And finally…

If any of your clients’ businesses are limited companies or limited liability partnerships and the client is worried that they might not be able to file their business accounts at Companies House on time, they can apply for an extension. You can find out more about this development on the government’s website.

Keep your clients up to date by sharing this version of the blog post with them.