Morton Fraser – Coronavirus Buisness Support
The events in the past few weeks are unprecedented, and with the situation changing hourly businesses need to have some certainty that support will be provided. We have put this note together to provide a list of sources where businesses might find what support is available and how it will be delivered.
If you are a small business based in Scotland, and have a total rateable value up to £35,000, you may be able to access rates relief via the Small Business Bonus Scheme https://www.mygov.scot/non-domestic-rates-relief/small-business-bonus-scheme/. The following relief is available to qualifying businesses:
- total rateable value up to £15,000 – 100% relief (no rates payable) on each individual property
- total rateable value of £15,001 to £35,000 – 25% relief on each individual property with a rateable value of £18,000 or less
You can apply for the Small Business Bonus Scheme through your local council by completing an application form. You may also be eligible for an additional £10,000 grant from the Scottish Government.
If you are a Scottish business in the hospitality, tourism or retail sector and your property has a rateable value between £18,000 and £51,000 you may be eligible for a £25,000 hospitality, leisure and retail property grant. You may also be eligible for one year’s 100% non-domestic rates relief for retail, hospitality and tourism.
It will be possible to apply for the grants from 24 March 2020 and they will be available to 31 March 2021.
Scottish Enterprise has also compiled a useful list of websites which provide information on business continuity https://www.scottish-enterprise.com/learning-zone/business-guides/components-folder/business-guides-listing/covid-19-advice-for-businesses-in-scotland
The Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’ (CBILS) at the last budget, and this scheme is expected to become available from the 23rd March to small or medium sized businesses https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/. The British Business Bank through participating providers will provide various types of financial support options to eligible businesses. The maximum value of a facility provided under the scheme will be £5 million pounds. The Government will pay for the first six months of interest payments but the business will remain liable for repayments of the capital. To qualify for support via CBILS your business must:
- 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 – see https://www.british-business-bank.co.uk/wp-content/uploads/2020/03/Ineligible-and-Restricted-Eligibility-Sector-2017.pdf)
- 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
For large businesses, you may be able to access the Covid Corporate Financing Facility, a scheme provided through the Bank of England https://www.bankofengland.co.uk/markets/market-notices/2020/ccff-market-notice-march-2020. Businesses must be able to demonstrate they were in sound financial health prior to the current crisis. Further details of the Facility, including application forms, terms and conditions and operating procedures will be published on the Bank’s website on the 23rd March.
To understand what your insurance covers you for The Association of British Insurers have provided a COVID-19 Q&A here https://www.abi.org.uk/products-and-issues/topics-and-issues/coronavirus-qa/
VAT payments for the next quarter have been deferred until June 2020. All payments due for Income Tax Self-Assessment on the 31st July will be deferred until 31st January 2021.
Last week the government announced that the Coronavirus Job Retention Scheme had been created, with the government paying 80% of the wages of non-working retained employees up to £2,500 per month. To access the scheme you will need to:
- designate affected employees as ‘furloughed workers’ and notify your employees of this
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
Please note that changing the status of employees remains subject to existing employment law and would have to be agreed between the employer and employee. Existing employment contracts may have to be varied.
Legislation will be enacted to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- 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 and payments of SSP
- the eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
The government can provide support to those who are self-employed as follows:
- self-employed people will be able to apply for a grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month
- to qualify you must have been self-employed as of 5 April 2019, anyone commencing as self-employed after this date will not be included
- the scheme will run for 3 months from 1 March 2020, and will be extended if necessary
- HMRC will contact you if you are eligible and payments should be available from the beginning of June (if not earlier)
- when making its assessment, HMRC will take the average of your last three years’ profits from your tax returns for those years
- if you have been self-employed for just one or two years, then HMRC will rely on those tax returns only
- the scheme is open to those who earn under £50,000 a year
- self-employed can continue to work as they receive support
- the grants will be taxable, and will need to be declared on tax returns by January 2022
- company owners who pay themselves a dividend are not covered
If you would like to speak with Morton Fraser for further guidance please contact:
Austin Flynn, Partner- Austin.Flynn@morton-fraser.com
Iain Young, Partner- Iain.Young@morton-fraser.com
Julie Nixon, Senior Associate – Julie.Nixon@morton-fraser.com