COVID-19: advice for businesses and individuals

The COVID-19 pandemic continues to cause significant concern from both a public health and financial perspective. In these testing times, much of the business community is facing unprecedented pressures and difficulties.

HM Government and The Bank of England have announced several initiatives to support individuals, SMEs and larger corporations through this difficult period. On this page you will find a summary of all the key details.



Summary of key policy announcements

The Chancellor announced that HM Government will cover up to 80% of the wage cost of employees designated as “furloughed” because of the COVID-19 pandemic, provided they are kept on the employer’s payroll. All UK businesses are eligible.

  • Ceiling of £2,500 per month, with employers able to top up salaries above this level if they choose to
  • Employers’ NICs and minimum automatic enrolment employer pension costs will be reimbursed in full on top of this until 31 July 2020 (i.e. not included in the £2,500 ceiling)
  • Dividends are excluded
  • The scheme will be backdated for those who have been unable to work since 1st March 2020
  • Employers are able to reemploy and furlough recently departed staff who are now in employment limbo as a direct result of COVID-19
  • CJRS closed to new entrants from 30 June, hence employees must have been furloughed by 10 June to comply with minimum 3 week rule
  • From July the scheme allows flexible part-time working.  The scheme will pay employee costs (up to the threshold) for the time they are furloughed, with employers paying for the time they are working
  • From August, employers will pay NIC and pension contributions for those employees on furlough
  • In September, the scheme will cover 70% of wages up to £2,187.50 for the hours employees are not working. Employers will cover the “remaining” 10% (can cover more) plus NIC and pension contributions
  • In October, CJRS will cover 60% of wages up to £1,875 for the hours employees are not working. Employers will pay the “remaining” 20% (or more) plus NIC and pension contributions
  • The scheme will end on 31 October 2020

For further information please contact Iain Dowling, Director, Private Clients.

The Coronavirus Business Interruption Loan Scheme (CBILS) can assist businesses with loans of up to £5m. The scheme may also be used for unsecured lending of up to £250,000.

Here are the key details:

  • Launched by HM Government for SME’s (turnover up to £45m) and to be delivered by the British Business Bank (BBB)
  • The Chancellor has confirmed that self-employed individuals and partnerships may also apply, with minimum loan amounts of £25,000
  • Product type: 
    • Overdraft
    • Invoice finance – max 3 years
    • Asset finance – max 6 years
    • Term loan – max 6 years
  • Facility amounts: Up to £5m (limited to 25% of annual turnover or 2 x annual wage bill, whichever is greater)
  • Term: 3 months up to 6 years (for term loans and asset finance)
  • Pricing: Interest free for first 12 months.  Some lenders are also providing repayment holidays of up to 12 months
  • Other: 
    • HM Government will provide a guarantee to lender for 80% of facility value
    • The Chancellor has confirmed that no personal guarantees will be required for loans below £250k
    • For facilities above £250,000 personal guarantees may still be required, but must exclude Principal Private Residences. Moreover, any recoveries will be capped at a maximum of 20% of the outstanding balance on the facility after the proceeds of business assets have been applied
    • Insufficient security is no longer a condition to access the scheme
    • No guarantee or arrangement fees
  • Eligibility:
    • UK based
    • Turnover of no more than £45m per year
    • Operate within an “eligible” industrial sector (excluded sectors include banking, insurance, pubic-sector organisations and trade unions)
    • Have a “sound” borrowing proposal were it not for the current pandemic
    • Not received de minimis state aid beyond €200,000 over the current and previous two fiscal years
    • Please note that companies already in receipt of R&D tax credits may be restricted from claiming loan scheme support due to the Notified State Aid criteria. Please contact us if you have any concerns on this matter.

Borrowers should approach one of the accredited BBB lenders with a “viable” proposal. This must show that were it not for the COVID-19 pandemic the business would be considered viable by the lender, and the provision of the specified finance would enable it to trade out of any short to medium term difficulty.

The Corporate Finance team at Ashcroft has great experience in helping SMEs raise different types of finance and have strong relationships with many of the pre-approved lenders. To find out more, please contact Tom Gallop, Partner, Corporate Finance.

Coronavirus Large Business Interruption Loan Scheme (CLBILS) was announced to tackle the so-called ‘squeezed middle’ businesses not covered by the original CBILS measures. This provides a government guarantee of 80% to banks making loans of up to £25m to businesses with an annual turnover of between £45m and £250m and up to £200m for businesses with turnover above £250m.

Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest but the government will not cover interest or fees in the same way as the small business scheme.

Companies borrowing more than £50m through this scheme will be subject to restrictions on dividend payments, senior pay and share buybacks during the period of the loan, including a ban on dividends and cash bonuses unless previously agreed before funding.

The Chancellor announced funding measures to enable SME’s to borrow between £2,000 to £50,000, for up to 6 years and capped at 25% of turnover.

There will be no repayments, fees or interest in the first 12 months, and the Government will guarantee 100% of the loan. The remaining period of the loan will attract interest of 2.5%.

Much like CBILS, the scheme is being administered by the British Business Bank and currently has well over 20 accredited lenders on board.

Eligibility:

  • UK based
  • Negatively impacted by COVID-19
  • Was not an “undertaking in difficulty” on 31 December 2019, meaning accumulated losses cannot exceed 50% of subscribed share capital
  • Cannot apply if in the following sectors:
    • Banks, insurers, re-insurers
    • Public sector bodies
    • State funded schools
  • Cannot apply if already claiming under CBILS but may transfer a CBILS loan to the bounce back scheme if loan amount is less than or equal to £50k

The Corporate Finance team at Ashcroft has great experience in helping SMEs raise different types of finance. To find out more, please contact Tom Gallop, Partner, Corporate Finance.

The CCFF is aimed at supporting the liquidity of larger corporates “who make a material contribution to the UK economy” by allowing them to raise short-term (up to 12 months) financing through issuing commercial paper which will be purchased by The Bank of England.

Please contact Tom Gallop for further details if you believe this scheme may apply to you.

The “Future Fund” was announced in order to support the UK’s innovative businesses that are currently affected by COVID-19.

Many of these businesses have thus far been unable to access other government business support programmes, such as CBILS, because they are either pre-revenue or pre-profit, and typically rely on equity investment.

The scheme will deliver an initial commitment of £250m of new government funding and will initially be open until the end of September 2020.

  • Eligibility:
    • UK based unlisted companies
    • Raised at least £250k from private 3rd party investors in the last five years
    • If part of a group, only the ultimate parent company is eligible
    • Loans provided on a matched basis alongside other private 3rd party investors. (Government loan will not exceed 50% of the bridge funding being provided)
  • Size: Convertible loans between £125k and £5m. Note: There is no cap on the amount that the matched investor(s) may loan
  • Term: Maturity after a maximum of 36 months
  • Pricing: Interest rates will be at least 8% per annum, with interest to be paid on maturity

The loan will convert to equity if not repaid before the next qualifying funding round, a sale or an IPO, at a minimum 20% discount rate.

The Future Fund is being administered by the British Business Bank and any applications must be made before the end of September.

The Corporate Finance team at Ashcroft has great experience in helping SMEs raise different types of finance. To find out more, please contact Tom Gallop, Partner, Corporate Finance.

A new £200m fund has been launched to provide financial support to businesses to keep their cutting-edge projects and ideas alive. Aimed at new tech and R&D intensive businesses, funding could go towards developing new technologies focused on making homes and offices more energy-efficient to cut bills, creating ground-breaking medical technologies to treat infections, or reducing the carbon footprint of public transport.

In a move to support more ‘climate-positive’ behaviours, businesses could also make use of the fund to develop smart sustainability-focused projects – from apps encouraging people to cut down their food waste to sustainable biodegradable packaging.

The fund will be administered by Innovate UK.

 

The SEISS is designed to support self-employed individuals (including members of partnerships) whose finances have been adversely impacted by COVID-19.

The scheme will provide taxable grants to the value of 80% of trading profits, up to a cap of £2,500 per month.

HMRC will use the average profits from the last three years tax returns (18/19 return must be filed) to calculate the size of the grant.

We have detailed the key elements of the scheme below:

  • Eligibility (must meet all the below criteria):
    • Be self-employed or a member of partnership. (Please note, if you pay yourself a salary and dividends through your own company you won’t be covered by the scheme but may be covered for the salary element by the Coronavirus Job Retention Scheme if you are operating under PAYE.)
    • Lost trading profits as a result of COVID-19
    • Filed your 18/19 tax return – those who haven’t have until April 23rd to do so
    • Are currently trading (or would be except for COVID-19) and intend to continue doing so
    • Have average trading profits of less than £50,000
    • More than 50% of your total income comes from self-employment
  • Grant payments expected to commence at the beginning of June, with payments backdated to March
  • HMRC will contact eligible individuals directly to invite applications
  • You are able to continue working and take advantage of this scheme (unlike The Job Retention Scheme)

Given the expected time lag on SEISS grants, we would encourage those affected to take advantage of the improved Universal Credit and business continuity loans (See CBILS above) if necessary. Furthermore, please consider other measures that may alleviate cashflow pressure such as VAT and self-assessment income tax payment deferrals, as detailed below.

A new online service launched for SME’s to recover coronavirus related SSP payments made to their employees.

  • Eligible employees (self-isolating or caring for people within the same household) covered from day 1 instead of day 4
  • No sick note required, isolation note from NHS111 online will suffice
  • Businesses can reclaim SSP paid to employees for up to 2 weeks sickness due to COVID-19
  • Eligible for SMEs with a workforce of fewer than 250 employees

The Time to Pay (TTP) service can be used by businesses to negotiate payment terms for tax and related penalties.

  • The Government has suggested that all businesses and self-employed individuals in financial distress and with outstanding tax liabilities may be eligible to receive support with their tax affairs (including PAYE) through HMRC’s time to pay service.
  • A dedicated helpline has been setup by HMRC to address each case individually, with arrangements expected to be tailored to specific circumstances
  • The HMRC helpline number is: 08000 159 559

The Government has recognised that these sectors have been affected perhaps more than any other by the COVID-19 crisis and the corresponding advice given to the public.

As a result, some significant announcements have been made:

  • Relief in the form of a “rates holiday” for the 2020/21 tax year, irrespective of rateable value for businesses in these sectors
  • Further cash grants of up to £25,000 available for those with a rateable value between £15,000 and £51,000. This granty is subject to tax
  • One-off grants of up to £10,000 available for businesses currently qualifying for Small Business Rates Relief (SBBR) or Rural Rate Relief (rateable value of under £15,000) to help meet ongoing business costs. This grant is subject to tax
  • VAT will be cut from 20% to 5% for the hospitality and tourism sectors from 15 July 2020 to 12 January 2021. This reduced rate will only apply to supplies of food and non-alcoholic drinks, as well as accommodation bookings and leisure attractions.

Enquiries should be made direct to your local authority as soon as possible

A new grant of £2,000 will be made available to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1 August 2020 to 31 January 2021. Employers who provide trainees with work experience will be awarded a further £1,000 per trainee.

Moreover, under the new Kickstart Scheme, £2bn has been allocated to fund 6-month work placements for people aged 16-24 and deemed at risk of long-term unemployment. Funding will cover 100% of the National Minimum Wage for 25 hours per week plus associated National Insurance Contributions and automatic pension enrolment contributions.

HM Government will fund a 50% discount of up to £10 per head on eat-in meals, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount.

Participating restaurants must have been registered as a food business with their local authority on or before 7 July and can register for this scheme from 13 July by clicking here.

Claims for payment can be made weekly and the last claim must be made by 30 September. Payments will be made within five working days of claims being submitted.

  • Corporation tax loss relief – HMRC have updated their guidance to allow companies to claim relief for the carry back of losses arising in “exceptional circumstances” before the end of the loss-making period. The claim can be made by writing to HMRC but will need to be supported by management accounts and forecasts showing how the anticipated loss has been calculated. They have also updated their guidance for ompanies who make quarterly instalment payments to allow them to reclaim payments made before the exceptional circumstances caused their estimated profits to fall.
  • VAT deferral – any quarterly VAT payments due between 20 March and 30 June will be deferred automatically until 31 March 2021. Please note, returns should still be filed on time and any direct debit will need to be cancelled (although repayments can be made from HMRC)
  • Ability to file accounts late – businesses now receive an automatic extension for filing accounts, confirmation statements and certain other filings, provided the filing deadline falls between 27 June 2020 and 5 April 2021. For accounts, the deadline is generally extended by 3 months
  • Confirmation that Government advice is sufficient for businesses to claim on their insurance if appropriate pandemic cover is in place
  • Commercial tenants who cannot pay their rent until 30th September are protected from eviction. However, this is not a rental holiday
  • IR35 legislation to be delayed until at least April 2021
  • Funding of up to £25,000 available from TechForce19 to technology companies who can find digital ways to support people staying at home, e.g. providing remote social care, boosting the volunteer sector, improving mental health support
  • Grants of up to £50,000 available to tech and research focused businesses to develop new ways of working and help build resilience in industries such as delivery services, food manufacturing, retail and transport
  • Councils have been given additional funds to make grants available to businesses who would not otherwise qualify. These grants are for £25,000, £10,000 or any amount below £10,000
  • Business rates holiday for 2020/2021 tax year for properties rented by Early Years nurseries
  • The self-employed can now access full Universal Credit at a rate equivalent to SSP
  • 3 month mortgage payment holiday available to home owners and landlords who are experiencing difficulties due to COVID-19 (note interest will still accrue on remaining balance). Further 3 month payment holidays can be applied for and individuals yet to apply have until 31 October to do so
  • Nearly £1bn of additional support pledged for renters, in the form of Housing Benefit and Universal Credit. From April of this year, Housing Allowance rates will pay for at least 30% of market rents in each area
  • Tenants can apply for a 3 month payment holiday. No one can be evicted from their home or have their home repossessed until at least 23 August 2020
  • Payments due on the 31st July 2020 under income tax self-assessment will be deferred until 31st January 2021. No penalties or interest will arise
  • Individuals working from home can apply for a refund on their season tickets through the relevant rail operator and TFL
  • There is a temporary increase to the Nil Rate Band of Residential SDLT in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021
  • Workers who have not taken all of their statutory annual leave entitlement due to coronavirus will now be able to carry it over into the next 2 leave years
  • A £500m Hardship Fund has been established to provide council tax relief to those receiving Local Tax Council Support
  • Funding: The Government has announced £750m funding for the charity sector. £370m will be provided to small charities working with the vulnerable. £360m will go to charities providing essential services supporting the most vulnerable – of this £200m will go to hospices, St Johns Ambulance, Citizens Advice and charities supporting vulnerable children, the disabled and victims of domestic abuse.  £20m will be donated to the National Emergencies Trust
  • Adoptive families: Up to £8m available for emergency support including online counselling and couples therapy for families whose adopted children may have already suffered trauma and be made more anxious owing to the uncertainty of the effects of the virus. This fund will be accessed via local authorities and regional adoption agencies
  • Prevention of second wave: £200m will back UK charities and international organisations to help reduce mass infections in developing countries which often lack the healthcare systems to track and halt the virus
  • Emergency funding for the vulnerable: The Government has announced £76 million extra funding for charities to support survivors of domestic and sexual abuse, vulnerable children and their families and victims of modern slavery

How Ashcroft Partnership can help

It is clear that the Government is fully committed to assisting businesses and the wider economy through this crisis. We would recommend keeping a constant eye on the gov.uk website for further details on how these and other measures will be implemented.

The Ashcroft Partnership is fully committed to working with our clients and the local business community to make sense of the new measures and support packages and to provide ongoing support and advice.

Our Corporate Finance team, for example, is on hand to assist with cash flow modelling and applications for funding, as well as general advice regards working capital management. Likewise, our Tax Team can assist with HMRC applications (e.g. Time to Pay) along with the other measures detailed above.

Please note, we will be providing regular updates as we hear further news from Government, banks and other agencies executing the schemes. Information from our teams advising businesses and individuals through these challenging times will appear elsewhere on this page.

In the meantime, should you require further information or have any questions regarding any of the above, then please do not hesitate to contact us on 01763 209 113 or at COVID-19@ashcroftllp.com