COVID-19 – latest reliefs for businesses, support from banks and dealing with imminent tax payments
Late yesterday afternoon (17 March) the Chancellor of the Exchequer, Rishi Sunak, announced a number of very welcome measures to help businesses through the current coronavirus pandemic. This announcement came only six days after the raft of measures announced in the Budget and illustrates the scale and pace at which things are changing. We expect that that there will continue to be further announcements and further support as it is clear that the economic conditions are unprecedented and other support measures are required.
Amongst the measures announced yesterday were:
- A complete holiday for business rates for the 2020/21 financial year for businesses operating in retail, leisure and hospitality sectors – a significant break for those affected businesses.
- A cash grant of up to £25k for businesses operating in retail, leisure and hospitality sectors. This is linked only to smaller premises with a rate-able value of up to £51k. Grants will be administered by the local authority where each property is based and further details have been promised by 20 March. One slight concern is that at this point in time there is no confirmation on whether the grant is per business or per qualifying property.
- Further enhancement of an employer’s entitlement to reclaim the cost of COVID-19 related Statutory Sick Pay from HMRC. This does have strings attached and limitations
- Government support (by way of an 80% guarantee) for loans to business of up to £5m. Such loans will be interest free for the first six months. The loan scheme is being administered by the British Business Bank and is expected to be rolled out week commencing 21 March.
- Continued support from HMRC allowing “time to pay” for various taxes with an increase in HMRC resource for handling requests.
In addition to the government initiatives it is also clear that the individual banks are taking proactive steps to help customers. One bank’s list of initiatives include; temporary emergency loans with no fees; business interruption loan scheme (to be delivered by the British Business bank – see above); granting working capital facilities to businesses with supply chain disruption; cashflow support with credit limits between £25k and £500k based on unpaid invoices; and up to 6-month capital repayment holidays on variable rate lending; interest reductions.
Practicalities of immediate actions for businesses
We are in dialogue with banks to find out how clients can access funding. Clients who have a relationship manager should contact them to find out more details specific to their bank and their circumstances. However, it is clear from our conversations this morning with senior bankers in the region that there is limited guidance at the moment, but things are moving rapidly. If clients would like to discuss any issues with UNW please contact your usual partner/manager who will be briefed on the latest position or can pass you on to a colleague.
In relation to impending payments of tax, most businesses will be facing a PAYE/NI payment being due by Friday for deductions from February pay. The timing of VAT payments will depend on VAT return periods with VAT due at the end of March for businesses with a VAT quarter which ended on 29 February. Corporation tax is likely to be less pressing for many businesses but, leaving aside companies in the quarterly payments regime, that depends on the timing of year ends and a company with a 30 June year end may be facing a due date for payment of 1 April. Some clients may be comfortable contacting HMRC directly to discuss deferring tax and the number to do so is 0800 0159 559 (this is a dedicated number set up by HMRC for COVID-19); other clients may prefer some support or assistance. If you wish to discuss time to pay with us please contact your usual tax partner/manager or one of the following:
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