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The various initiatives to help SMEs announced by the government since the outbreak of the Coronavirus crisis comprise a mix of various grants and loans outlined below. It excludes those targeted at larger companies (eg the Coronavirus Large Business Interruption Loans Scheme). 

Initiatives such as the start-up loan and R&D tax credit schemes which remain as potential avenues of fund raising are also excluded as they are quite separate from the specific Coronavirus related programs.

English Local Council grants

English councils should automatically pay £10,000 to qualifying businesses without the latter applying for them.  The main qualification criteria are:

  • Business based in England
  • Occupies property
  • Was eligible for small business rate relief (including tapered relief) or rural rate relief on 11 March 2020

Note that English businesses in the retail, hospitality and leisure sectors qualify for grants in a different way.  They are entitled to a one-off cash grant of up to £25,000 from their local council providing their rateable values are £51,000 pa or less (upto £10,000 for rateable values upto £15,000).

Self-Employment Income Support Scheme

This grant is available only to sole traders and not limited companies and must be claimed by 13/7/2020.

It pays a taxable grant worth 80% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

A second grant becomes payable in August worth 70% of average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

The main qualification criteria are:

  • Business trading in the tax year 2019 to 2020
  • Intending to continue to trade in the tax year 2020 to 2021
  • The trade has been adversely affected by coronavirus

Corona Virus Job Retention Scheme

The government pays 80% of wages upto £2,500 pm (or £30k pa) plus employers National Insurance (NI).  It also pays the minimum employers Automatic Enrolment (AE) pension contributions on this amount (ie 3% of that part of the annualised salary grant in excess of £6,240 and below £50,000).  This is thus a maximum of £59 pm per employee.

The company must still pay HMRC all Income Tax and NI on time – the following month.

The scheme runs from 1/3/2020 to 31/10/2020 and until 31/7/2020, employees are not allowed to work at all.  Beyond that, part-time work is allowed with the grant being progressively reduced from:

  • 1/8/2020, the grant excludes pension contributions and NI
  • 1/9/2020, 20% reduction of the grant
  • 1/10/2020, 40% reduction of the grant

The grant cannot be used to fund redundancies but we assume that it can be used to fund notice periods (HMRC information notices as at 10/6/202 are silent on this point)

Corona Business Interruption Loan Scheme (CBIL)

A loan or overdraft upto £5m per company (or group of companies) which is appropriate (ie would meet normal bank credit approval processes in terms of size)

HMRC will guarantee 80% of the loan, but the borrower remains fully liable for the whole loan

HMRC will also pay the first 12 months interest and all set-up fees but thereafter interest will accrue at a commercial rate

All big 4 UK banks have agreed not to seek personal guarantees if loan <£250k

The main qualification criteria are:

  • UK-based in business activites
  • Annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Not have been classed as a “business in difficulty” on 31 December 2019, if applying to borrow £30,000 or more

Corona Virus Bounce Back Loan (BBL)

A loan from £2,000 upto £50,000 based on 25% of the applicant’s 2019 annual turnover

HMRC will guarantee 100% of the loan, but the borrower remains fully liable for the whole loan

HMRC will also pay the first 12 months interest and all set-up fees

After 12 months, the interest rate is fixed at 2.5%

Loan applications are simple and by pass banks’ usual credit approval processes

Loan repayment is over a 5 year amortizing period like a mortgage but can be paid back early without penalty

The main qualification criteria are:

  • UK-based in business activites
  • Was established before 1 March 2020
  • Has been adversely affected by the coronavirus – self certified
  • If the business was classified as a business in difficulty (eg loss making), then self certifying that the business is complying with additional state aid restrictions

VAT Deferral

Without informing HMRC, companies may defer any VAT payments falling due between 20/3/20 and 30/6/20.  Instead such liabilities only need be paid by 31/3/2021.

All VAT returns must however be submitted on time.

This initiative does not cover import VAT or VAT Mini One Stop Shop payments – which relate only to the supply of certain digital services.

Income Tax Deferral

Certain individuals and entities are obliged to make interim income tax payments on 31/7/2020 (eg trustees, partnerships, people with property income).  These payments may now be deferred until 31/1/2021 without penalty or late interest.

Statutory Sick Pay (SSP)

Government pays 2 weeks relief per employee upto £94.35 pw

For coronavirus, SSP applies from the first day of sickness, not after day 3 which is the norm

Note that under existing SSP regulations, it applies upto 28 weeks during which time employees accrue annual leave

Time To Pay

Individual entities may contact HMRC and gain further tax relief.  This is actually nothing new and is totally at HMRC’s discretion.  Such relief arises on an individual basis after one-on-one discussions with HMRC.

Suspension of wrongful trading liability

The Bill will temporarily remove the threat of personal liability arising from wrongful trading for directors who continue to trade a company through the crisis with the uncertainty that the company may not be able to avoid insolvency in the future. Liquidators and administrators will not be able to make a claim against an insolvent company’s directors for any losses to the company or its creditors resulting from continued trading while the wrongful trading rules are suspended. This will remove the pressure on directors to close otherwise viable businesses to avoid potential liability. All the other checks and balances on directors remain in place.

This does not apply to financial services companies.

Initially applies for 3 months from 1/3/2020 and has been extended until 30/6