As more and more businesses across the UK and the globe begin to experience the immediate economic impact of the coronavirus crisis, controlling cash flow has never been more important. The Government has introduced an unprecedented package of financial measures to help businesses through this challenging time.
While guidance is continuing to evolve daily, I’ve taken a look at the financial support available to businesses now and how this can help to preserve and inject much needed cash into your business.
Firstly, the Coronavirus Job Retention Scheme was introduced to help protect jobs during the crisis. For employers, this is a scheme that has been a real lifeline for many. Under the scheme the Government will cover employee costs up to 80% or a maximum of £2,500 per month. HMRC will launch the claims portal on Monday 20 April to allow employers to register their furloughed employees, with the payment to follow. Originally it was stated that employees who were furloughed could not take up other employment, but it has now been clarified that those on furlough can work for another employer. For those businesses that have, or are planning to sign up to this scheme, it is important to adequately document calculations and details of any claims, as HMRC may ask to review these in the future.
For self-employed workers a similar scheme has been set up with new guidance released just this week. Under the Self-employed Income Support Scheme HMRC will review the past three years of tax returns to calculate support worth up to 80% of average monthly trading profits, up to a maximum of £2,500 per month. This will be available to those who earn the majority of their income from self-employment and whose annual profits are less than £50,000. HMRC is aiming to contact eligible taxpayers by mid-May and will ask for an online form to be completed as part of the process.
For preserving cash in your business, HMRC has announced that businesses with a VAT payment due between 20 March and 30 June 2020 can defer the payment until 31 March 2021, personal tax payments due by 31 July can be deferred till January 2021 and a time to pay arrangement is available, on a case-by-case basis, for those businesses struggling to pay PAYE or corporation tax.
If you need a cash injection, the Coronavirus Business Interruption Loan Scheme could be an option. While ultimately the loans will have to be paid back, the first 12 months of interest and any lender-levied fees will be paid by the Government. These loans are administered through the banking system and are specifically to help businesses deal with the impact of the coronavirus crisis on their business, they can’t be used for normal business investment such as new machinery.
As well as business rates reliefs, if your business is involved in leisure, retail or hospitality and you have a rateable value between £18,000 – £51,000 a £25,000 grant is available. This week the Scottish Government announced that it was extending the Small Business Grant scheme to ensure that, in addition to a 100% grant on the first property, small business rate payers will be eligible to a 75% grant on all subsequent properties. Further, some businesses eligible for small business rates relief or rural rates relief are also eligible for a £10,000 grant. Check your local council website for details of how to apply for these grants.
For businesses that are feeling the financial effects of the lockdown, keeping a positive cash flow is key to survival. Make sure all the possible support measures have been claimed and watch out for further announcements as they arise. For the bank support available, a detailed cash flow forecast will be required, but even if bank lending is not being sought, it is still good practice to have a plan which monitors cash income and expenditure for the immediate future during this challenging time.
Get in touch to find out more: T: 01786 459 900, E: Graeme.Bell@jcca.co.uk
Disclaimer: This article was drafted on 17 April 2020. New updates are being released by the Government daily so we would urge readers to refer to the Government website for the latest guidance.