Update on Financial Measures for Your Business

Newsletter Archive

CV19 Update - Financial Measures So Far



This week has been just awful on all fronts. No getting away from that. A photo of the dogs doesn't seem to cut it any more. We're doing what we can to help but with so many clients needing help, and the frequency of new announcements from the government, we're conscious we just physically can't speak to everyone personally.

I hate mass mailings but, let's not be coy, this is one. I've put together this Coronovirus-specific mailing list to keep everyone updated on developments as we know more. If your colleagues, friends and family would like to be included in these messages, please ask them to email me here.

What I plan to do is send round a summary of "where are we now" and ask you to contact me if you'd like more information on any particular points. I am making myself available over the weekends too if you'd like to chat.

There's a lot of information out there which appears to be just copy/paste announcements but I have tried to 'flesh out' these measures and explain exactly how you apply for them and/or when you can expect to see the cash in your bank.

BUT WE NEED YOUR HELP - we want to hear real-world experiences of the reliefs available, and access to new finance, so we can build a map of how things are rolling out across the UK, and whether the measures are manifesting themselves as promised. We don't care if you're a client or not - we're genuinely all in this together - and information will be shared anonymously with everyone in this group.

We have made a decision not to charge for our telephone advice for the CV19-related issues that you are having. It just doesn't seem right. However, I would appreciate your patience as we do our best to man the phone lines - please leave a message and we'll get back to you when we can.

So without further ado, lest the information change faster than I can type, here's where we are after a rather disturbing and emotional week for everyone: 


BoE Base Rate of Interest

This has fallen from 0.5% to just 0.1%, which makes borrowing cheaper.

When and How do I get this?

If you're on fixed borrowing then there will be no change to your monthly payments (but see below). For those on variable or tracker mortgages, you should see a 0.4 percentage point cut in your mortgage payments very soon.

This doesn't sound like much but if you are paying £1,000 a month on an interest-only mortgage at 2.5%, you'll be saving £160 a month.


Mortgage Repayment Holiday

This has been lauded in the press but, essentially, appears to be little more than a plea from the govt to ask banks to be lenient with their customers. RBS (being govt owned) leads the way and the main banks have also said they will be "more understanding" in the current climate.

When and How do I get this?

It's not automatic, you'll need to agree it with your mortgage company. They have no obligation to allow a mortgage holiday, and will be considered on a case by case basis.


Government-backed Loans

The govt will guarantee 80% of eligible loans made by banks to small businesses, up to £5M. In addition, there will be no interest payments for the first TWELVE months. Crucially, this isn't deferment of interest - the govt will pay this for you.

Remember that you remain 100% liable for the debt, as normal. The govt guarantee simply means more loans are likely to be approved.

When and How do I get this?

The scheme will be available from the 23rd March, and you should apply to your bank directly (not the Govt). It's up to each bank to decide how much it will lend and at what rates, although please note that this only applies if you don't meet the criteria for a normal commercial loan from your bank.


Up to £25K Cash Grants for Small Businesses

What's available?

If your business already claims Small Business Rates Relief, you'll be entitled to a cash grant of £10,000 even if you pay no business rates.

But, if your business is in retail, hospitality or leisure, and your rateable value is between £15,000 and £51,000, the grant will be increased to £25,000.

This is a grant, not a loan; it's non-repayable. It'll be counted as income in your business but if you're VAT registered you must treat this as "Outside the Scope of VAT" in your software - otherwise, you'll pay 20% VAT on it.

When and How do I get this?

Local Authorities are still awaiting guidance from central government on how this will work in practice. We understand that your LA will write to you if you are eligible for it.

We'll let you know when they start trickling through.


Rates Relief for (Most) Small Businesses

In addition, for businesses in retail, hospitality or leisure there will be NO rates to pay in respect of the 2020/21 tax year.

When and How do I get this?

This will be automatic and reflected in your next rates bill (which will be £nil...). Please let us know if you believe you qualify for the relief but are charged rates.


80% Grants for 'Furloughed' Workers

If you're forced to lay off workers, this scheme will instead pay 80% of their wages (up to £2,500 per month) if you keep them on the payroll but off work, either on full or reduced pay. Currently this is for up to three months.

We don't yet know if this will apply to employees who only have their hours cut - it appears to be an "all or nothing" position at the moment,

Remember, you must still apply any terms of their employment contract - nothing has changed there, only that the govt will help support their wages.

When and How do I get this?

As yet, we don't have anything more than the govt statement that "HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers."

In the first instance, you'll need to pay your employees, and claim this back from HMRC in due course, which I appreciate isn't very comforting right now. Obviously we'll let you know once this system is in place.


Statutory Sick Pay for Employee and Employers

There's no change to the rates of SSP per se. The big change for employees is the eligibility criteria. Normally this is only payable from the 4th day of your illness, but where you or someone in your household has symptoms of CV19 and are self-isolating, employees can claim SSP from day one.

Normally employers have to absorb the cost of SSP - despite its "statutory" title, it's not repaid by the govt. However, employees will be able to reclaim the first two weeks of SSP paid to employees in respect of CV19 from 13th of March.


When and How do I get this?

To claim SSP, employees should first get a sick note by calling 111 - they should NOT visit their GP. Otherwise, the only change is that SSP starts from day one rather than day four.

For employers, it's not so clear. HMRC tell us "A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed."

So, for now, employers will still have to foot the bill, and reclaim in due course. Remember, SSP is payable for up to 28 weeks; it's only the first 2 weeks which will be covered by the govt. 

I sincerely hope the above advice does not come in useful for you, but please call if you are affected.


Support for the Self-Employed

Lots of talk about support for employees in companies, but what about the self-employed? As ever, we do end up near the bottom of the pile when it comes to financial support.

I can't offer you much right now, except to say that a) the criteria for Universal Credit for the self-employed has been relaxed and b) the amount you can claim has increased.

The amount varies depending on your personal circumstances, and will be somewhere in the region of SSP. It is unlikely to replace your lost earnings but I would urge you to consider making an application in any case.

Universal Credits are tax-free and are not included in your tax return.

When and How do I get this?

You can apply for Universal Credit online at the gov.uk website, or by calling 0800 328 5644. The requirement to attend a Jobcentre Plus in person has been temporarily scrapped, and quite rightly so.

UC payments are made monthly, direct to your bank account. 


VAT Liability for March 2020

The chancellor has announced a deferral for VAT liabilities - often the largest payment a business makes, well in excess of its PAYE or Corporation Tax payments.

His speech only referred to deferring the 31 March quarter-end. Most businesses prepare returns on the 'calendar quarter' basis, but we are waiting for confirmation that those who prepare returns to April and May will also benefit from the deferral. I will let you know when we have more information.

The payment for this quarter will be deferred until March 2021. The next VAT quarter (i.e. 30th June) will be payable as normal BUT if your business has been hit hard, you're unlikely to have any VAT to pay anyway.

Remember you still need to file your VAT return by the usual deadlines.

When and How do I get this?

If you make a manual BACS payment each quarter but are unable to do so...you simply don't make your March payment. There is no need to agree the deferment with HMRC.

If you pay your VAT by direct debit then, in theory, the payment won't be taken. But for your own peace of mind you may wish to cancel your direct debit just in case the system does try to take the funds, and revert to manual payments.

If you are due a refund, this will be paid to you in the usual way.

Regardless of your VAT payment, there may be merit to you temporarily changing your VAT scheme or deregistering from VAT altogether - that's outside the scope of this email so please call me to see if this may benefit you.


Personal Tax Liability for 31 July 2020

From the initial promise of leniency at HMRC, the chancellor has gone one further and announced that, for the self-employed, your 'Payment on Account', which is due on 31st July 2020, will not now be payable until 31 January 2021.

There will be no interest or penalties for late payment, until after January 2021.

When and How do I get this?

This is automatic for self-employed taxpayers - you simply don't make your July 2020 payment, if you are unable to. At the moment this only applies to those with self-employed income; please call me if you want to understand whether you would meet the criteria.

On behalf of the rest of the UK, however, if you are in a position to make this July payment without hardship I would ask you to pay what you can to support the economy - we don't know how long or how hard this is going to be for everyone, and your contributions will be valued.



The above is certainly not an exhaustive list of the measures announced this week, but it covers the most important ones for individuals and small businesses.

I'll do my best to keep you abreast of new financial developments, but please bear in mind that almost everything currently announced is still in the process of being brought in to legislation and everything is a moveable feast.

Clearly we have closed the office for face to face meetings, but you can reach us on Zoom, Google Meet or the trusty telephone.

If you'd like to book a NO CHARGE call to discuss any of the above, or how your business has been affected in general, we've set up a dedicated appointment you can book here: https://calendly.com/blue-penguin/coronasupport

In the meantime, stay safe, stay tuned and stay indoors.


Peter and the Blue Penguin team.

Smallprint: this is a massively fluid situation. The above is our understanding right now, but things are changing daily. We'll do our best to keep you up to date with more information as we get it. Please call us for clarification on any points above.


Blue Penguin Chartered Accountants • 16 Claremont Drive, Taunton TA1 4JF

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