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Tag: Grants

Grants

  • Coronavirus Dates To Remember – Just like yesterday’s Valentine date, make sure you don’t miss them!

    BBLs – Loan – apply by 31 March 2021

    Borrow between £2k and up to 25% of turnover up to £50k, very easily with no fees or security and pay annual interest of only 2.5% after 12m, with no repayments due for the first 12m.

    These remain the best loans a small business will ever receive and must be worth considering. We’re seeing the cash give small businesses valuable breathing space so they can focus on re-grouping and re-launching, as restrictions permit.

    Pay As You Grow improvements announced by the British Business Bank on 6 February, appearing to apply to existing BBLs borrowers, allow repayments to be delayed by a further 6m and after making only one repayment the option to pause repayments for up to 6m.

    This is in addition to the existing choices to extend the loan term from 6 to 10 years and/or pay interest-only up to three times during the loan term.

    CBILs – Loan – apply by 31 March 2021

    Designed for small businesses requiring finance for up to £5m, with no personal guarantees required for loans under £250k and even over £250k your home cannot be taken as security. No fees or interest due for the first 12m. These loans may also be extended to a term of up to 10 years.

    Local Authority Grants – current

    There are six schemes currently available:

    • Closed Businesses Lockdown Payment – from 5 January 2021
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by Tier restrictions from 2 December
    • Local Restrictions Support Grant (Open businesses) – hospitality, accommodation and leisure businesses
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by November and from 5 January national restrictions
    • Local Restrictions Support Grant (Sector) – nightclubs, adult entertainment venues and similar
    • Additional Restrictions Grant – discretionary

    For example, a small local authority discretionary Additional Restrictions Grant may be available to a home based business which has been severely impacted throughout, such as an events business.

    Business Rates Holiday (retail, hospitality & leisure) – to 31 March 2021

    Might this be extended in the Budget? We’ll let you know on 3 March…

    Full or Flexible Furlough – to 30 April 2021 – claim within 2 weeks of each month

    The government continues to pay 80% of furloughed non-working hours, the employer paying only employer NIC and pension contributions. Remember to claim within the specified 2 week date of the month end for each claim. 

    SEISS 4.0 – to 30 April 2021 – claim details due by 3 March 2021

    Details of the fourth self employed grant covering February, March and April are due to be announced by Budget day. 

    VAT Deferral – to 31 March 2021 or up to a further 12m – apply from 23 February

    VAT due between 20 March and 30 June 2020 is due by 31 March 2021 unless you apply to join the new interest-free instalment deferral scheme between 23 February to 21 June 2021.

    VAT Rate Reduction (hospitality & tourism) – 20% to 5% – to 31 March 2021

    This increases gross profit margins helping small businesses deal with other aspects of the virus such as bringing in safety measures or adapting their business model. Another one to look out for on Budget Day.

    Income Tax Returns – extension to 28 February 2021

    Apparently there are still quite a few to be submitted! If 28 February is missed, the usual £100 penalty is due, even if no tax is due, escalating after that for continuing delays.

    Income Tax Deferral – apply before 2 March 2021.

    If you’ve missed the 31 January payment deadline make sure you pay or enter an online deferral agreement before 2 March 2021 [EDIT: NOW AMENDED TO BY 1 APRIL 2021], to avoid a 5% surcharge. If you owe more than £30k in total, you’ll need to contact HMRC to agree a bespoke payment plan – known as Time To Pay.

    Other Taxes -Time To Pay – case by case – as early as possible

    This has always existed for taxpayers in difficulty. Approach HMRC as early as possible to agree a realistic payment plan. 

    Businesses have done well to keep going and many have improved their entire business model for the long term. Make sure you get the help for your long term success while you can.  

  • Coronavirus Grants 2.0 – Finding Your Exit – Small Businesses

    Apart from using the same £2,500 monthly maximum, the two schemes are very different with the self employed now compensated for a maximum of 6 months and employees a maximum of 8 months. This perhaps reflects the fact that the self employed can work as much as possible, but employees cannot work at all or, more likely, the government would prefer employers to take more time to make decisions about redundancies.

    What do I need to know?

    Self Employed (SEISS)

    The current version SEISS 1.0 closes on 13 July 2020 with the new version SEISS 2.0 opening in August 2020.

    The maximum drops from £2,500 per month to £2,187.50 per month, rounded up to a 3 month lump sum of £6,570 being 70% of £3,125 or your average profits, as currently calculated, if lower.

    You can claim both grants or only one: SEISS 2.0 is NOT dependent on claiming SEISS 1.0.

    Presumably if you were adversely affected early on, say in April, where your profits dropped in April, but they have since picked up, you can’t claim SEISS 2.0, but this isn’t yet clear.

    Coronavirus Job Retention Scheme (CJRS)

    June – carries on as now, except any employee who needs to be in a claim from July, must be in a claim in June. With the 3 week minimum, this is an effective last date for newly furloughed employees of 10 June. All claims for June (and presumably earlier) must be made by 31 July.

    July – carries on as now, except employers can choose not to claim for any hours/days employees work paying them their full pay as before the crisis.  

    This could be beneficial for shareholder-directors who may be able to generate good profit for their limited companies in a couple of days but pay themselves only their usual small salary.

    August – as July, except employers must pay any employer’s national insurance (NI) and pension contributions on furloughed pay.

    September – as August, except the government grant to the employer is 70% of pay up to a maximum of 70% of £3,125 = £2,187.50 adjusted for any hours/days worked.

    October – as September, except 70% is now 60%, being a maximum 60% of £3,125 = £1,875 adjusted for any hours/days worked.

    What are the figures for shareholder-directors who can’t work?

    Taking the typical reference salary of £719, the £575.20 current furlough claim will change as follows:

    • June £575.20
    • July £575.20
    • August £575.20 (no NI or pension)
    • September £503.30
    • October £431.40

    Unfortunately, a dividend replacement scheme for shareholder-directors wasn’t announced, with the Chancellor reminding us to use other measures such as business bounceback loans, VAT deferral and income tax deferral. HMRC is also being helpful where companies ask to defer corporation tax under general time to pay provisions.

    Further details on both schemes will be available on 12 June. In the meantime, businesses are still working their way through this, looking for their way out.

    Please ask your usual On The Spot contact for further assistance.

  • Coronavirus – Limited Companies – What Are Your Choices?

    Now we’ve probably heard all the major Coronavirus announcements from the Chancellor, what choices do Director-Shareholder Limited Companies have to help them through this crisis? We provide a checklist below with signposting to the relevant part of gov.uk.

    Time To Pay

    Applicable to all companies and all taxes, you can call HMRC and agree a scheduled delay to paying your taxes. Have a realistic proposal that you can stick to. Signpost: https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19

    Time To File

    Companies house will allow you to send in your accounts 3 months later than normal, a increase from the usual 9 months to 12 months, as long as you ask before the 9 month deadline.

    This may help if you’re finding it hard to get your figures prepared, but we would urge all companies to keep their figures and accounts up to date to help them keep on top of their finances particularly cashflow. Signpost: https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts#coronavirus-covid-19

    Corporation Tax

    Using an existing, normal rule, remember that if you make a trading loss during your current year end, you can carry it back 12 months and generate a corporation tax refund from the tax you paid in your previous accounting year.  Your loss may be increased by making a higher home office claim, due to working from home more often than usual.

    Business Interruption Loan

    Applicable to all companies, you may borrow from your current bank or another in the scheme, interest free and fee free for 12 months without providing any security up to £250k. If your company should be viable for the long term, this must be worth a look as a flexible option. Signpost: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

    Director Personal Income Tax Payments Deferral

    You may be due to pay income tax on your dividends on 31 July 2020 on account for the 2019/20 tax year. HMRC will not charge interest if this isn’t paid on 31 July, as long as it’s paid by 31 January 2021, the next income tax payment date. Again, this is designed to provide some immediate breathing space, but will need to be paid 6 months later along with any other income tax due by 31 January 2021. Signpost: https://www.businesssupport.gov.uk/deferral-of-self-assessment-payment/

    If your dividends are less than expected for this tax year to 5 April 2020, it should be worth sending in your income tax return as soon as possible after 6 April to generate an income tax refund from your January 2020 payment on account.

    Director Personal Mortgage Or Rent Deferral

    To help your personal cashflow further, reducing the need to rely fully on your company’s finances, you may ask your mortgage company or landlord for a mortgage or rent deferral for 3 months. This will need paying back in due course, so be confident this is something you should be able to manage.  

    If your personal finances are very stretched you may want to claim state benefits which can also help with housing costs, if you’re eligible.

    VAT Deferral

    If your company is VAT registered, you won’t have to pay any VAT due between 20 March and 30 June 2020. This covers VAT quarters ended 29 February, 31 March, 30 April and possibly 31 May.

    If you pay by direct debit, remember to cancel your direct debit in good time, and then reinstate it afterwards. HMRC won’t ask for any explanation, charge interest or penalties as long as you repay this VAT by 31 March 2021. This may provide good breathing space for the next couple of months, but do have a plan to refund it before 31 March 2021. Signpost: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19 

    Your VAT returns are due as normal, refunds will be paid as usual and VAT due outside of this period remains due. 

    Job Retention Scheme

    If you have employees whose jobs are at risk due to a downturn in your business, you can keep them on the books by labelling them as ‘furloughed’ employees for a minimum of 3 weeks at a time for a maximum of the three months March, April and May. They cannot do any work at all for you during the period they are furloughed.

    You need to pay your staff and operate PAYE on either full pay or 80% of their pay. The government will refund you, starting at the end of April, 80% of their pay, up to £2,500 per month, plus the associated national insurance and 3% auto-enrolment pension contribution if the employee is enrolled. Sign post: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

    We are still waiting to hear whether owner-directors can ‘furlough’ themselves where their business is on hold but they need to continue to carry out statutory duties such as preparing VAT returns or filing annual returns. If such a director was on a salary of £719 per month, this should mean a maximum refund of £1,725. [EDIT: It has been confirmed that owner-directors can furlough themselves, as long as they don’t work on the business and confine themselves to statutory duties. This is easy to demonstrate for freelancers and consultants who have no contracts at all or if a high street retailer has closed and isn’t carrying out any alternative business activity. The company through the Board of directors needs to make this decision and record it in the minutes of the meeting.]

    Separate to this, if your employees are off work due to being ill from the Coronavirus you can reclaim their sick pay for up to 2 weeks. This is also available to you as a director. Signpost: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-who-are-paying-sick-pay-to-employees

    Business Rates

    If you pay business rates, your company may be entitled to receive a £10k or £25k grant, which we assume will be taxable as for most other grants. 

    A £10k grant is available to any business which receives small business grant relief (SBRR) Signpost: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-that-pay-little-or-no-business-rates

    If you’re in the retail, hospitality or leisure sectors, you’ll pay no business rates from 6 April 2020 to 5 April 2021. If your rateable value is up to £15k, you’ll receive a grant of £10k, or if it’s between £15k and £51k a grant of £25k. Signpost: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-retail-hospitality-and-leisure-businesses-that-pay-business-rates 

    You don’t need to take any action because your local authority will contact you.

    In summary, please take appropriate advice to ensure you optimise your company’s particular situation. We’re in a fast moving situation and HMRC might amend its guidance without any signposting at all! 

    Stay well.