June 2, 2020
As Scotland enters Phase 1 of easing of lockdown restrictions, we recap on support for business
As we start a new month, a few days into Phase 1 of the easing of lockdown restrictions in Scotland, and with further clarity on the Job Retention Scheme and Self-Employed Income Support Scheme by the UK Chancellor at the end of last week, it’s worth recapping on some of the key measures that have been put in place by the UK Government, Scottish Government, and local authorities since March to assist businesses, employers, and individuals and consider what support is still available in the coming weeks.
Job Retention Scheme
Many organisations will be very familiar with much of the detail of the first stage of this scheme in the past 10 weeks and have already received grants from HMRC. The premise of the scheme is for employees to continue to receive at least part of their normal wages during this period of uncertainty and for employers to receive a taxable grant from HMRC effectively reimbursing 80% of the normal wages and some employment costs of employees it had placed on furlough. This scheme will remain unchanged until 30 June.
The UK Chancellor announced an update to the Job Retention Scheme on Friday 29 May but a further announcement is expected on 12 June with more precise details on how the next stage of the scheme will work.
As of 29 May, the Job Retention Scheme will continue to remain open until 31 October. Employees enrolled into the scheme will still be entitled to 80% of their usual wages for time they are furloughed until 31 October. The main changes announced on 29 May are:
- The scheme will be closed to new entrants from 10 June (the earliest date that makes them eligible for a claim as at 30 June), which means that an employee must be placed on furlough for the first time by this date for an employer to make a claim in respect of that employee. Note that an employee previously furloughed, and since un-furloughed, can still be re-furloughed at a later date.
- From 1 July, an employee can work part-time and be paid normal wages for doing so but still be paid 80% for the hours/days they are furloughed. As an example, an employee contracted to a 40-hour week could be brought back to work 3 days a week for full pay and receive 80% of wages for the two other days. The current rules are ‘all or nothing’ and do not allow furloughed employees to carry out any work so this new measure gives flexibility to employers who want to operate more in line with the needs of their business. Details on how this might be calculated for employees on variable hours will be announced by 12 June.
- From 1 August, there will be a phasing down of the Government’s commitment to furloughed employees. From August, the employer will not be able to claim back employer’s pension or NI contributions. From September, the employer will have to contribute to 10% of usual wages, with the Government’s contribution reducing to 70% up to a maximum of £2,190 per month. From October, the employer will have to contribute to 20% of usual wages, with the Government’s contribution reducing to 60% up to a maximum of £1,875 per month.
Coronavirus Business Support Fund
There are two main grants available for businesses from local government:
- Small Business Grant Fund – a £10,000 grant to businesses that are eligible for Small Business Bonus Scheme or Rural Relief. Some organisations with Charitable Rates Relief and Nursery Relief are also now eligible. This scheme is for organisations where non-domestic rates would be due but the organisation is eligible for Relief as the rateable value of their business property is under £18,000 for instance.
- Retail, Hospitality & Leisure Grant Fund – a £25,000 grant to businesses in the Retail, Hospitality, and Leisure sector where property has a rateable value between £18,001 and £50,999.
For businesses with two or more premises, there’s a subcategory to this Fund, the Coronavirus Multiple Properties Fund.
This scheme allows additional grants to the value of 75% of the initial grant for a single non-domestic property. So, if your business ran out of four small properties each of which were eligible for the Small Business Bonus Scheme, your business could apply for £32,500 in grants (£10,000 + £7,500 + £7,500 + £7,500).
Applications can be done through your business’s local Council’s website.
The closing dates for applications to the Coronavirus Business Support Fund is 31 March 2021.
Relevant page from the Scottish Government website:
Relevant pages from City of Edinburgh Council and Glasgow City Council website:
Non-Domestic Rates relief
This should be an automatic relief and should have been applied in your annual bill issued by your local council. For those in the Retail, Hospitality and Leisure sector there is a 100% rates relief for the year from 1 April 2020 to 31 March 2021. For other businesses, the relief is 1.6%; effectively freezing the rates at 2019/20 levels.
The main measure offered by the Government in respect of VAT was allowing businesses to defer until 31 March 2021 any VAT payments that fell due between 20 March and 30 June 2020. For those businesses filing monthly and quarterly VAT returns then this covers VAT returns up to 30 April 2020 (as the 31 May 2020 return is due for payment by 7 July 2020). For any businesses that opted for this it is essential that these VAT deferrals are held as a liability in the bookkeeping records so as not to risk spending these funds which will need to be paid by spring 2021.
Another amendment concerning VAT is the temporary zero-rating of Personal Protective Equipment from 1 May to 31 July and will include the supplies of disposable gloves, aprons, and masks, which many businesses are now purchasing in order to protect their staff and premises.
For any individual due to make a Payment on Account to HMRC by 31 July 2020 this can be deferred with payment instead due by 31 January 2021. No application need be made and no interest will be charged on such deferrals. Typically, this will primarily affect self-employed individuals but anyone due to have made a payment, including landlords for instance, can defer income tax until January 2021.
Time to Pay
HMRC have a dedicated helpline on 0800 024 1222 for businesses and self-employed individuals struggling to pay HMRC bills, including outstanding tax liabilities. The scheme existed prior to the COVID-19 pandemic but HMRC has drawn more attention to the availability of this service.
Self-Employed Income Support Scheme
This scheme was set up to act as an equivalent to the Job Retention Scheme and originally covered the 3 month period March to May. The scheme is up and running and individuals that are self-employed or in partnership have been able to apply to the scheme since 13 May. Applications for the first phase of the scheme remain open until 13 July (not a typo, the deadline is the thirteenth of July which is two months after it opened).
The UK Chancellor announced on 29 May that a second grant will be available to cover the 3 month period June to August. From August, applications will be open for the second grant.
To be eligible, a taxpayer must have at least filed their 2018/19 Tax Return and have taxable profits of £50,000 or less on average. HMRC intended to contact everyone who was eligible but may not have done so if an email address was not registered with them, for instance. In which case, it is possible to check your eligibility for the Scheme through the following link (you will need your UTR and National Insurance number):
HMRC will have calculated your total self-employed taxable profits from the tax years 2016/17, 2017/18, 2018/19 to produce an annual average (the total divided by tax return periods). From this they pro-rate 3 months and award a taxable grant of 80% of that figure, capped at £7,500. The second grant, available from August, will award a taxable grant for the equivalent of 70% of 3 months earnings, capped at £6,570.
The Government’s webpage for the SEISS is on:
Coronavirus Newly Self-Employed Hardship Fund
The Self-Employed Income Support Scheme (see above) is eligible only for those self-employed individuals who started prior to 5 April 2019 and have filed at least one tax return with HMRC. For those individuals newly self-employed, the Scottish Government has made available a one-off £2,000 grant. You can apply online through the local authority where you are resident.
Relevant pages from City of Edinburgh Council and Glasgow City Council website:
There are four main business loans established by the UK Government in its response to the pandemic:
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
For companies with a turnover of over £45,000,000 with loans available up to £200,000,000. The maximum term of the loan is three years.
- Coronavirus Business Interruption Loan Scheme (CBILS)
For companies with turnover up to £45milllion, a loan of up to £5,000,000 is available. Personal guarantees may be requested by the banks – over 50 of which are involved are in the scheme – for loans over £250,000. The maximum term of the loan is six years and is interest-free in the first year.
- Bounce Back Loan Scheme (BBLS)
The scheme went live in early May with around 20 banks signing up to the scheme. A business can apply for the Bounce Back Loan Scheme for a loan of between £2,000 and the lower of 25% of the business’s annual turnover and £50,000. There are no repayments in the first 12 months, with interest are set at 2.5%. The loan is 100% guaranteed by UK Government with no personal guarantees required. The maximum term of the loan is six years and early repayments can be made without any penalty. This scheme is useful for any business with short-term cashflow concerns where a small cash injection for items such as computer equipment and investing in home-working may help the business get up and running.
This scheme was introduced to provide match-funding to support start-up or innovative companies where investors would apply to the Future Fund and the company receive 100% match funding from £125,000 to £5,000,000 in the form of a convertible loan. There is strict eligibility criteria and conditions attached to the funding which has a term period of 36 months and no early repayment provision. Applications are available only until 30 September 2020.
Some of the support for business offered by the UK and Scottish Government is also available to charities and many have already applied for such reliefs and grants. There has been additional support from funds made available by the Scottish Government which has been through three main Funds:
- The Third Sector Resilience Fund – this is a Fund set up for those third sector organisations that require help to stabilise and manage cash flows during this period. Costs are intended to cover overheads and essential staff and the award can be in the form of a grant, a loan, or a mix.
- The Wellbeing Fund – this Fund was for those charities working with at-risk groups and providing support on areas such as mental health, personal finances, housing. This fund has now closed.
- Supporting Communities Fund – this is a Fund to support community ‘anchor’ organisations that support local responses to the current crisis and will be community-based charities.
A number of grant-funding bodies have continued to be highly supportive of charities they fund but these Scottish Government-backed Funds are available to offer some charities additional support if required.
The following page on the Scottish Council for Voluntary Organisations (SCVO) website is a useful summary of the support available for charities:
The introduction of the Off-Payroll Working rules to the private sector was due to take place on 1 April 2020 but these have been postponed until 1 April 2021.
Companies House have extended the deadline for filing company accounts by three months for companies that are able to cite COVID-19 as a reason for requiring the extension. To avoid a late filing penalty, an application must be made to Companies House before the end of the existing reporting deadline. The application need not be done through the normal WebFiling service on Companies House website but can be done through the following webpage:
This is not an exhaustive list of all the measures adopted by the Government to keep the economy moving but covers the support available for a majority of organisations during this uncertain period. As can be seen above, a number of the measures are still ‘live’, but some are being wound up or have a set time limit for organisations to apply for a grant, loan or deferral.