We know you are likely to have many questions about the various support measures on offer from the Government and the various changes to existing rules regarding your business.

To help we have collated various frequently asked questions and provided answers to these to help you navigate these new arrangements.

Coronavirus Business Interruption Loan Scheme (CBILS)

You will need to submit a detailed application for the funding you need to the lender. This will vary from lender to lender.

The British Business Bank also advises that you will need to provide certain evidence to show that you can afford to repay the loan. For larger facilities, this may include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of business assets

The above requirements will also vary from lender to lender. If you do not have access to everything listed above, that does not mean you will be ineligible for a CBILS loan, but it may affect your ability to access finance.

Yes, you are free to make as many applications as you like. If you were rejected previously by a bank at the start of the crisis it is advised that you consider reapplying as the Government has changed the rules to encourage lenders to support more businesses.

Alternatively, if you are finding it difficult to access finance via CBILS you could consider making an application for up to £50,000 of finance via the Bounce Back Loan Scheme (BBLS). You must do this by 31 March 2021.

Due to the volume of requests being made to banks, and the strict controls they have in place, it is taking quite some time to process loan applications and release funds. If you urgently require finance to cover costs within your businesses then you should see what other support is available to you. 

CBILS supports a wide range of business finance products, including overdrafts, as well as term loans, invoice finance and asset finance facilities. The type of finance offered varies by lender, so you should use the British Business Bank’s finance finding tool on its website here.

CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period.

For those that took out loans when the scheme was launched this means that they may face repayments from May 2021.

Most facilities are being offered over a six-year period, which means that businesses will have to repay the debts plus interest over the additional five years.

However, some banks may extend repayment under a restructuring plan at their own discretion.

The Government and the British Business Bank, which is helping to administer the CBILS, have confirmed that no setup fee will be charged.

After the initial 12-month interest-free period ends, lenders should provide businesses with an outline of their repayment costs, factoring in interest.

Pricing varies amongst lenders, but interest rates beyond the 12-month interest-free period are likely to take into account the existence of a guarantee from the Government.

With a loan facility, it may be necessary to provide regular capital repayments, but lenders may be able to provide payment holidays subject to discussions with them.

Businesses who borrow under the CBIL scheme are also not subjected to early repayment charges, should they choose to repay their financing before its term ends.

However, businesses remain 100 per cent responsible for paying the facility back, as well as interest and fees charged by the lender once the initial interest-free 12-month period ends.

When a business took out a CBIL, they agreed to be liable for the repayments, in the same way as any other type of credit agreement.

If a business is not able to pay back the loan, the lender will need to recover the debt from any personal guarantee used for the loan, up to 20 per cent of the loan value. The remainder is then covered by the Government’s 80 per cent guarantee.

For loans of less than £250,000, no personal guarantee was required and, in this case, the loss is covered by the Government up to 80 per cent of the loan value at the time.

Businesses can approach lenders to restructure a loan if they have issues meeting the prescribed repayment plan.

Businesses that need to restructure a loan, will need up to date figures, financial forecasts, profit and loss reports and a balance sheet before approaching their lender to demonstrate the difficulties they face.

The British Business Bank has confirmed that the lender can only require personal guarantees for facilities of £250,000 or more. However, where personal guarantees are required:

  • they exclude the Principal Private Residence (PPR), and
  • recoveries under these are capped at a maximum of 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

The borrower will remain 100 per cent liable for the debt. An 80 per cent guarantee offered by Government is simply to provide some recourse for the lender in the event of a borrower defaulting on their debt in future.

Banks must pursue debts in order to benefit from the guarantee, which means that you could be pursued by debt collection agencies if you do not repay the loan.

Multiple companies within a group can be considered for the CBILS facility, but the consolidated group must not have a combined turnover in excess of the £45 million annual threshold. 

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is aimed at large businesses with annual turnovers above £45 million.

Like CBILS, a Government guarantee of 80 per cent will be provided to enable banks to lend in circumstances where they might not otherwise be able to.

Unlike CBILS, which only provides loans of up to £5 million, CLBILS will provide loans of up to £25 million.

However, while CBILS provides loans that are interest-free for 12 months, CLBILS loans will be provided at normal commercial rates of interest.

Applications were originally due to end in October 2020, and were then extended until the end of November. In light of the recent restrictions that have been imposed, business now have until 31 March 2021 to submit an application.

Bounce Back Loan Scheme (BBLS)

The Bounce Back Loans scheme (BBLS) will allow small businesses to borrow up to 25 per cent of their turnover, up to a maximum of £50,000.

The Government will also adjust the Bounce Back Loan Scheme rules to allow those businesses who have borrowed less than their maximum (i.e. less than 25% of their turnover) to top-up their existing loan.

The BBLS is 100 per cent backed by a Government guarantee, unlike the Coronavirus Business Interruption Loan scheme (CBILS) and will offer an interest-free period for 12 months. Businesses won’t pay any fees and no repayments will be due during the first 12 months.

The loans are provided by a network of accredited lenders, similar to CBILS, which means some loan agreements may vary, but the Government level of fixed interest at 2.5 per cent for the remaining period of the loan.

The BBLS is open to businesses from most sectors and those applying must be able to self-certify the following to lenders:

  • It is UK-based in its business activity and established by 1 March 2020;
  • It has been adversely impacted by the Coronavirus (Covid-19);
  • It is not currently using a government-backed Coronavirus loan scheme (unless using BBLS to refinance a whole facility);
  • It was not a business in difficulty at 31 December 2019; and
  • It is not in bankruptcy, liquidation or undergoing debt restructuring.

Some organisations are excluded from BBLS finance, this includes:

  • Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
  • Public sector bodies,
  • State-funded primary or secondary schools
  • Insurance companies.

No – You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). However, if you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

With large parts of the economy facing restrictions well into June, the Government is offering businesses support to repay the Bounce Back Loan via the Pay as you Grow’ (PAYG) initiative.

Under PAYG, businesses have the option to:

  • Extend the length of the loan from six years to 10 years
  • Make interest-only payments for six months, with the option to use this up to three times during the life of the loan
  • Pause repayments entirely for up to six months.

PAYG is available to all borrowers from their first repayment and offers companies the flexibility to tailor their repayment schedule to meet the needs of their business.

Businesses do not have to use the PAYG initiative and can choose to make loan repayments as they see fit.

In some cases, it may be beneficial to repay the loan sooner to reduce any interest (fixed at 2.5 per cent per annum) on a Bounce Back Loan. Bounce Back Loans are not subject to early repayment fees.

Once a business has selected an accredited lender via the British Business Bank website here, they will be required to fill in a short online application form on their chosen lender’s website.

This self-certifies that they are eligible for a Bounce Back Loan facility. The bank will then undertake standard customer fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.

If the bank is satisfied that the borrower meets the conditions of the BBLS then they should be able to release funds within a matter of days – in some cases within 24 hours.

To start the BBLS application process please click here

Applications were originally due to end in October 2020, and were then extended until the end of November. In light of the recent restrictions that have been imposed, business now have until 31 March 2021 to submit an application.

Coronavirus Job Retention Scheme (CJRS)

The Coronavirus Job Retention Scheme (CJRS) is a temporary scheme open to all UK employers until the end of September 2021 that is designed to support employers whose operations have been severely affected by the pandemic.

Employers can use HM Revenue & Customs’ (HMRC) dedicated portal to claim for 80 per cent of furloughed employees’ usual monthly wage costs, up to £2,500 a month, for any hours not worked up until the end June.

In July the amount of support given by the Government will be limited to 70 per cent (capped at £2,187.50), with the remaining 10 per cent provided by the employer.

Then from 1 August until the end of the scheme on 30 September 2021, employers must contribute 20 per cent, with the Government covering the remaining 60 per cent of a person’s regular wage (capped at £1,875).

In addition to the 10 per cent and 20 per cent contributions made in July, August and September, employers must continue to pay employers National Insurance and pension contributions on the full amount being paid to employees throughout the remainder of the scheme.

Any UK organisation with employees can apply for the scheme including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE).

Publicly funded organisations are not expected to use the scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.

Employers do not need to have used the CJRS previously and can claim, whether their business is open or closed.

The scheme is open to all employees for whom a Real Time Information (RTI) submission had been made on or before 30 October 2020.

For CJRS claims from 1 May 2021, employees on an RTI submission before 2 March 2021 will be eligible for furlough.

Neither the employer nor the employee needs to have used the CJRS previously to use the extended scheme.

The scheme will otherwise operate as it has done previously and will be open to employees on any type of contract. You will also be able to top-up employee wages above the value of CJRS grant if you wish to do so.

You will need to agree full furlough or flexible furlough arrangements with employees, in accordance with employment law and their contracts of employment. There is no maximum number of employees you can claim for.

Employees can work for any amount of time, and any work pattern and claim the grant for the furloughed hours, with reference to hours the employee would usually have worked in that period.

This means furloughed employees will be able to work reduced hours, paid by their employer in full, while the employer can claim a CJRS grant in respect of 80 per cent of the pay for usual hours not worked.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period claimed for must be for a minimum claim period of seven consecutive calendar days.

When launched in March the scheme was initially only due to run for a month or so, but the Government then extended the scheme until 30 September 2021.

When the scheme closes later this year, you must decide to either:

  • bring employees back to work on their normal hours
  • reduce employees’ hours
  • terminate employees’ employment.

Employers can claim for any periods where an employee isn’t working due to reduced demand.

Employers need to report actual hours worked and the usual hours an employee would be expected to work in a claim period.

Finally, for hours worked, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

Under the rules, the claim period must also start and end within the same calendar month.

Where the pay period includes days in more than one month, separate claims will need to be submitted covering the days that fall into each month.

These claims should be calculated separately, based on the specific rules and contributions for that period.

A claim can be made in anticipation of an imminent payroll run, at the point an employer runs their payroll or after they have run their payroll.

Claims relating to each month should be submitted by day 14 of the following month (unless this falls on a weekend and then it is the next working day).

To apply you will need a Government Gateway user ID and password, which will have been given to you when you registered for PAYE online.

If you do not finish a claim in one session, you can save a draft, but it must be completed within seven days of starting it.

Businesses looking to make a claim can do so now via HMRC’s portal, by clicking here.

To make a claim, you will need:

  • to be registered for PAYE online
  • your UK, Channel Island or Isle of Man bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
  • the billing address on your bank account (this is the address on your bank statements)
  • your employer PAYE scheme reference number
  • the number of employees being furloughed
  • each employee’s National Insurance number
  • each employee’s payroll or employee number (optional)
  • the start date and end date of the claim
  • the full amounts that you’re claiming for including:
    • employee wages
    • employer National Insurance contributions (for claims up to 31 July 2020)
    • employer minimum pension contributions (for claims up to 31 July 2020)
  • your phone number
  • contact name.

You also need to provide either:

  • your name (or the employer’s name if you’re an agent)
  • your Corporation Tax unique taxpayer reference
  • your Self-Assessment unique taxpayer reference
  • your company registration number.

If you’re claiming for employees that are flexibly furloughed, you’ll also need:

  • the number of usual hours your employee would usually work in the claim period
  • the number of hours your employee has or will work in the claim period
  • you will also need to keep a record of the number of furloughed hours your employee has been furloughed for in the claim period.

Following the extension of the scheme, the Government has confirmed it will operate on similar terms to those in place in August 2020.

CJRS grants will cover 80 per cent of a furloughed employee’s usual wages, capped at £2,500 a month, while employers will be required to cover employer National Insurance and pension contributions. They will not be required to contribute to employees’ wages, as had been required in September and October 2020.

Although the Government has reserved the right to review the scheme in January 2021, which may lead to additional contribution requirements.

Employers are responsible for calculating the correct amounts to claim from the scheme, with HMRC expected to take a hard line on errors that are not corrected quickly.

HMRC’s guidance walks employers through the various calculations needed to work out the amounts they need to claim in respect of furloughed employees.

The amount you should use when calculating 80 per cent of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including:

  • regular wages you paid to employees
  • non-discretionary payments for hours worked, including overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece-rate payments.

You cannot include the following when calculating wages:

  • payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
  • any tips, including those distributed through troncs
  • discretionary bonuses
  • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay.

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid as money and should not be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Employees cannot switch freely out of most salary sacrifice schemes unless there is a life event. However, HMRC has confirmed that coronavirus counts as a life event that could warrant changes to salary sacrifice arrangements if the relevant employment contract is updated accordingly.

To help employers deal with the potentially wide range of permutations, HMRC has published example calculations in the guidance dealing with different situations. To read the latest guidance, please click here or to use the Government’s own calculator click here.

Grants payments are anticipated within six working days of a new claim.

If you receive an overpayment and you are making further claims, it is possible to offset the overpayment against the amount of your next claim (your new claim will be reduced and you’ll need to keep a record of the adjustment for six years).

If you do not intend to make another claim you must obtain a payment reference number and pay HMRC back within 30 days.

If you do not do this, you may have to pay a penalty and it will prevent any potential tax liability in respect of the overpayment of CJRS.

If you made an error in your claim that has resulted in you receiving a smaller grant, you must still pay your employees the correct amount and should contact HMRC.

You can only increase the amount of your claim if you amend the claim within 28 calendar days after the month the claim relates to (unless this falls on a weekend and then it is the next working day).

Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for.

You must have made a PAYE RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

Similarly, an employee who was on a fixed-term contract, on payroll on 23 September, and that contract expired after 23 September can be re-employed and claimed for, provided that the other eligibility criteria are met.

From 1 December 2020 the scheme will prevent claims in respect of employees serving contractual or statutory notice periods.

This includes employees serving notice of redundancy, as well as those who are serving notice of resignation or retirement.

In circumstances from 1 December onwards where you have already submitted a claim and an employee subsequently begins a notice period, you must make an adjustment.

For claims relating to November, you can still claim for employees serving statutory notice periods. However, CJRS grants cannot be used to substitute redundancy payments.

Redundancies must be made in accordance with employment law, while statutory redundancy and statutory notice pay must be calculated based on an employee’s usual wages.

HMRC published information about all claims for periods from December 2020 onwards. Under these disclosures, HMRC publishes each employers’ names and reference numbers and an indication of the value of the claim for each month.

This rule applies to all employers claiming from the scheme, including individuals, ordinary partnerships and trusts, unless they can demonstrate doing so would lead to a “serious risk of violence or intimidation”.

HMRC will require evidence of this threat, which could include:

  • A police incident number;
  • Documentary evidence of a threat or attack; or
  • Evidence of possible disruption or targeting.

If the employee has been employed for a full 12 months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the previous tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

As an employer, it is your responsibility to calculate how much of an employee’s salary you can claim for, including the amount of Employer National Insurance contributions and minimum automatic enrolment employer pension contributions.

Employees returning from statutory maternity and paternity leave in the next few months will remain eligible for furlough through the Coronavirus Job Retention Scheme (CJRS) as long as they meet the existing eligibility criteria.

However, employees who wish to return early from maternity leave to be furloughed with the agreement of their employer must give eight weeks’ notice.

Yes, directors of a company can be furloughed. During this period directors should be careful to avoid anything that could be mistaken for work, including posting promotional material on their social media feeds on days where they are furloughed.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would be judged reasonably necessary.

This also applies to salaried individuals who are directors of their own Personal Service Company (PSC).

Employees can be furloughed where they are unable to work because they are shielding in line with public health guidance (or need to stay at home with someone who is shielding) or have caring responsibilities resulting from coronavirus, including employees that need to look after children

The CJRS is not intended for short-term sickness absences. If, however, you want to furlough employees for business reasons and they are currently off sick, you are eligible to do so, as with other employees.

Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP).

It is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.

You should discuss furlough with staff and make any changes to the employment contract by agreement. Remember the employment, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, you must also have confirmed with the employee or reached a collective agreement with a trade union in writing that they have been furloughed or flexibly furloughed. The employee does not have to provide a written response.

You must keep a written record of the agreement for five years, as well as keeping records of how many hours employees work and the number of hours they are furloughed (for at least six years).

The CJRS allows staff members to undertake volunteer work outside of the business and take part in training courses. Apprentices can be furloughed like any other member of staff.

The CJRS does not cover performance-related pay, but you can voluntarily top up pay to reflect this.

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts to be eligible for the Coronavirus Job Retention Scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency or umbrella company, as the deemed employer, and the worker.

Those who are contractually obliged to enhanced maternity, adoption or shared parental pay are eligible for the scheme, but not those on statutory maternity pay. They will be paid in the same way and cannot be additionally furloughed.

In the majority of cases, it will be in the employees’ interest to accept an offer of furlough as it means that their role would otherwise be made redundant.

Employers have a variety of options open to them including reducing their working hours, reducing their pay, short-time working and layoffs and in some cases redundancy.

Remember that existing employment rules continue to apply so you must consider whether your actions could lead to a claim for unfair dismissal or discrimination.

Employees can take holiday whilst on furlough and they should be paid as normal. The Working Time Regulations (WTR) obligates employers to pay time taken as annual leave at the normal rate of pay or, where their rate of pay varies, calculated based on the average pay they received in the preceding 52 weeks.

The CJRS guidance confirms you can make a grant for an annual leave furlough day in the same way as any normal working day.

This would still be paid at 80 per cent of normal rates (capped at £2,500 per month) as you are in effect ‘topping up’ for those annual leave days by paying the difference between that and their normal pay.

Although furloughed employees are not working, they continue to accrue annual leave, as per the terms of their employment contract.

Where staff are furloughed over a bank holiday period, and they usually take bank holidays as part of their holiday allowance, employers must pay them on top of their furlough for this. If staff usually work bank holidays this does not apply.

Grants from the various Government schemes to provide support during the coronavirus outbreak are taxable in the same way as other income.

You must also deduct and pay to HMRC Income Tax and employee National Insurance contributions on the full amount that you pay employees, including any scheme grant.

Self-Employed Income Support Scheme (SEISS)

The first Self-Employed Income Support Scheme (SEISS) has generally paid self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the three months from March 2020.

The first grant was paid in a single lump-sum and based upon tax returns from 2016-17, 2017-18 and 2018-19.

A second round of funding was then made available for applications from August equal to 70 per cent of average monthly trading profits, capped at £6,570 and paid in a single instalment.

The scheme has subsequently been extended to cover three further grants up until the end of September. The latest third round of funding closed on 29 January 2021.

At the Budget it was confirmed that the fourth SEISS grant will be set at 80% of three months’ average trading profits, paid out in a single instalment, capped at £7,500.

Online claims service for the fourth grant will be available from late April 2021 until 31 May 2021.

If you are eligible, HMRC will contact you in mid-April to give you your personal claim date. This will be the date that you can make your claim from.

This will be followed by a fifth and final round of funding, the details of which are yet to be confirmed.

To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership.

To work out your eligibility we will first look at your 2019 to 2020 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 Self-Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

You must also have traded in both tax years:

  • 2019 to 2020 and submitted your tax return by 2 March 2021
  • 2020 to 2021

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus
  • You must also declare that:
  • you intend to continue to trade
  • you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus

Self-employed individuals will still be able to do business while they receive a grant from the scheme. This differs drastically from the Coronavirus Job Retention Scheme, which requires employees not to work to be eligible.

The scheme is only intended for those who have been ‘adversely affected’ due to COVID-19.

Applications for the scheme are currently closed, but will re-open for the fourth round of funding in late-April.

Individuals that are eligible for the scheme will see the grant paid into their bank account by 25 May, or within six working days of completing a claim.

Self-employed people are eligible to apply for a Business Interruption Loan if they think they meet the criteria.

Alternatively, the Government has changed the rules around Universal Credit and Employment Support Allowance to ensure self-employed people can access the support they need immediately.

Applications for both these benefits can be found online if needed, as can details of the Business Interruption Loan.

HMRC will use turnover figures provided on tax returns and then to calculate trading profit, it will deduct expenses including:

  • Office costs
  • Travel costs
  • Clothing expenses
  • Staff costs (for example, in the case of a partnership)
  • Things bought to sell on
  • Financial costs, such as insurance or bank charges
  • Costs of business premises
  • Advertising and marketing, such as website costs
  • Train courses
  • Business expenses deducted through the trading allowance
  • Capital allowances used to buy assets used in the business
  • Qualifying care relief
  • Flat rate expenses.

HMRC will also take into consideration:

  • any business expenses deducted through the trading allowance
  • capital allowances used to buy assets used in your business
  • qualifying care relief
  • flat rate expenses

Any losses carried forward from previous years and the personal allowance will not be deducted from trading profits.

HMRC will also consider other income reported on your self-assessment return. Your total income is the total of all your:

  • income from earnings
  • trading profits
  • property income
  • dividends
  • savings income
  • pension income
  • miscellaneous income (including social security income)

At the same time, HMRC has confirmed that it will not deduct losses carried forward from previous years from trading profits, nor will it deduct an individual’s personal allowance.

Grants from the various Government schemes to provide support during the Coronavirus outbreak are taxable in the same way as other income. Payments made under SEISS are considered to be taxable income.

The position had been set out in the various guidance documents for the schemes but has now been underscored by a series of Government amendments to the Finance Bill 2020.

Coronavirus Apprenticeship Scheme

Employers will receive £3,000 for new employees of any age who start their apprenticeship from 1 April 2021 to 30 September 2021.

The incentive payment is in addition to the £1,000 employers already receive for hiring an apprentice:

  • aged 16 to 18 years old
  • under 25 with an education, health and care plan or who has been in the care of their local authority

For new apprentices who joined your organisation between 1 August 2020 and 31 March 2021 aged:

  • 16 to 24, employers will receive £2,000
  • 25 and over, employers will receive £1,500

You must apply for these apprentices before 30 April 2021. These payments are also in addition to the regular £1,000 apprenticeship payment.

The payment is different to apprenticeship levy funds, so you can spend it on anything to support your organisation’s costs. For example, on uniforms, your apprentice’s travel or their salary. You do not have to pay it back.

You can apply for the incentive payment after you add new apprentices to your apprenticeship service account.

You must set up an apprenticeship service account to apply.

The scheme will end on 30 September 2021.

Charities that otherwise would meet the necessary criteria, but whose bill for 11 March was reduced to nil by a local discretionary award are still eligible for the RHLG, according to the guidance.

Hereditaments that are occupied for personal use, such as private stables, beach huts, moorings, car parks and parking spaces are excluded from both schemes.

Additionally, businesses that were in liquation or were dissolved as of the 11 March cannot apply for either scheme.

Neither scheme has a mandatory application process. Instead, businesses should be contacted by their local authorities who will outline how they can claim a grant.

In some cases, where a business has an existing direct debit to pay business rates, local authorities can handle the application automatically or they may request additional details via an online form.

If you are not contacted by your local authority and believe you are eligible, we recommend that you speak to the relevant officer at your council to find out how the funding is being delivered.

The grants are given to the ratepayer, who would presumably be the landlord in this case. Unless the rateable value of the hereditament is less than £15,000 (in England) the landlord would not qualify for the grant. The landlord would, in any case, need to decide whether to pass on any grants received.

Coronavirus Statutory Sick Pay Rebate Scheme

The Coronavirus Statutory Sick Pay Rebate Scheme repays employers the current rate of SSP (£95.85 per week) that they have paid to current or former employees for periods of sickness starting on or after 13 March 2020.

Some employers may be contractually obliged to pay more than the current rate of SSP through top-up payments, but HMRC has confirmed that the scheme will only cover the current statutory rate.

The reimbursement scheme covers up to two-weeks of SSP starting from the first day of sickness if an employee is/was unable to work because they either have/had coronavirus, are shielding in line with guidance or are self-isolating at home. Employees do not have to have provided a doctor’s fit note for you to make a claim.

To be eligible for a repayment of SSP, an employer has to:

  • be claiming for an employee who is eligible for sick pay due to coronavirus
  • have a PAYE payroll scheme that was created and started on or before 28 February 2020
  • have had fewer than 250 employees on 28 February 2020.

The scheme covers all types of employment, including agency workers and those on flexible or zero-hour contracts.

Connected companies and charities can also use the scheme if their total combined number of PAYE employees was fewer than 250 on or before 28 February 2020.

HMRC has developed a new online portal for claims, which can be found here. that employers must keep a record of:

  • the reason why an employee could not work;
  • details of each period when an employee could not work, including start and end dates;
  • details of the SSP qualifying days when an employee could not work; and
  • National Insurance numbers of all employees who have received SSP as a result of coronavirus.

Businesses must keep these records for at least three years following their claim.

Grants

Local authorities have been given various funding during the pandemic to support businesses affected by COVID-19. The availability of these grants and additional support varies from one local authority to the next, which is why it is best to seek local advice.

With most grants, businesses have been contacted by their local authorities who will outline how they can claim a grant.

In some cases, where a business has an existing direct debit to pay business rates, local authorities can handle the application automatically or they may request additional details via an online form.

If you are not contacted by your local authority and believe you are eligible for a Coronavirus grant, we recommend that you speak to the relevant officer at your council to find out how the funding is being delivered.

The grants are given to the ratepayer, who would presumably be the landlord in this case. Unless the rateable value of the hereditament is less than £15,000 (in England) the landlord would not qualify for the grant. The landlord would, in any case, need to decide whether to pass on any grants received.

Business Rates

To continue to support businesses, the Government announced in the 2021 Budget that it will continue to provide eligible retail, hospitality and leisure properties in England with 100 per cent business rates relief from 1 April 2021 to 30 June 2021.

What happens after the holiday ends?

The holiday will be followed by 66 per cent business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.

This means that 750,000 retail, hospitality and leisure properties in England will continue to pay no business rates for a further three months from 1 April 2021, with the vast majority of eligible businesses receiving 75 per cent relief across the year.

PAYE Liability Deferral

No, businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay Service.

Business Recovery Loan

The new Recovery Loan Scheme will be open from 6 April to 31 December 2021. It will offer businesses loans of between £25,000 – £10 million over a six-year loan period and is backed by an 80 per cent Government guarantee.

Despite Government backing, applications will be subject to full underwriting and affordability checks and unlike the other Government-backed loans there will be no interest-free period.

The information required by each lender to approve a loan varies but they typically require financial accounts for trading periods of between one and three years.

  • Term loans and overdrafts will be available between £25,001 and £10 million per business.
  • Invoice finance and asset finance will be available between £1,000 and £10 million per business.

Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.

You will be able to apply for a loan if your business:

  • is trading in the UK
  • You will need to show that your business:
  • is viable or would be viable were it not for the pandemic
  • has been impacted by the coronavirus pandemic
  • is not in collective insolvency proceedings – further details will be provided in due course

Businesses that have received support under the existing COVID-19 guaranteed loan schemes are still eligible to access finance under this scheme, if they meet all other eligibility criteria.

The scheme will launch on 6 April 2021. Further details on how to apply and details of accredited lenders will be released in due course.

VAT Deferral Scheme

All VAT payments, apart from import VAT and VAT MOSS, were deferred by three months from 20 March 2020 until 30 June 2020.

During this period, most businesses had the option not to make VAT payments to HM Revenue & Customs (HMRC).

HM Revenue & Customs (HMRC) is giving businesses several options to choose from to allow them to manage the financial burden of VAT repayments. Here are the following options available to those businesses affected:

  • pay the deferred VAT in full by 31 March 2021;
  • join the VAT Deferral New Payment Scheme (VDNPS); or
  • contact HM Revenue & Customs (HMRC) to agree extra help to pay by 30 June 2021.

The VDNPS opened on 23 February and will close on 21 June 2021. It provides businesses with the option to pay deferred VAT in equal interest-free instalments.

Under the scheme, you can repay deferred VAT in up to 11 instalments from March 2021 (the length of repayment and number of instalments will depend on when you join).

Businesses that are already on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, will be invited to join the VDNPS in March.

To use the online service, you must:

  • join the scheme yourself – agents cannot directly assist you;
  • have deferred VAT to pay;
  • be up to date with VAT return filings for the last four years;
  • correct any errors on VAT returns, as soon as possible;
  • make sure you know how much VAT you owe;
  • pay the first instalment when you join; and
  • pay instalments by Direct Debit (there are alternative payment methods of payment on request).

If you intend to use this scheme, you will need to opt-in online by 21 June 2021.

Click here to join the scheme today

As mentioned, businesses can also repay their deferred VAT in full by 31 March 2021 or agree extra help to pay with HMRC by calling 0800 024 1222 by 30 June 2021.

Businesses may be charged interest or a penalty if they do not pay the deferred VAT in full by 31 March, opt-in to the VAT Deferral New Payment Scheme or seek additional help to repay deferred VAT by these deadlines.

If a business decides to use the New Payment Scheme it will not affect its ability to request any additional Time to Pay arrangements from HMRC in future.

Reduced VAT rate

Businesses in the hospitality, hotel and holiday accommodation sectors have benefitted from a temporary five per cent reduced rate of VAT on certain supplies.

This has helped companies in these hard-hit sectors to manage the impact of the COVID-19 pandemic, which has forced many businesses to temporarily close.

This relief was due to end on 31 March 2021. But the the Chancellor Rishi Sunak announced in the Budget that the temporary five per cent rate of VAT for these sectors will now be extended until 30 September 2021.

After this rate ends, a new reduced rate of VAT of 12.5 per cent will be introduced on the same supplies for the period from 1 October 2021 until 31 March 2022.

The following supplies, which already benefit from the five per cent reduced rate, will remain at five per cent through this extension period and then move to the 12.5 per cent reduced rate for the further period to 31 March 2022:

  • food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
  • hot takeaway food and hot takeaway non-alcoholic beverages
  • sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.

The reduced rate is also available for admissions to the following attractions where they are not already eligible for the cultural VAT exemption:

  • theatres
  • circuses
  • fairs
  • amusement parks
  • concerts
  • museums
  • zoos
  • cinemas
  • exhibitions
  • similar cultural events and facilities.

If you are a small business and use the Flat Rate Scheme, to simplify your VAT calculations, certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT to assist you.

In most cases, businesses will simply account for VAT at either five per cent or 12.5 per cent for supplies made between now and the end of September and 1 October and 31 March 2022 respectively.

However, there may be situations where you receive payments or issue invoices that straddle the change in VAT rates, in which case you may need to correctly apportion the VAT charged.

If you face this issue, it may be necessary to amend your method of accounting for VAT, which is why you should seek professional advice.

Working from home

Employers can reimburse costs tax-free where there is a ‘homeworking arrangement’ between an employer and an employee and the employee must work at home under the terms of these arrangements.

A notable exception here is costs that are unaffected by whether or not an employee is working from home or not, like mortgage repayments or rental payments.

Similarly, the cost of existing broadband connections cannot be reimbursed tax-free, although new connections can be, where the employee does not already have a broadband connection.

In circumstances where the employer does not meet the additional costs of an employee working from home – such as heating, water and electricity – but requires the employee to work from home, it may be possible for the employee to claim tax relief of up to £6 per week in respect of these costs.

Further information can be found here.

Expenses for both personal and business use are not eligible for tax relief.

Employees can use HMRC’s online tool to determine whether particular expenses would be eligible for tax relief. The tool can be viewed here.

Fraud

Various organisations, such as Action Fraud, the ICAEW and the police have issued warnings regarding an increase in fraud as a result of the pandemic. This can take various forms including fraudulent invoices, advanced fee fraud for services and phishing.

To give you some idea of the scale of the danger, the National Cyber Security Centre (NCSC) is understood to have already removed more than 2,000 online coronavirus scams over the last month, including 471 fake online shops selling fraudulent coronavirus-related items, 555 malware distribution sites set up to inflict significant damage to visitors and 832 advance-fee frauds.

In light of this, you and your employees must take additional care at this time and seek additional verification on all transactions. If you remain unsure of whether a communication or request is fraudulent, seek professional advice.

Dividends

There are strict rules governing the circumstances in which a company may pay a dividend to its shareholders, some of which could affect directors’ income.

Companies must have sufficient distributable reserves to pay the dividend at the time it is paid. Broadly, distributable reserves are accumulated profits from prior years that haven’t been paid out as dividends, together with current year profits/losses. In the current circumstances directors must be confident that the firm has built up sufficient profits, allowing for losses that may have arisen since the last year end,  equal to or greater than the amount of the dividend to be declared.

The directors also need to consider whether, having regard to the whole of the Company’s business, and the actual and contingent liabilities inherent in the business, it is reasonably foreseeable that the dividend would cause the Company to be unable to pay its debts as they fall due. It would be unlawful for the directors to declare such a dividend. Directors should therefore ensure that provisions for future tax and other liabilities have been considered.

Whether a board can do this with ease will depend on the type of dividend agreed upon. An interim dividend is decided on and announced by directors, which only becomes a binding obligation to shareholders of a company once it is paid.

A final dividend is one which is recommended by directors to shareholders that is approved by shareholders via an ordinary resolution and which is binding at the point of approval.

This latter classification of dividend may be more difficult to cancel and could be more likely to lead to action through the courts or other legal disputes, which is something businesses should be aware of. It is best to discuss the cancellation of dividends with those affected and to explain the needs of the business.

Audits

The impacts of COVID-19 on an audit report or financial statement will vary depending on the individual business and should be considered on a case-by-case basis. The ICAEW has said there is “no standard response to COVID-19 with regard to audits or disclosures in the accounts”.

The Financial Reporting Council have also confirmed that they will not be providing boilerplate wording to be used in audit reports in respect of the coronavirus pandemic and stressed the importance of the auditor ensuring any disclosures they do make are entity-specific and useful to users of the financial statements.