Surviving the crisis – Bulley Davey
Confusion surrounds the support available to businesses and individuals during the Covid-19 crisis. Chris McKenna, Director at Bulley Davey Chartered Accountants, offers some guidance
Recent announcements by the Government surrounding the support available during the coronavirus crisis have offered reassurance to many businesses and individuals fearful for their future, but like anything the devil’s in the detail. Here’s a summary of the main schemes available.
Under the Small Business Grant Fund all businesses in receipt of either Small Business Rates Relief or Rural Rates Relief are eligible for a payment of £10,000. The grants are being distributed by councils, who have already begun to release payments. Business owners must contact the Council to verify information so that payments may be made quickly. The eligible date is 11 March 2020 and the property and ratepayer must have been registered with the Council on this date to qualify. Then there’s Retail, Hospitality and Leisure Grant, available for businesses that would have been in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) on 11 March and with a rateable value of less than £51,000. Eligible businesses in these sectors with a property that has a rateable value of up to and including £15,000 will receive a grant of £10,000, while those with a rateable value of over £15,000 but less than £51,000 will receive a grant of £25,000.
SELF-EMPLOYED INCOME SUPPORT SCHEME
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 a month. The scheme will be available for three months, but may be extended and is subject to Income Tax and National Insurance contributions. The biggest hurdle is the timeframe, with the system not expected to open till mid-May and payments made by early June at the earliest. To qualify you must be both self-employed historically (have completed a 2018-19 tax return) and going forward, and earn less than £50,000 a year. Currently there is a lot of detail is still to be ironed out, and as with the Coronavirus Job Retention Scheme the devil will be in the detail. Check the Government website for the latest on this or speak to your accountant.
BUSINESS INTERRUPTION LOAN SCHEME
The Coronavirus Business Interruption Loan Scheme supports businesses with an annual turnover of up to £45 million to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments. This scheme hasn’t had the impact the Government hoped for, which is not surprising given the complexity of borrowing affordability. The affordability of any loan cannot be overlooked, as repayments will obviously have to be made at some point.
While there is plenty of money to be borrowed or deferred, it’s not necessarily advisable to accept all of the support on offer. With deferred payments on VAT, PAYE, corporation tax and personal tax available, plus potential loan repayments, what’s great for short-term cashflow could be disastrous several months down the line. Think about future cashflow after the crisis is over. Will your business be able to sustain all of the additional Direct Debits going out? The best advice is to stay up to date with payments if you are able to. Then when we come out of the crisis you will be in a far stronger position than many of your competitors.
Find out more
For specific advice relating to your situation please contact Chris McKenna on email at or by phone on 01406 423166. General advice on the financial support available to businesses and individuals may be found at www.gov.uk/coronavirus/business-support
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