COVID–19 FAQs: support for individuals and businesses
There is a wide range of financial support available under the Government’s economic rescue package, but it can be difficult to identify the measures most relevant for your specific circumstances. These FAQs provide a simple overview of the most common financial issues arising for businesses and individuals affected by COVID-19. You can find further information and the contact details for our advisers by clicking on the links below.
Financial support for companies
What Government support is available for businesses affected by COVID-19?
Cash grants and loans may be available to businesses affected by COVID-19.
Cash grants of up to £25,000 are available to some businesses in the retail, hospitality and leisure sectors that operate from premises with a rateable value of less than £51,000. £10,000 cash grants are available to some businesses that are eligible for small business rate relief and/or rural rate relief.
The Coronavirus Business Interruption Loan Scheme (CBILS) supports SMEs by providing access to loans, overdrafts, invoice finance and asset finance of up to £5 million. Government support is also available to cover the first 12 months of interest payments and any lender’s fees. The Government is also providing a guarantee to lenders up to 80% of each loan however the borrower always remains 100% liable.
The Coronavirus Large Business Interruption Loan scheme (CBILS) is aimed at businesses generating revenues of between £45m and £500m through providing access to funding of up to £50m. Finance of up to £25 million is available to businesses with revenues from £45 million up to £250 million, whilst £50m is available to businesses with revenues in excess of £250m. As with CBILS, the CLBILS is providing a guarantee of 80% of the balance to the lenders however the borrower always remains 100% liable. The scheme is now open for applications.For more information, see CLBILS - British Business Bank.
Larger businesses can access financial support through the COVID Corporate Financing Facility (CCFF). Under the CCFF, the Bank of England will buy short-term debt from eligible companies on terms comparable to market terms prior to the impact of COVID-19.Government support for Coronavirus-hit businesses
What is the Coronavirus Business Interruption Loan Scheme and how can I apply?
The temporary Coronavirus Business Interruption Loan Scheme (CBILS) supports SMEs by providing access to loans, overdrafts, invoice finance and asset finance of up to £5 million. CBILS will be provided through commercial lenders, backed by the Government-owned British Business Bank.
The Government is providing Business Interruption Payments to cover the first 12 months of interest payments and any lender-levied fees under CBILS. It can also guarantee the lenders for up to 80% of each loan however the borrower remains 100% liable for the loan.
Businesses are eligible for the scheme if they are UK-based with turnover of up to £45 million per year, subject to meeting the other British Business Bank eligibility criteria.
The scheme is now open for applications. For more information, see the British Business Bank CBILS information page. Accessing funds via CBILS is not straightforward. To find out if you are eligible and how Smith & Williamson can help you, please see the checklist provided in the article linked below.
What is the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and how can I apply?
The CLBILS is supporting medium to large sized businesses that generate revenues between £45m and £500m by providing access to short term loans, overdrafts, invoice finance and assets up to a value of £50m. Finance of up to £25 million is available to businesses with revenues from £45 million up to £250 million, whilst £50m is available to businesses with revenues in excess of £250m.
The Government will provide lenders with an 80% guarantee on individual loans however the borrower remains 100% liable for the loan.
The scheme is now open for applications. For more information, see CLBILS - British Business Bank
What should I do if my business is in financial trouble due to COVID-19?
There are a number of options available to support business owners and prevent businesses from closing down. These include grants, loans and financial support for paying employee wages. We have specialist teams in our offices who can help you consider all options including use of the Government support programmes now available.
I am unable to file my company accounts on time due to COVID-19 – what should I do?
Businesses can now apply to Companies House for a 3-month extension for filing their accounts. Companies House has indicated that businesses citing issues around COVID-19 will be automatically be granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete. Access the application here.
Listed companies may be eligible for a 2-month extension to filing audited financial statements under temporary relief offered by the Financial Conduct Authority.
I have business operations globally – are other governments offering financial support?
Yes, governments in the majority of countries affected by COVID-19 are offering financial aid in the form of Government-backed lending, grants and deferrals to tax payments. Please get in touch if you require information in respect of a specific jurisdiction.
If you would like more information or to discuss how coronavirus will affect you or your business, please contact:Philip Quigley
Partner, Head of Transaction Services
T: +44 20 7131 4304
Director, Corporate Finance
T: +44 23 8082 7619
Tax support for companies
What happens if I pay my corporation tax late?
Penalties and interest may be charged when corporation tax is paid late. HMRC also charge interest on underpaid quarterly instalments of corporation tax.
If you are concerned that the business may not be able to meet its corporation tax liability on time, you should contact HMRC on its dedicated Coronavirus COVID-19 helpline. Time to pay arrangements may be available to extend tax payment deadlines for taxpayers in financial distress. HMRC may also agree to cancel penalties and interest where there have been administrative difficulties.
What should I do if I can’t make payment of a corporation tax liability on time? Is there a deferral scheme for corporation tax?
It is important to speak to HMRC as soon as possible, and in advance of the payment becoming due if your business may not be able to meet its corporation tax liabilities on time.
If you have a Customer Compliance Manager (CCM) at HMRC, we recommend speaking to them in the first instance. Otherwise, speak to HMRC on the COVID helpline.
There is no automatic deferral of corporation tax, but a deferral may be agreed with HMRC under the Time to Pay arrangements. These arrangements will be considered on a case by case basis, but based on our experience so far, HMRC is being sympathetic to business needs.
My business has overpaid corporation tax – can I get a refund from HMRC?
If you are submitting a tax return showing that a repayment is due, you should ensure that the company’s bank details are included on the tax return to speed up payment.
If you have overpaid corporation tax but have not yet submitted the tax return to HMRC, we recommend speaking to your Customer Compliance Manager (CCM) or calling the COVID helpline to request the repayment.
Our experience to date has been positive, and we are aware of several cases where HMRC has agreed to make repayments to companies over the telephone.
Can I obtain a repayment of quarterly instalments?
Yes. If a large business has paid corporation tax by making quarterly instalment payments throughout the year but its circumstances have now changed and profits have been revised downwards, it is possible to request a repayment of overpaid tax from HMRC, rather than waiting until the tax return is filed and processed by HMRC. We are aware of several cases recently where HMRC has agreed to make repayments to companies over the telephone and, if this is something that would help your business’s cash flow situation, we would recommend calling HMRC on the COVID helpline to discuss this possibility.
If you would like more information or to discuss how coronavirus will affect your business, please contact:Alistair Shaw
Partner, Business Tax
T: +44 20 7131 4456
Associate director, Business tax
T: +44 20 7131 8384
How do I defer my VAT payments that fall due between 20 March and 30 June 2020?
All UK VAT registered businesses are eligible for this deferral and no application to HMRC is required. If a VAT payment is due in the period 20 March to 30 June 2020 you do not need to make the payment to HMRC until 31 March 2021. Please note that VAT returns will still need to be filed and are subject to the normal submission deadlines.
If you have a Direct Debit set up to make VAT payments in this period, this will need to be cancelled otherwise HMRC will automatically debit the VAT payment as normal.
Can I deregister from VAT at any time?
You can ask HMRC for voluntary VAT registration cancellation if any of the following occur:
- you can satisfy HMRC that your taxable turnover in the next 12 months will not exceed the VAT registration cancellation limit (currently £83,000);
- you close down part of your business and you satisfy HMRC that your taxable turnover for the remainder will not exceed the VAT registration cancellation threshold; or
- your turnover exceeds the registration limit, but your taxable supplies are wholly or mainly zero-rated. If you make any standard-rated supplies, you can only cancel your VAT registration voluntarily if your input tax normally exceeds your output tax. If these circumstances apply to you, you should write to the VAT Registration Service explaining why you think you should be exempt from registration.
If your turnover has decreased due to COVID-19 and you can sufficiently demonstrate that the value of your taxable supplies will not exceed the VAT registration cancellation limit in the next 12 months, then you can apply to HMRC to cancel your VAT registration. If business as normal resumes and your turnover subsequently breaches the VAT registration threshold (currently £85,000 in any rolling 12-month period or £85,000 in the next 30 days alone) you will need to register for VAT again.
I am now selling takeaway food, as opposed to letting patrons consume food on my premises. What is the VAT liability?
Many restaurants have now resorted to selling takeaway food due to the closure of non-essential business. Hot takeaway food is subject to VAT at the standard rate (20%), although some cold takeaway food is zero-rated. Food that is zero-rated includes sandwiches, cakes and pastries provided they are not advertised as hot, heated to order or kept warm after they have been cooked.
You will need to confirm the VAT treatment of the food/beverages that you sell and identify these separately using your point of sale system to ensure that the correct VAT is charged.
If you would like more information or to discuss how coronavirus will affect you or your business, please contact:
Support for employers
What is a furloughed worker?
A furloughed worker is an employee who has been asked to temporarily stop working but who is being kept on the payroll. The employee must not do any work for the employer throughout the period he or she is furloughed.
The employer will designate affected employees as ‘furloughed workers’ and notify them of this change to their employment contract. Changing employment contracts will be subject to employment law and may be negotiated.
Support under the Job Retention Scheme is only available in respect of furloughed workers who were on their employer’s payroll on or before 19 March 2020 and have been furloughed for a minimum of three weeks.
Which employees can be furloughed?
Furloughed employees must have been on the employer’s PAYE payroll on or before 19 March 2020 and must have been notified on an RTI submission on or before 19 March 2020. They must be furloughed for a minimum of three weeks to qualify under the scheme.
Employees who continue to work on reduced hours or for reduced pay are not covered. The scheme only applies where employees entirely cease providing services to, or generating revenue for, the employer. Employees can take part in volunteer work or training. Where an employee is required to complete online training courses while they are furloughed, they must be paid at least the national living wage/ national minimum wage for doing so.
The scheme covers part-time employees, employees on flexible/ zero-hour contracts and agency workers. It also covers employees who were made redundant but are then rehired. Only workers who are paid through PAYE can qualify; other workers may need to rely on the separate scheme for the self-employed.
Employees who are ‘shielding’ from COVID-19 in line with public health guidance, or on long-term sick leave, can be placed on furlough.
If office holders (including directors), salaried members of Limited Liability Partnerships, agency workers or workers are paid via PAYE then you may be able to claim the grant for these individuals as long as they are furloughed.
The normal rules for maternity and other forms of parental leave and pay apply and the employees will still have the same employment rights. It is possible to claim through the scheme for enhanced contractual pay for those who qualify for maternity and other forms of parental pay.
How will the Government pay 80% of my workers’ salaries?
As an employer, you will need to designate affected employees as ‘furloughed workers’ and notify them of this change. You will then need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.
The online HMRC portal to make claims under the coronavirus job retention scheme is now online. Businesses are able to backdate claims to 1 March 2020.The payments will be made via BACS to a UK bank account of the employer. The employer will then be responsible for paying its furloughed employees.
Smith and Williamson can process claims on your behalf or assist with claims.
What can be claimed under the Coronavirus Job Retention Scheme?
The amount that can be claimed per employee is:
- the lower of 80% of their regular salary and £2,500 per month; and
- employer’s NICs and minimum auto-enrolment employer pension contributions on that sum.
Employees’ salary can be topped up to 100% but it will not be possible to claim back any top-up from HMRC.
If an employee has variable pay then it is possible to claim the higher of the same month’s earnings from the previous year or their average monthly earnings for the 2019-20 tax year. If they have been employed less than 12 months you can use their average monthly earnings since they started employment.
It is possible to claim for any regular payments made to employees. This includes wages, past overtime, fees and compulsory commission payments. Discretionary bonus, commission payments and non-cash payments should be excluded.
Furloughed employees must continue to make employee auto-enrolment pension contributions, unless they have chosen to opt-out or to cease saving into a workplace pension scheme. It is not possible to claim for any additional national insurance or pension contributions on any amounts you decide to top up over the 80% for the employee. It is not possible to claim for any pension contributions above the minimum employer limits.
All the grant received to cover an employee’s subsidised furlough pay must be paid to employees in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.
The Apprenticeship Levy and Student Loans should continue to be paid as usual.
Refunds will be backdated to 1 March 2020.
How do I claim statutory sick pay costs from the Government?
Statutory Sick Pay (SSP) of £95.85 a week is paid as part of an employee’s normal pay. Small and medium-sized UK businesses and employers can reclaim SSP paid for sickness absence or self-isolation due to COVID-19. The refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19 and will be available for employers with fewer than 250 employees.
Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a fit note from a doctor. If evidence is required by an employer, those with symptoms of COVID-19 can get an isolation note from NHS 111 online.
The Government is working with employers to set up the repayment mechanism for as soon as possible. We expect more detail to become available.
If you would like more information or to discuss how coronavirus will affect your business, please contact:
Support for individuals
How are costs of working from home taxed?
Tax relief on household expenses is not available where you choose to work from home. If however you are required to work at home on a regular basis, either by agreement with your employer or, for example, because your work-place has closed or because you are are self-isolating, you can receive limited tax-free payments or reimbursements from your employer.
Your employer can reimburse you for additional household expenses incurred when working from home, up to £6 a week (£26 per month) and this is not taxable. If reimbursements are above this amount then you can still claim tax relief if proof is available of the additional household expenses.
If your employer does not reimburse you, then you may be able to claim a flat-rate deduction of £6 a week against your taxable income, or keep detailed records and claim actual additional costs. This deduction is only available if specific conditions are met, and one of these conditions is that there are not appropriate facilities at your employer’s premises. Those working from home because their office is closed may therefore be eligible for this deduction assuming the other conditions are met.
There are additional rules on the provision of equipment that is not entirely used by you for business purposes.
What Government assistance is available for the self-employed?
A new self-employed income support scheme is available that will allow you to claim a taxable grant worth 80% of your average monthly earnings, capped at £2,500 per month. The scheme will run for three months initially, and payments are expected to be made in June.This period may be extended if needed. Amongst other criteria, you can only apply for this grant if your self-employed trading profits are less than £50,000.
HMRC has stated that they will contact you if you are eligible and invite you to apply for the grant online. Individuals do not need to contact HMRC.
I am concerned that COVID-19 will change my tax residence.
Some individuals who are normally non-UK resident may find that, due to travel of other restrictions arising from the pandemic, they spend more time in the UK than planned. Days spent in the UK can usually be ignored, up to a maximum of 60 days, if the individual’s presence in the UK is due to exceptional circumstances beyond their control.
The Government has published new guidance on exceptional circumstances, aimed at those trapped in the UK as a result of COVID-19.
Circumstances are considered exceptional if you:
- are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus;
- find yourself advised by official Government advice not to travel from the UK as a result of the virus;
- are unable to leave the UK as a result of the closure of international borders, or
- are asked by your employer to return to the UK temporarily as a result of the virus.
Further information can be found in HMRC’s internal guidance here.
My income fell in March, can I reduce my tax bill/claim a refund?
If you made advance tax payments, including under PAYE, and your income fell in March you may be due a refund. As the tax year ended on 5 April, you can complete your return now to determine your tax position. Refunds are generally paid two weeks after filing the return. If you are not due a refund then filing early will not mean that tax is due earlier, any balancing payment will still be due at the end of January.
Even if you do not file the return now, if your income has fallen you could consider making a claim to reduce your July payment on account for the 2019/20 tax year accordingly. This may be appropriate if you are able to make the payment on account and so have not deferred it.
What should I do if I can’t pay my rent due to COVID-19?
Emergency legislation has been introduced to stop evictions of tenants in private or social residential accommodation. If a rent payment is missed up until 30 June the lease will not be forfeit automatically, though the arrears will still be due for payment.
If you are having financial difficulty, landlords are expected to work together with their tenants to establish an affordable repayment plan, taking into account your individual circumstances. This may involve rent holidays, changes to payment terms, or reductions in rent.
For further information and guidance see Tenants and landlords: Collaborative solutions in tough times
If you would like more information or to discuss how coronavirus will affect you, please contact:Geoff Everett
Head of Private Client Tax Services
T: +44 121 710 5235
General tax support
What should I do if I cannot pay HMRC?
You should contact HMRC on its dedicated Coronavirus COVID-19 helpline (0800 024 1222), ideally before the tax is due.
HMRC has confirmed that all VAT payments for the period 20 March 2020 to 30 June 2020 inclusive can be deferred without application. If you choose to defer a VAT payment, you will have until 31 March 2021 to pay it.
Income tax payments on account that were due by 31 July 2020 have been automatically deferred until 31 January 2021. All persons who pay income tax under payments on account are eligible for this deferral; it is not limited to the self-employed. The deferral is intended to apply where the impact of the coronavirus causes you difficulty in making payment by 31 July 2020. HMRC guidance states that if you are able to make your July payment on time then you should do so.
For other taxes, HMRC may extend support to individuals or businesses under the Time to Pay arrangement. This is on a case by case basis and could result in agreeing an instalment arrangement, suspending debt collection proceedings, or cancelling penalties and interest where there have been administrative difficulties.
What is the contact number for HMRC’s dedicated COVID-19 helpline?
HMRC has changed its COVID-19 helpline number to 0800 024 1222. Opening hours are 8am to 4pm Monday to Friday only.
I’m having difficulty getting hold of HMRC, what should I do?
In our experience, HMRC’s helplines are usually quieter first thing in the morning and just before they close. HMRC’s automated message usually advises if the helpline is particularly busy. We recommend that you avoid calling on days when tax filing and payments are due (for example, 7th of each month for VAT) as these can be particularly busy. Keep trying and be prepared to remain on hold. Your usual Smith & Williamson tax adviser or accountant may also hold contact details for specific HMRC teams.
If you would like more information or to discuss how coronavirus will affect you or your business, please contact:Alistair Shaw
Partner, Business Tax
T: +44 20 7131 4456
Head of Private Client Tax Services
T: +44 121 710 5235