Published: October 12, 2020 | Updated: October 12, 2020
Invaluable advice to help your business chart difficult waters from the real experts at Inspire
Chris Downing, Director of Inspire, the business and tax advisers, answers your questions.
What support is available if my business is forced to close due to local Covid restrictions?
Firstly, it’s important to clarify that the support packages announced by the Chancellor on 9 October are only for businesses legally required to close, due to Covid restrictions, not for those who are operating at a reduced capacity. The package of measures – including an expansion of the Job Support Scheme – are designed to protect and support jobs and businesses through the pandemic, enabling them to reopen promptly once restrictions are lifted.
The new measures available are:
- The government grants will pay two-thirds (or 67%) of employee’s wages – up to a maximum of £2,100 per month
- Employers will be required to cover NI and pension contributions in many cases, but will not have to make further contribution to wage costs. They will be able to pay employees a top-up if they wish.
- The scheme will begin on 1 November and be available for six months, with a review in January
- As with the Job Retention Scheme (furlough scheme), payments to businesses will be made to businesses in arrears, via a HMRC claims service, which will be available from early December
- This new provision is not to be confused with the other element of the Job Support Scheme, which also starts on 1 November, but is aimed to support employees returning to ‘viable’ jobs, but on reduced working hours.
- In addition to paying employee wages, cash grants (linked to rateable values) will also be available to businesses in local lockdown areas who are forced to close, with up to £3,000 per month, payable every two weeks.
There’s more detail about eligibility and terms available here.
I have a VAT bill due, do I need to pay it, or can I defer?
Last month, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments, over a longer period. Instead of paying the full amount by the end of the March 2021, you can now make small payments up to the end of March 2022, interest free.
You may remember that there was an option to defer VAT payments earlier in the year, which was automatically granted – this is different because you have to opt-in to the scheme to confirm that you will be taking advantage of the longer period of interest free payments.
Similarly, if you deferred your Self-Assessment payment from July 2020 to January 2021, you can also split these payments over 12 months, payable in total by January 2022.
My advice is that if you can pay your VAT on time, then you should continue to do so, but the help is there with this scheme, if you need it. As always, if you think you won’t be able to pay, then you should get in touch with HMRC as soon as possible, to discuss a plan.
I am self-employed, can I still apply for a government grant?
Yes you can – applications for the second Self-Employment Income Support Scheme (SEISS) are open until 19 October. Even if you didn’t make a claim for the first grant, you can still claim for the second one, which covers the three-month period from 14 July 2020.
The self-employment scheme was also extended as part of the Chancellor’s Winter Economy Plan, to provide further support if you’re self-employed and continuing to trade, but are facing reduced demand due to the pandemic. Similar to the original SEISS, the extension will provide two taxable grants and will last for six months, from November 2020 to April 2021.
The first grant will cover a three-month period from the start of November until the end of January, this will cover 20 percent of average monthly trading profits, capped at £1,875 in total. This level of support is broadly in-line with the support being offered for employees through the Job Support Scheme.
The extended scheme is not yet open for claims, but you can read about the eligibility criteria and information released so far, here.
Can I still apply for cash flow support from the government?
The closing dates for applications for the government’s Bounce Back Loans (BBL) and The Coronavirus Business Interruption Loan Scheme (CBILS) have been extended to 31 December 2020, giving businesses an extra couple of months to apply, if they need to.
The repayments for BBL can now be spread over 10 years (rather than the original six years), with the possibility of obtaining a payment holiday or switching to interest-only for a period, to ease cash flow, with neither measure affecting your credit rating.
Similarly, CBILS repayments terms have also been extended to 10 years, which will be a welcome reduction in payments for some businesses.
If your business is forced by law to close, due to Covid restrictions in local lockdown areas, you will be able to claim a grant of up to £3,000 per month
There’s more detail on the eligibility criteria and applications process for both BBL and CBILS available from the British Business Bank.
My business exports goods to Europe, what do I need to prepare to be ready to continue to trade after Brexit?
There’s been a lot of talk recently about businesses needing a ‘door to knock on’, if they want to continue to export goods to European markets after the Brexit transition period, which ends on 31 December 2020.
Although there’s still plenty of uncertainty around what the UK’s departure from the EU is going to mean for UK businesses wanting to trade with the rest of Europe, we do know that – without doubt – there will be an impact on the seamless flow of goods from the UK to Europe and vice versa.
The suggestion of setting up an office in an EU country would certainly help the process, enabling the company to form relationships on the ground, and crucially, being able to process and submit customs documents without delay.
My advice is to think now about if your business would benefit from an EU base and start talking to advisors in that country, to help guide you. We work closely with a network of advisors across Europe and worldwide who are best-placed to give advice and support to UK businesses setting up overseas. Please do get in touch with us and we can recommend the best people for you to speak to.
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