In these drastic and unprecedented times, small businesses (including the self-employed) are looking for reassurance and guidance as to what assistance they will get from the Government, as well as how they can make sure their hard work isn’t lost over the coming months.
Fortunately, there are now many routes that can be taken for businesses to receive help, depending on their own situation, and can be summarised as follows:
Self-employed and freelancers:
– SE Income Support Scheme: receive the lower of 80 per cent of average net trading profits or £2,500 per month, based on tax returns from 16/17 to 18/19 (if available). You must have submitted an 18/19 tax return and continue to trade now. HMRC will contact those who are eligible.
– Universal Credit – From April 6 2020, the requirements of the minimum income floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak
– Deferred Self-Assessment Tax – if you are due to make a second payment on account by July 31, you have been given to the end of January 2021 to make this payment
Businesses (limited and soletrader/partnership)
– Job Retention Scheme – The Government will assist with 80 per cent of employee wages to a max of £2,500 per month for employees who you choose to “furlough”.
In short, these employees should not be carrying out any work while furloughed. Directors can be included if they are only carrying out “statutory duties”
– Business rates holiday – Businesses who would usually pay rates and are in the retail, hospitality or leisure industry will benefit from this relief during the 20/21 tax year
– Cash Grants
o Retail, hospitality or leisure industry – up to £25,000 cash grant if the rateable value of your premises is between £15-51,000
o All other businesses who benefit from small business rates relief with a rateable value of your premises below £15,000 are eligible for a £10,000 cash grant.
– Business interruption loan scheme – This scheme is in place to support businesses who require additional cash support during this time. The Government will back loans (guarantee up to 80 per cent) and will also pay the loan interest for the initial 12 months. 40 lenders are part of this scheme and can be found on the British Business Bank website.
– Deferred tax payment & time to pay arrangement – HMRC has allowed businesses to defer VAT payments due between now and the end of June. They have also introduced a time to pay scheme, where you can call and arrange a payment plan for your PAYE due as well as corporation tax – call the dedicated helpline on: 0800 024 1222
All businesses should always operate a minimum 12-month cash flow forecast, but now is the time to create one (if you haven’t already).
I would recommend you create one for your personal finances too. Believe me, it will provide fantastic insight and give you an action plan to work with.
If you are not sure what this is or where to start, I am providing a free template to use, as well as a video walkthrough on how to use one, as well as tips on what to consider.
Ben Steele is the managing partner of Steele Financial Ltd chartered accountants