Hello
As someone who is self employed or runs a small business and has been in touch with my team about how the Government’s various schemes to assist those whose livelihoods are affected by the Covid-19 crisis, I’m sharing with you some of the latest feedback bullet points we have had from the Government. These come from the reports back following the daily briefings for MPs and reflect many of the points you have been raising.
Apologies for the impersonal nature of this update, but given there are so many of you having to make hard decisions about your finances or business in the next few days, I wanted to share information as swiftly as possible. These are the latest updates they have sent- I have shared them directly below and am still awaiting further information on a number of issues. However, I hope below is of use in understanding the current status of planning, and we will continue to chase answers for local residents on these issues. In addition to the points below where we are waiting for clarification from the Government e.g on limited company status, we are seeking answers to :
- The status of those who have recently accepted a new job and so are not on a payroll for this by 28th February 2020.
- The support for those who were self employed but have not yet accrued a history of tax returns.
- The impact of the £50,000 profit cap on London based self employed people
- Support for those on PAYE contracts which are short term or who have an income which is a mixture of PAYE and self employment e.g. performers and creative workers
- Support for those who are agency staff or employed by a n other person e.g. nannies
I realise this update doesn’t provide the complete answers on these issues that residents need, but hope it is helpful to know these issues are being raised and the process by which we’re chasing for responses. We will of course share with you any further information as soon as we get it.
With kind regards
Stella
Support for businesses that pay business rates
● A business rates retail holiday will be introduced for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
● A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
● Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Further guidance for local authorities is available in the expanded retail discount guidance.
Support for businesses that pay little or no business rates
● The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs with businesses in the retail, hospitality and leisure sectors to receive even more.
● If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.
● Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.
Will nurseries benefit from changes to business rates?
● To support nurseries, the Chancellor has decided that they will also now be eligible for a business rates holiday for one year. That means non-local authority providers of childcare will pay no business rates in 2020-21, from 1 April.
● Millions of parents rely on childcare and the vital service provided by nurseries, childminders and preschools. Making sure that young children can be cared for safely so that their parents are able to work where required is of the utmost importance now more than ever.
● In recognition of this, the government will continue to pay for all free early years’ entitlements places, even in the event that settings are closed on the advice of Public Health England, or children are not able to attend due to coronavirus, and we will not be asking for funding back from local authorities
Self-employed Question: Those who pay themselves a dividend from their limited company are not eligible under the Self-Employment Income Support Scheme. Is any extra support being provided?
● We have raised this with HM Treasury and are seeking further answers on the specific question raised.
● Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
Self-employed Question: The £50,000 cap is too low, so can this be kept under review?
● In order to target support at those most in need, the government has chosen to cap the Self-Employment Income Support Scheme.
● For all those with trading profits of £50,000 and over, the mean self-employment income is £186,000 and the mean total income is £217,000.
● Those with higher average incomes are more likely to have access to savings and other resources.
● They may also still be able to access support through the temporary Coronavirus Business Interruption Loan Scheme.
Company director liability Question: What is a company director’s liability if the company is trading as insolvent?
● Under the Insolvency Act 1986 there is a deterrence provision against directors that continue to trade a company that is insolvent and where there is no reasonable prospect of a recovery. It is known as “Wrongful Trading”.
● The existing laws preventing misfeasance and fraudulent trading, as well as the director disqualification regime, will act as an effective tool to prevent reckless misuse.
● In the current circumstances, some companies that are otherwise viable may find themselves in a situation where this provision may become engaged. A company director may find it very difficult to make a decision to continue to trade without knowing whether a reasonable prospect of recovery is likely.
● UK companies undergoing a rescue or restructuring process will be able to continue trading, giving them the breathing space to get back to full health. Changes to the insolvency law framework include:
○ New rules to help continue necessary supplies to companies undergoing restructures
○ Temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability throughout COVID-19.
● The proposals also include a range of safeguards for creditors and suppliers and propose to temporarily suspend the wrongful trading provision (from 1 March for an initial 3 month period) to remove the deterrence effect.
● This aims to provide greater comfort to company directors to encourage them to use their best endeavours to continue to trade without the threat of being made personally liable should the company ultimately fail.
● Other provisions in company and insolvency law remain that can deal with those directors that act recklessly.
Business Interruption Loan Scheme Question: What personal guarantees will applicants need to give?
● No borrower under the scheme will be required to put their house on the line in order to access finance.
● Whether a lender requires a personal guarantee for a loan supported by the Coronavirus Business Interruption Loan Scheme is at the discretion of the lender, who is accredited by the British Business Bank to benefit from the guarantee the scheme provides.
● Many lenders have already announced that they will not seek personal guarantees against a loan under the scheme. Businesses should confirm with their lender whether they have made this commitment.
● However, a lender is not allowed to take a personal guarantee against a borrower's principal residence under the scheme. So even if a personal guarantee is required under the lender's credit policy, it cannot be taken against the borrower's home.
Job Retention Scheme Question: Can employees work limited hours and still be furloughed?
● The scheme is designed to help those who otherwise would have been made unemployed. An employer can decide how many staff members they need to furlough, however the staff that are put on furlough will then be unable to do any work for the employer, including reduced hours.
● The minimum period employers have to furlough an employee for is 3 weeks, Employees can be re-furloughed.
Job Retention Scheme Question: Can companies be required to participate?
● We have raised this with HM Treasury and are seeking further answers on the specific question raised.
● The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus.
● Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
● All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
Job Retention Scheme Question: Can the time lag on providing cash for furloughed staff be addressed?
● HMRC are working night and day to get the scheme up and running.
● The first grants are expected to be paid within weeks – with the aim of getting it done before the end of April. Existing systems are not set up to facilitate payments to employers.
