Understanding what financial support we’re being offered as UK businesses

It’s never easy running a business, financial concerns are usually part of your daily routine. Worries about cash flow, about new business, about plans for growth and whether you have the money to scale your team. However never has there been a time in my career, where so much support has existed for founders and small business owners - that’s not to say that more can’t be done - it must if the UK’s SME community is to survive - but I wanted to take a moment to share some of my thoughts on the schemes and grants available.

Before I begin, I want to caveat this with the fact that I am not an accountant. I am however, a business owner who has become very well acquainted with the information I am going to share with you today. Much of it I have had to action myself over the last few days and weeks.

Please also remember that this information is being updated daily by the government as new initiatives are announced.

I want to start with the support available for UK business owners with employees. 

For those of us who employ people, there are a number of schemes available to help us through these trying times. I have included a topline overview of the key points below - remember to always check with HMRC and if you can, speak to an employment lawyer.

Coronavirus Job Retention Scheme

I am sure you have all heard and read about this scheme. If you are in the position of needing to cut costs and that extends to your employees, HMRC have introduced a grant that enables you to furlough an employee rather than make them redundant.

In real terms, this means the government will pay 80% of a furloughed employees wages and employers can choose to top up that amount themselves if they so wish. The grant will be paid to all employees who have been on the payroll since on or before 28th February 2020. The grant will also be paid up to ￡2,500 per person per month.

Crucially, furloughed workers cannot keep working for you - you need to think of them as being temporarily let go. Furloughing can be backdated to 1st March and will be available for at least three months, at the moment. Always check existing employment contracts and if you can, speak to an employment lawyer as it is important to get the consent of the employee to be furloughed.

Business Interruption Loan Scheme

This is a new scheme that is being updated regularly by the government. It is available to all companies with a turnover of less than ￡45m and allows them to borrow up to ￡5m as a normal term loan. The loans are interest free for 12 months and are 80% backed by the government - however ‘government backed’ does not mean risk free. Issues with this loan scheme have come to light with banks demanding personal guarantees for the remaining 20% of the loan that is not government-backed. This means that company directors are effectively being asked to offer personal loan guarantees - which brings everything including your personal savings into account.

This is a big ask and in uncertain times, it might not be the best option for you. The government has promised more clarity on this but please do be careful if exploring this option. 

A couple of other points to note:

• Rates - for businesses in the retail, leisure and hospitality sectors you will receive 100% business rates relief for one year. There are also SME grants of ￡10,000 for businesses who are receiving business rates relief.
• Tax Relief - as a business owner, you should speak to HMRC to explore your eligibility for an offer that lets you spread business tax payments over a longer period of time
• VAT payment holidays - a useful offer for most businesses, no application is required, however if you do pay your VAT return by direct debit - don’t forget to cancel it. 

Now, moving on to the self-employed.

Government relief efforts here are still catching up and in my option, there is certainly more that needs to be done.

Self-employed Income Support Scheme

Available for self-employed people who have lost income due to COVID-19, this scheme allows you to claim a taxable grant worth 80% of your trading profits up to the value of ￡2,500 per month. The key difference between the Self-employed Income Support Scheme and the Coronavirus Job Retention scheme is that you are able to continue working whilst claiming this grant. You are eligible for this scheme if the majority of your income is from self-employment and you have a self employed tax return for 2019.

The issue here is that those who are new to freelancing are not eligible and HMRC have stated that this will only be paid in June and then back dated three months which leaves things incredibly tight for lots of self-employed people.

 Self-employed Sick Pay

Finally, the government has suspended the minimum income floor for the self-employed, meaning that you can now access Universal Credit at a rate equivalent to Statutory Sick Pay for paid employees - a useful change for anyone who has become ill with coronavirus.

This overview is by no means exhaustive but I hope it acts as a starting point for your explorations. There is help out there, you just need to take the time to explore your options and remember, always read the small print. 

Please remember, the information above is changing every day and this post is relevant to the day I posted it. Please do stay on top of news announcements, government websites and advice, and we’ll be continuing discussions like this every week over on our Digital Sisterhood. I will also do my best to keep our community updated on all there is to know during this turbulent time. So please do join us over on www.allbrightconnect.com for support, learning and community.