Covid-19 : Business Support 22.04.20 – Update 25
We have updated our UK Business Support summary document (Available Here) for the recent developments on the Coronavirus business support initiatives which we have circulated via email in recent days. This includes:
- Small Business Rates Relief Grant – further announcements that the scheme will apply to businesses that have a rateable value of less than £15k and benefit from industrial de rating.
- Hospitality, Tourism and Retail Grant – the grant opened on Monday 20th April, and the list of eligible businesses have been published.
- Coronavirus Job Retention Scheme – updated guidance on the scheme including the treatment of holiday pay and the calculation of the furlough payment.
- Self-employment Income Support Scheme – additional guidance on how trading profits are calculated.
- Future Fund – introduction of a new £500 million loan scheme for high-growth firms.
- Innovate UK – £750 million of targeted support for small and medium sized businesses focusing on research and development, which will be delivered through Innovate UK’s grants and loan scheme.
Coronavirus Large Business Interruption Loan Scheme – update
Furthermore, the guidance has been updated for yesterday’s announcement on the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”). The CLBILS was set up to provide emergency funding for larger firms impacted by the crisis which were not eligible for the CBILS, due to the £45million turnover threshold. The following details have been released on the scheme:
- The scheme will offer finance of up to £25 million to businesses with turnover from £45 million up to £250 million
- The scheme will offer up to £50 million to businesses for those with a turnover of over £250 million
- Business with turnovers of more than £500 million were originally not eligible for the scheme.
- Finance is available in the form of term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance.
- Similarly to the CBILS, the government will provide lenders with a guarantee of 80% to give banks the confidence to lend to more businesses which are impacted by Coronavirus but which they would not lend to without CLBILS.
- Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest.
- Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.
- For facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.
Coronavirus Job Retention Scheme – potential revision for directors pay
As previously noted Directors who pay themselves salaries and dividends through their own company may receive minimal support from the Coronavirus support initiatives. A proportion of these directors salaries might be covered under the CJRS if they are operating PAYE schemes. However often the salary levels involved are minimal as the majority of their income is via dividends, which there is currently no support for. Previously, Treasury officials noted that it is impossible to know whether the dividends came from the fruits of their work or from passive investments, concluding that there were no plans to adjust the schemes to accommodate directors operating the “dividend salary” model.
The matter was discussed yesterday at the Treasury Select Committee, when the committee was urged to relax the rules in some way to support directors on the dividend/salary model. It was acknowledged that it couldn’t easily be determined by HMRC what elements of the dividend were salary related, however the committee was encouraged to provide some support for directors which if overpaid could be clawed back at a later date. The committee agreed that they would push the Treasury on the idea of a “pay now, claw back later” approach, which will be welcome news for many directors.
Looking forward, the chairman also noted that he would support changes to future tax arrangements where the advantages of taking dividends compared to PAYE income were reduced, therefore we can anticipate changes in the future on this front.