Coronavirus Support Economics

Coronavirus Business Support Update #2 – from BfS

Tuesday 24th update can be found here Coronavirus Business Support Update # 3 – from BfS. Today – Sole Traders and the Self Employed http://ow.ly/sYCZ50yU5e4

Business for Scotland is one of the Scottish Government’s account managed business organisations and we have been in touch with our Account Manager and with relevant Ministers to request clarity on the business support available.

Support package still a work in progress

Unfortunately, the relief package is still a work in progress. Given the latest set of measures was just announced on Friday evening, this is to be expected and that means that the information we can confirm is limited at the moment. So far, government helplines suggest going to local council websites but those websites are not ready.

The target date for having the information available with applications forms seems to be April 1st. We will keep you informed as things progress and have urged Ministers to offer more detail and a progress report. Note that I have not yet seen a single council website with the relevant details on how to claim Non-Domestic Rates (business rates) relief or the grants. When we see that change, we will add it to our updates.

The relief will be available on non-domestic properties from 1 April 2020 to 31 March 2021 and it will be possible to apply for the grants from April 2020 (date not specified). They will be available until 31 March 2021.

 

Wage Support – We can clarify that the 80% wage support will be for furloughed employees only. That is to say that they must be on a paid leave of absence, if they are still working, even from home you will not qualify.
To qualify you must:
  • Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC have yet to build this).

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement but that may be a month away or more. In other words, you have to pay them and then reclaim the 80%.  You can only pay 80% or you can contribute the 20% to maintain full wages yourself but you will not be able to claim that back.

Grants

We can report that the Scottish Government has introduced extra rates reliefs (discounts) which will be automatically applied to your bill.

It has also introduced a one-off grant of £10,000 for businesses, in receipt of Small Business Bonus or Rural Relief and £25,000 for businesses with larger rates bills.   I have asked for clarification and more details on the eligibility criteria. On the UK Government site it states at all businesses are eligible but that that also begs the question; do big supermarkets get it when their sales are doubling? Again, we will clarify when the information becomes available.

Retail, hospitality and leisure businesses with a rateable value between £18,000 and up to and including £51,000 will be able to apply for a one-off grant of £25,000, the building must be occupied though. We suspect this means the premises should have been operational until the Covid-19 impact on the economy and not that you are still open for business now. 

Please Note: The rate reliefs announced by the UK Chancellor on Friday apply to English businesses and Scotland will have its own system administered via your local council’s website.

 

VAT
You can defer all Valued Added Tax (VAT) payments for 3 months. VAT deferral will apply from 20 March 2020 until 30 June 2020.  You don’t have to apply for a deferral, just don’t pay and VAT will assume you are deferring.  You will be given until the end of the 2020 to 2021 tax year to pay any VAT liabilities that have accumulated during the deferral period. However, VAT refunds and reclaims will be paid by the government as normal.

 

Scottish Government Helpline
The Scottish Government has set up a business helpline to provide Scottish businesses with advice and guidance. The number is 0300 303 0660. The helpline will be open Monday to Friday 8.30am to 5.30pm.  It’s not really worth calling yet as it refers you to local council websites that are not yet ready and to an HMRC helpline that we could not access when we called to see how it works.

 

Sole traders and self-employed people are still being let down by the support package announced by the UK Government and that impacts on the Scottish Government’s ability to offer support.  BfS is lobbying for all sole traders to be offered 80% of the value of their average declared earnings for the last three years up to a cap of £2,500 so that it matches the support to salaried workers. Currently being able to claim Universal Basic Income, if you actually qualify, will create unnecessary hardship to hundreds of thousands in Scotland.

 

If you are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

 

Can you help keep our members informed?
Please let us know if your council site goes live for Covid-19 grant applications etc and also let us know about any questions you need answering and we will try to get those answers for you.

 

Stay safe, don’t worry too much, all the old rules of business and economics no longer apply, almost everyone will need support and watch this space for future updates.

 

The best source of UK Government announcements on business support is this website

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

9 Comments

  • Hi Gordon, my wages bill is a quarter of a million per month for furloughed employees , if it takes HMRC til April or May to get their app/website up and running and it is inundated with applications for the 80% it could be June July before payments for some businesses are received which for me could mean paying out wages of two million or more with a business income of zero this is not sustainable

    • Agreed, you have a big wage bill other smaller companies have the same pressure on cashflow, so everyone is in the same boat just at different cash amounts.

      The £10k and £25k grants should be in companies accounts before April wages if people apply early enough – the 80% will take a lot longer.

      I am not convinced that the support package is well enough thought through, that it will reach companies in time to pay April wages and that it’s even remotely big enough.

  • Great summary

    Are MOT Centres essential and to be kept open? We have a nurse in tomorrow for an MOT and she will be unable to get to work with unsociable hours and shifts without vehicle. If I close tomorrow it will be unlikely to reopen? My staff think we may have no option but to close. Your view ASAP

    Regards

    • There is not any real clarity on what is and isn’t essential services, that list will be defined over time. On the one hand, such a crisis is unheard off but we are supposed to have plans in place! I would suggest that an MOT centre doing work on key worker behalf will be absolutely classed as essential work – however, there is a grey area when it comes to normal peoples cars – if they are not needing to be done for a month etc. We will try and give you more clarity in our updates as all of these questions get answered.

  • Hi Gordon,

    What about small businesses that work remotely (who do not have offices)?

    I have IT company with everyone in it working from home. Will I get the one-off grant of £10,000!

    • It does seem to be tied to Business rates, so that’s an interesting question – you will still be able to get the 80% wage support for furloughed employees but the grant is uncertain – I will ask.

      • Yes but they can only claim the 80% wage relief if the employee is not working. Working from home is still working and doesn’t qualify. I know you did cover that in the original detailed summary, but slightly unclear in response to the specific question.

        • I stated in my comment and in the update itself that employees that employers claim for must be furloughed and that means not working from home but actually on paid leave.

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