Tax partner at Streets Chartered Accountants Luke Prout provides an overview of COVID-19 financial support available to independent kitchen and bathroom showroom owners
With the outbreak of COVID-a9, this has caused major disruption across several sectors of the economy with some worse than others. And this will have major impacts on retail showrooms where members of the public are now barred from entering if these are considered non-essential items.
Hardware shops are allowed to remain open, but many retailers are choosing to close their store and showrooms for the safety of customers and staff, with some switching to online-only sales.
Businesses that do have a robust online and distribution network are facing increased demand for products, as many households are choosing to undertake DIY jobs to pass the time whilst the country is locked down.
Also with leisure and commuting expenditure non-existent for most, the households that still have salaries coming in, are using the cash to fund such projects.
While there will be some winners, there will be businesses that will struggle to trade through and the Government has introduced several measures to assist businessses.
The announcements include a package of £330bn in support for businesses and further relations to business rates, including increased cash grants.
Government financial support
The measures introduced by the Government to support businesses are:
Job Retention Scheme for employees – HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month and this is open to all businesses, no matter the size.
Statutory Sick Pay (SSP) for employees – Employees sick/self-isolating due to COVID-19 but return back to work. This refund will cover up to two weeks’ SSP per eligible employee
Support for the self-employed – Providing a taxable grant based on 80% of the average trading profile over the last three years, up to £2,500 a month. This will only be available to individuals and partnerships that trade and not to companies where there is sole director/shareholder. These companies will have to seek support from the other measures.
It will be practically impossible for a director/shareholder to put themselves on furlough and, as such, the only support may be short-term loans and assistance with tax payment support.
VAT and Income tax deferments – HMRC will support businesses by deferring Value Added Tax (VAT) payments for three months. The deferral will apply from March 20, 2020 to June 30, 2020. If self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
Business Rates holiday period for retail, hospitality and leisure businesses – Rates will not be payable for the 2020-2021 tax year and will apply to kitchen and bathroom showrooms.
Cash grants for retail, hospitality and leisure business – The Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors, with a rateable value of under £15,000, they will receive a grant of £10,000.
For businesses in these sectors, with a rateable value of between £12,001 and £51,000, they will receive a grant of £25,000.
Time to Pay service – All businesses and self-employed people in financial distress, with tax liabilities, may receive support with their tax affairs through HMRC’s Time To Pay service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Coronavirus Business Interruption Loan Scheme – A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank with banking partners.
The Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs (up to a turnover of £45million).