TREASURY REJECTS SMALL LIMITED COMPANY SUPPORT PACKAGE
April 29th, 2020.
The Government has responded to a petition “Coronavirus Support Package for Directors/Shareholders of small Limited Co's.”.An email from HM Treasury outlined its reasons as follows …
“The Government has announced an unprecedented package of measures to support public services, workers and businesses through Coronavirus, many of which are specifically aimed at small companies.
The Coronavirus is the biggest threat this country has faced in decades, and the Government recognises the extreme disruption it is having on people’s lives, their businesses, their jobs and the nation’s economy.
That is why we have announced unprecedented support for public services, workers and businesses to protect against the current economic emergency, including measures specifically for small companies, such as:
The new 100% backed loan scheme for small businesses. Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government guarantee. Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days. Loans will be interest free for borrowers for the first 12 months, after which interest will be fixed at a low rate. Businesses can apply online through a short and simple form.
The Small Business Grant Scheme. Through this scheme, the Government is providing additional funding for Local Authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 per property in receipt of reliefs, to help meet their ongoing business costs. In addition, the Government is granting small businesses in the retail, hospitality or leisure sectors a higher grant of £25,000 per property, for each property that has a rateable value above £15,000 and below £51,000.
The Coronavirus Business Interruption Loan Scheme. The Government provides lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give them further confidence in continuing to provide finance to viable SMEs. The government will not charge businesses for this guarantee and will also cover the interest costs and fees for the first 12 months.
The Statutory Sick Pay Rebate. This will allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for staff sickness absence due to coronavirus. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because they have been ill with Covid-19 or have had to self-isolate because of it. The Government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.
In addition, the Government has put in place schemes to maintain the links between employees and companies, and support living standards, alongside other changes to the welfare system.
The Self Employment Income Support Scheme (SEISS) will provide grants to eligible self-employed people, or members of partnerships, worth 80% of their trading profits up to a maximum of £2,500 per month. It is based on income from self-employment or a share in a partnership as reported on a UK income tax self-assessment return. Whilst the government understands that some business owners choose to pay themselves in the form of dividends, under current reporting mechanisms it is not possible for HM Revenue and Customs to distinguish between dividends derived from an individual’s own company and dividends from other sources. HMRC are designing SEISS to require almost no new information from the customer, in order to make it deliverable by early June. Expanding the scope would require HMRC to collect and verify new information which would take longer to deliver and put at risk the other schemes which the government is committed to delivering as quickly as possible.
However, those who have incorporated, and receive income from the company as an employee, may benefit from the Coronavirus Jobs Retention Scheme by furloughing themselves from their roles as employee and director of their own company in addition to the other forms of support for small businesses note above. This means that company owner-managers may be eligible for a grant of 80% of the salary they have paid themselves.
HM Treasury”