In this update we will focus on two financial aids released by the government this week, Bounce Back Loans and Self Employment Income Support Scheme.
Bounce Back Loans
The Bounce Back Loan Scheme (BBLS) is aimed at providing financial support to businesses across the UK that are losing revenue and seeing their cashflow disrupted as a direct result of COVID-19.
In particular, this scheme has been brought about due to the difficulties businesses have reported in accessing funds under the Business Interruption Loan Scheme (BILS)
To be eligible for this scheme, the business must not have been in any financial trouble as of December 2019, but currently be suffering financially from the consequences of COVID-19.
Under the BBLS, lenders can provide a six-year loan term from £2,000, up to 25% of a business’ annual turnover. The loan value is capped at £50,000.
Early repayment of the loan is allowable, without early repayment charges.
There is also no application fee to access the fund.
The interest rate for this facility is set at 2.5% per annum.
The Government is backing this loan 100% against both the capital and interest elements. The borrower does remain 100% liable for the debt, and lenders still retain the power to seize business assets to recover the loan amount in case of default.
It is a point of note that lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).
The Government will make a Business Interruptions Payment (BIP) to cover the first 12 months of interest payments. This means the borrowers does not have to make any repayments for the first 12 months.
If you have already applied for the Business Interruption Loan Scheme, you can transfer this loan into the BBLS, which is a more favourable scheme.
BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.
Self-Employment Income Support Scheme (SEISS)
HMRC will begin contacting those businesses which are eligible for support this week.
Those who are eligible will be able to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits), paid in a single instalment.
If you would like to check if you are eligible for support you can do so here: https://www.gov.uk/government/news/self-employed-invited-to-get-ready-to-make-their-claims-for-coronavirus-covid-19-support
You will require your UTR number (which can be found on your Tax Return) and your National Insurance Number
If you are eligible to receive SEISS you will be invited to enter in further details using your government gateway account, and also receive confirmation of when you can make your claim.
(The claim portal will open on 13th May 2020)
If you do not have a government gateway account, we would highly recommend you set one up.
This can be done here: https://www.access.service.gov.uk/registration/email
Unfortunately, at this point, HMRC are not allowing agents (accountants) the facility to submit applications on client’s behalf.
However, we have been informed that the claims process will be very simple, and those eligible will have the money paid into their bank account by 25 May, or within six working days of completing a claim.
As a reminder, those eligible will be individuals who:
- Are trading in the current tax year (2019/2020)
- Traded in the tax year 2018/2019 and submitted their Tax Return by 23rdApril 2020
- Earn at least half their income through self employment
- Have trading profits of no more than £50,000 per annum
HMRC is using information that taxpayers have provided in their 2018/2019 tax return (and returns for 2016/2017 and 2017/2018 where needed) to determine their eligibility and is contacting customers who may be eligible via email, text message or letter.
We need to remind readers at this point that there are unfortunately plenty of scam emails, text messages and letters also being sent out.
If you are unsure, refrain from giving out personal information over phone, text or email to anyone purporting to be from HMRC.
