Welcome to the April 2020 'Need to Know' update. You'll find the latest key information on the Coronavirus outbreak and support form Government, FSB advice that is available, and the latest developments.
Help for self-employed welcomed, but more to be done
Responding to the Chancellor Rishi Sunak’s pledge of financial support for the self-employed impacted by the coronavirus crisis, National Chairman of the Federation of Small Businesses (FSB) Mike Cherry said: “This bold support package from the government will give much-needed help to vast numbers of self-employed workers, guaranteeing 80 per cent of income to those affected, with earnings of up to £50,000.
“This is a time of national emergency, and it is very welcome that the Government has listened to FSB and responded with a multi-billion-pound package to support the most financially vulnerable entrepreneurs, and to do so through the self-assessment system.
“This follows help in the Budget and since, that was aimed squarely at small businesses such as a cut in the jobs tax, cover for small employers that cannot pay their employees, business rates holidays, cash grants, mortgage holidays, rent protections, and interest-free, fee-free loans. We hope the raft of support will keep as many small businesses as possible afloat.
“Many tax-paying self-employed who will be helped by the measures will be relieved. Although the deal is not perfect, the Government has moved a very long way.”
You can read more here: https://bit.ly/2UvYVng
New insolvency laws to help beleaguered businesses
British companies struggling amid the coronavirus outbreak are to be given greater protection from bankruptcy under emergency changes to insolvency laws due to be unveiled by the government this weekend, the Guardian has learned.
Under the plans, the UK’s Insolvency Framework will add new restructuring tools including:
- a moratorium for companies giving them breathing space for from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure;
- protection of their supplies to enable them to continue trading during the moratorium; and;
- a new restructuring plan, binding creditors to that plan
The proposals will include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought.
The government will also temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency.
Existing laws for fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against director misconduct.
You can read more here; https://bit.ly/2JCti5f
Free webinars giving business owners vital advice and answering your questions
The FSB has broadcast two live webinars, featuring panels of business experts on hand to answer specific questions from concerned business owners.
The webinars, which are free and still available to view, have given advice on finance, banking, insurance and employee management. There has also been extensive advice around the Government’s latest help for the self-employed, announced on Thursday March 26.
The webinars will continue every Friday with the most up to date and vital information for business owners in the UK.
To view the webinars click here; https://bit.ly/2ykNB4F
Covid-19: limited company directors have limited support
Chancellor Rishi Sunak’s package of support for businesses affected by the coronavirus pandemic does not currently cover all business owners, with directors of limited companies falling between the two key schemes.
This group includes, for example, contractors, consultants and other off payroll workers who provide their services to an organisation via a personal services company (PSC) which is usually set up as a limited company.
Typically they are the director of the PSC and pay themselves a small amount in PAYE salary, drawing the rest as dividends from the company.
They had been hoping for help from the government’s self employed income support scheme, offering a taxable grant of up to 80% of an individual’s average monthly profit over the last three up to a maximum of £2,500 a month for self employed traders and the members of a partnership who have filed tax returns showing average profits below £50,000 for the previous three years.
Directors of limited companies are, in some cases, eligible to make a claim under the coronavirus job retention scheme, which offers employers support for a salary subsidiary reimbursing 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Directors can be furloughed provided they meet the definition of who can be furloughed e.g. must be an employee on PAYE and on the payroll on 28 February 2020.
Some directors will meet the PAYE criterion, some won’t. They will only get 80% of basic pay though, and they can’t do any work for the business during furlough.
An HMRC spokesperson said: “People who are paid a salary by PAYE can be furloughed for the job retention scheme but dividends are not covered by that or the self employed scheme.”
This means that directors of limited companies would be able to claim 80% of their PAYE payments, but would not be able to work while doing so, and their dividend payments which make up the bulk of their income will not be taken into account.
Anyone who receives an internet download speed of less than 10MPbs will have the legal right to request a decent, affordable broadband connection
Universal right to broadband as Coronavirus forces more homeworking
The Government has changed the rules so now anyone who receives an internet download speed of less than 10Mbps or an upload speed of less than 1Mbps will have the legal right to request a decent, affordable broadband connection from BT under the government’s Universal Service Obligation (USO).
Commenting on the news, Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “The need for decent, efficient and reliable broadband could not come at a more urgent time. Currently, around five per cent of homes and commercial premises across the UK do not receive the broadband connection they’re entitled to.
“But as coronavirus grips the nation, more people are being forced to work from home. However, sluggish broadband speeds are debilitating, and result in lost business and employment opportunities.
You can read more here; https://bit.ly/33TC4oE