These are scary times for all of us but what can small businesses and self-employed photographers do to survive financially? We can offer the following advice written in layperson's terms.
The coronavirus measures below now apply to all businesses in England, Scotland, Wales and Northern Ireland.
This page will be updated as and when we receive more information. We'll also make sure that if any information is required from us, we'll make it our priority to help you speed up the application process.
Coronavirus Business Interruption Loan Scheme (CBILS)
Let's start off with something which should be available to most of us. This scheme allows banks to offer loans to all small businesses and the self-employed. The Government will provide lenders with an 80% guarantee on the value of the loan which opens this up to those of us who would be unable to get a loan under normal circumstances due to inadequate security. The government will also cover the first 12 months of interest payments and any arrangement fees (although many lenders have said they'll waive these fees anyway). Finance terms for the loan are up to 6 years.
This will be available from Monday 23 March and you can apply simply by contacting one of the 40+ accredited lenders. It should take no longer than a standard application.
There are a few eligibility restrictions but thankfully photographers are not amongst them. However, you must have a borrowing proposal which would have been considered viable by the lender before the current pandemic.
Most participating lenders now have a dedicated page explaining the application process.
Please visit British Business Bank - Coronavirus Business Interruption Loan Scheme for full details.
Coronavirus Self-employment Income Support Scheme
This is the news most of us have been waiting for. The government have announced a grant allowing you to claim up to 80% of your taxable trading profit, initially for 3 months backdated to March.
Let's break this down:
- Taxable trading profit is the figure on your Self Assessment tax calculation for profit from self employment
- It will be calculated from your 2019 tax return. If you filed a return in 2018, it will be calculated on an average of the 2 years, and if you filed a return in 2017, it will be calculated on an average of all 3 years
- If you will be filing a return in 2020 for the first time, unfortunately you are not eligible for this grant
- Your average profit based on the above must be less than £50,000 per annum
- Your profit from self employment must be over 50% of your total taxable income ie employment, property
- It will be capped at £2,500 per month
- It will be paid directly into your bank account in one instalment and will be taxable. This should be in June and will be backdated to 3 months from March
- HMRC will contact you if you are eligible for the scheme and invite you to apply online
Business rates holiday
For those of you who pay business rates, these will be scrapped for 12 months from 1 April 2020. You'll need to get in touch with your local authority.
Grant of up to £25,000
If you pay business rates and operate from premises with a rateable value between £15,000 and £51,000, then you are eligible for a non-repayable grant of up to £25,000. Details of how to claim this are yet to be confirmed at the time of writing but it won't hurt to contact your local authority.
£10,000 cash grant
If you would usually pay business rates, but you're claiming either 'Small business rate relief' or 'Rural rate relief', then you are eligible for a non-repayable £10,000 cash grant. Your local authority should contact you if you're eligible and the funds will be available in early April.
Statutory Sick Pay (SSP)
If you employ staff who are off sick due to coronavirus (either illness or staying at home on government advice), the government will refund up to 14 days of SSP. This will be available from day one as opposed to day four. The government are yet to finalise how they'll pay this back.
Coronavirus Job Retention Scheme
HMRC will cover 80% of the salary of employees who would otherwise have been laid off during this crisis. This is subject to a cap of £25,000. Employers must designate affected employees as 'furloughed workers' (asked to stop working but not laid off) and notify the employees of this change. Employers will submit information to HMRC about the employees and their earnings through a new online portal and HMRC are currently working to set up a system for reimbursement.
Detailed information is still to be released but this is what we know so far:
- It is available to all employees on the payroll at 29 February 2020
- All UK businesses are eligible
- Once furloughed, an employee is not allowed to do any work for the business. Directors can be furloughed but other than statutory duties, they are not allowed to do any work for the company. This would include dealing with bookings/postponements and cancellations unfortunately.
- As an employer, it is optional whether you top up the remaining 20% of the salary
- Furloughed pay will be calculated based on the 12 weeks up to the end of February
If you're one of our payroll clients, once we have the full details from HMRC, we'll contact you individually and discuss how this will be implemented in practice.
Employment and Support Allowance (ESA)
For the self-employed, if you're unable to work due to coronavirus (either illness or staying at home on government advice), and you don't have savings or investments worth over £16,000, you can claim up to £73.10 per week from day one. If you're in receipt of Working Tax Credits, you will still be eligible. To claim, simply go to this page and download the form. You won't need to attend an interview but it may be worth calling the number on the gov.uk page to clarify the sitation.
This benefit is available if you're on a low income (employed or self-employed) and neither you nor your partner have savings or investments worth over £16,000.
The chancellor has announced an increase of £1,000 per annum (also applicable to Working Tax Credits) and suspension of the minimum income floor for the self-employed. This is the amount used to calculate your universal credit payment each month. The standard rule is that if you earn more than the minimum income floor, you'll get less universal credit, and if you earn less than the minimum income floor, you won't get any extra money to make up the difference.
By relaxing the rules, your claim will be based on what you actually earn each month so you'll be better off.
It is often quite complex to work out the exact amount you can claim but Citizens Advice have a national phone line providing help and advice with your claim. You can also check out the benefits calculator link below.
There are a number of benefits available for both the employed and the self-employed. As your personal circumstances are unique, it would be impossible to list them all. Here's a really useful link - https://www.gov.uk/benefits-calculators - which should help you find out what benefits you could get and how to claim them. If you need any information from us, again we'll make this our top priority.
UK banks are to offer various relief measures to customers affected by coronavirus (this includes loss of income). The measures vary slightly from bank to bank but include 2 to 3 month repayment holidays on mortgages and loans, increased credit card limits and the ability to withdraw funds from fixed savings accounts with no charges. I would recommend contacting your bank directly.
Tenants can apply for a three month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Self assessment tax payments deferred
If you have an existing payment on account due to HMRC by 31 July 2020, this payment has now been deferred until 31 January 2021.
VAT payments deferred
The government also announced a 3 month VAT payment holiday from 20 March to 30 June. This is a little misleading as VAT payments are always due on the 7th (1 month and 7 days after the VAT period end). VAT returns must still be submitted but payment for VAT periods ending 29 February, 31 March, and 30 April (due 7 April, 7 May, 7 June respectively) can be deferred and paid by 31 January 2021.
HMRC Coronavirus Helpline
HMRC have also set up a helpline for people who may struggle to pay their tax bill because of coronavirus.
If you're one of our clients, in the majority of cases we'll be preparing your tax return in April so you'll have plenty of time to contact HMRC to arrange a payment plan.
This is a very fast changing situation we find ourselves in so I will do my best to update this page as soon as anything changes. I hope it helps some of you.
Stay safe everyone.