Updated: Jan 27
9 November 2020
In the framework of winter economic plan,the UK Government has announced the new measures to mitigate damage to the economy. They are new VAT deferral payment scheme and enhanced Time to Pay for Self-Assessment taxpayers.
New “Pay As You Grow” scheme
The government will give all businesses that borrowed under the ‘bounce back loan’ (BBLS) the option to repay their loan over a period of up to 10 years (if you have not received such a loan, you can still get it, see below).
UK businesses will also have the option to move temporarily to interest-only payments for periods of up to 6 months (an option which they can use up to 3 times). Besides it, UK businesses will also have the option to pause their repayments entirely for up to 6 months (an option they can use once and only after having made 6 payments). In both cases their credit rating would not be impacted.
What is the Bounce Back Loan Scheme and who can apply?
The main idea of the BBLS is to support small firms. Small businesses will benefit from a fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.Your business will remain liable for repayment of the loan.
The loan limits under BBLS are a minimum of £2,000 and a maximum of £50,000. You will be able to get loans worth up to 25% of your turnover. The borrower does not have to make any repayments for the first 12 months, with the government covering the first 12 months’ interest payments. Under the new ‘Pay AsYou Grow’ options (see below), BBLS borrowers will all be offered the choice of more time and greater flexibility for their repayments.
You must be able to self‑declare to the lender that:
you must be UK based;
you have been impacted by the COVID-19 pandemic;
you were not a business in difficulty at 31 December 2019;
you are engaged in trading or commercial activity in the UK and were established by 1 March 2020;
you are not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF). But you can replace the CBILS, CLBILS or CCFF facility with BBLS;
you are not in bankruptcy or liquidation or undergoing debt restructuring;
you are not in a restricted sector (credit institutions; insurance companies; public-sector organisations; schools).
The criteria are slightly different depending on the lender.
The deadline to apply for a BBLS has been extended to the end of November.
The above-mentioned measures are temporary measures only. Nevertheless extending the temporary VAT reduced rate, spreading deferred VAT bill over the financial year 2021-2022 or defferring self-assessment liabilities, businesess can support the cashflow and can protect jobs through the the financial year 2021-2022.
The UK Government is in the process of defining and agreeing the measure’s details and specifications. Therefore, the information regarding new measureswill be changed and updated in the coming days.
For further information on any of the points above contact
Mikita Makayou at email@example.com, or
Dr. Frank at firstname.lastname@example.org.