Throughout the course of the Covid-19 pandemic, we have been paying close attention to the government support available for businesses. All business owners have been affected by the Coronavirus impacts in some way, good or bad. Some industries were incredibly busy throughout lockdown, whilst others had to shut down completely.
During lockdown, when the need for financial support was at it’s greatest, we kept you all regularly updated on what was available. Below is an update on all the support schemes still available and any changes that have been made.
Job Support Scheme for small businesses
The government recently announced a new Job Support Scheme. It replaces the furlough scheme, which will end on the 31st of October.
The Job Support Scheme will start on the 1st of November and last for six months. The idea is that the scheme will protect ‘viable’ jobs in businesses facing lower demand this winter due to the impacts of Covid-19.
Businesses will need to pay employees for time worked. The cost of hours not worked will be split between the employer, the government (through wage support) and the employee (through wage reduction). The government’s contribution will be capped at £697.92 a month.
Employees must work at least a third of their normal hours.
According to the Government, this will ensure employees earn a minimum of 77 per cent of their normal wages.
To access the Job Support Scheme:
- You don’t need to have used the furlough scheme to take part.
- You need to have a UK bank account and UK PAYE schemes.
- Larger businesses will need to have a financial assessment test, but there’s no such requirement for small and medium-sized businesses.
- Employees need to have been on the payroll on, or before, 23 September 2020.
- The scheme will be open from 1st November 2020 to the end of April 2021.
- You can make a claim online through gov.uk from December 2020 and you’ll be paid on a monthly basis.
- Grants are paid in arrears. This means that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Bounce Back Loan Scheme for small businesses
The Bounce Back Loan Scheme (BBLS) provides loans between £2,000 and £50,000, with the government giving accredited lenders a 100 per cent guarantee for the loans they pay out.
Small business owners won’t need to repay anything towards their Bounce Back Loan in the first 12 months.
After the first year, borrowers will have to pay 2.5 percent interest for the remaining period of the loan, according to the government website.
As of September 2020, the government has introduced changes to the BBLS, designed to give businesses more flexibility in how they repay the loan. These include:
- new and existing loans can be repaid over 10 years, rather than six
- you can take one payment holiday lasting six months, but you have to have made six payments to use this option
- you can choose to make interest-only repayments three times over the course of the loan, with each interest-only period lasting up to six months
The government is calling these changes a ‘pay as you grow’ scheme for businesses.
But remember that any extensions to your loan, as well as payment holidays or interest-only payments, mean that you’ll end up paying more interest overall.
There are currently 11 lenders taking part in the scheme – you can apply for a Bounce Back Loan on the government website.
Read more about the Bounce Back Loan Scheme here.
The government has also recently extended the deadline for applying for a new Bounce Back Loan to the 30th of November 2020.
£750 million for innovative small businesses
Small to medium-sized enterprises (SMEs) focused on research and development will have access to £750 million of grants and loans. That’s in addition to the Future Fund – £500 million of loans being set aside for high-growth firms.
Rishi Sunak, Chancellor of the Exchequer, has said:
“Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis.”
The funding will be available through national innovation agency, Innovate UK and its grants and loan scheme. If you’re one of the agency’s existing 2,500 customers, you’ll be able to opt in to a scheme fast-tracking up to £200 million of grant and loan payments. On top of this, £550 million of extra support is being made available for existing customers.
If you’re a research and development intensive small business but not an existing Innovate UK customer, you may still benefit from £175,000 of support they’re setting aside for around 1,200 firms.
The first payments started in mid-May, and there’s more information on the government website.
Continuity grants applications closed on the 29th of May 2020, but continuity loans are available until all the money is allocated, or 31st of December – whichever is earlier.
Coronavirus business grants
The Chancellor made £25,000 cash grants available to retail, hospitality and leisure businesses with a rateable value between £15,001 and £51,000.
He has also provided one-off grants of £10,000 to smaller businesses. To qualify for the £10,000 grant your business needed to have a rateable value of £15,000 or less, or you needed to already be getting Small Business Rate Relief (SBBR), Rural Rate Relief (RRR) or tapered relief.
This scheme closed on 28th August 2020 and any unclaimed money has been returned to the government.
If you have questions, the government’s advice says to contact your local authority.
If you’re not sure how to get in touch with them, you can find your local authority on the government website.
Read more about here about grants for small businesses.
Business rates holiday for tax year 2020-21
Earlier this year, the government introduced a business rates holiday for businesses in the retail, leisure and hospitality sectors to help them through disruption caused by Covid-19. These businesses won’t have any business rates to pay in 2020-21.
Nurseries in England will also get a year off paying business rates for tax year 2020-21.
Your local council should have automatically applied this business rates holiday if you are eligible. If you feel you should have had this or would like to clarify this, you can find your local authority on the government website.
The government has pledged to review the business rates system as a whole and will publish its findings in the autumn.
Protection if you can’t pay your commercial rent
The government announced that commercial tenants who can’t pay their rent as a result of the Covid-19 outbreak will be protected from eviction.
In June, the government extended its initial ban on evictions until the end of September 2020.
Commercial tenants and landlords are being encouraged to come to voluntary arrangements on repayment.
The government introduced a new code of practice in June, designed to help struggling businesses and landlords work together on rent payment issues.
The Gov.uk website does stress that this is protection from eviction if you can’t pay your commercial rent right now, due to the pandemic.
It is not a rent holiday, and commercial tenants will still be liable for the rent.
Coronavirus Business Interruption Loan Scheme (CBILS)
In September 2020, the government announced that businesses will now have until the 30th of November to apply for the CBILS. In addition, lenders can now extend the loan term up to 10 years (previously it was six).
If you have a turnover of up to £45 million you can apply for loans, overdrafts, invoice finance and asset finance of up to £5 million. The government is encouraging lenders to process these by guaranteeing up to 80 per cent of any losses. There are also no upfront loan charges. On top of this, the government will cover the first 12 months of interest payments.
The CBILS is now also available to all viable small businesses affected by the pandemic – not just businesses that can’t get regular commercial financing.
The government has also banned lenders from requiring you to use your own property or savings to guarantee a loan under £250,000.
Besides making operational changes to speed up lending approvals, the Chancellor, along with the Governor of the Bank of England, Andrew Bailey, has written to banks asking them to support small and medium-sized enterprises in any way they can.
This support includes making sure interest rates are reasonable, and making sure the benefit to those borrowing under the CBILS is passed on.
The scheme, which is delivered through the British Business Bank, is available through participating lenders.
Your business needs to:
- be based in the UK.
- have an annual turnover of up to £45 million.
- have a borrowing proposal the lender would consider viable, if it wasn’t for coronavirus.
- have been adversely impacted by coronavirus (you can self-certify for this).
All major banks will offer this scheme, according to the government website. It advises speaking to your own business banking provider now, to ensure you get any cash you’re eligible for as quickly as possible.
Read more about the Coronavirus Business Interruption Loan Scheme here.
Coronavirus Job Retention Scheme (CJRS) – help to pay furloughed employees’ salaries
The Coronavirus Job Retention Scheme (CJRS) was one of the Chancellor’s headline measures to help support businesses through the coronavirus outbreak. This scheme closes on the 31st of October.
If you have staff, including apprentices, you’d otherwise have to lay off due to the Covid-19 outbreak, the CJRS will pay a portion of an employee’s salary, up to a maximum of £2,500 a month.
In October, the government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee is on furlough.
Employers need to top up their employee’s wages to make sure they receive 80 per cent of their wages, up to a cap of £2,500.
The government has also announced a Job Retention Bonus, which is a £1,000 one-off payment to employers for every employee they claimed for under the CJRS, who remains continuously employed until the 31st of January 2021. These payments will be made to employers from February 2021.
Full refund on statutory sick pay due to Covid-19
SME’s with fewer than 250 employees as of the 28th of February 2020, are eligible for a full refund from the government on 14 days of statutory sick pay per employee off sick with Covid-19. Any sickness you claim for needs to have started on or after the 13th of March 2020.
You don’t need a doctor’s note from your employee, but they do have to either:
- have had coronavirus.
- be unable to work because they’re self-isolating.
- or be shielding in line with public health guidance.
The online repayment system for coronavirus-related SSP is now available on the government website.
Make sure that you keep records of all absences and statutory sick pay payments due to Covid-19 (this is good practice for your business for any sickness, at any time).
Read more about statutory sick pay.
Self-Employment Income Support Scheme (SEISS)
The Self-Employment Income Support Scheme (SEISS) is made up of a series of grants designed to support self-employed people whose business has been adversely affected by coronavirus.
The first grant paid 80 per cent of three months’ average monthly trading profits over the last three years, capped at £7,500. The claims deadline for this grant was 13th of July 2020.
The second grant pays 70 per cent of three months’ average monthly trading profits, capped at £6,570. Applications close on 19th October 2020.
And in September 2020, the government announced it is extending the scheme by two more grants, but at a much reduced level.
The next grant is for November 2020 to January 2021. It covers 20 per cent of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £1,875 in total.
The final grant is for February 2021 to April 2021, but the government hasn’t announced what level this will be.
Only those currently eligible for SEISS will be able to apply for the extension (see more about SEISS eligibility below).
For the purposes of SEISS, your average trading profit will be your total trading profits or losses for tax years 2016-17 + 2017-18 + 2018-19 divided by three.
You’ll need to take in trading profits of no more than £50,000, and make more than half of your income from being self-employed, to be eligible for the taxable grant.
While you’ll still owe Income Tax and National Insurance on any money you get through the SEISS, it’s a grant rather than a loan. This means you won’t need to pay it back.
You’ll need to have a tax return for 2018-19. You can’t be a limited company or operating a trade through a trust.
Other eligibility criteria include:
- you traded in tax year 2019-20.
- you’re trading when you apply, or you would be if the pandemic hadn’t stopped you.
- you plan to keep trading in tax year 2020-21.
- you’ve lost trading profits because of coronavirus.
You can make a claim for the second grant payment on the gov.uk website.
Applications close on the 19th of October 2020 and you don’t need to have made a claim for the first grant.
To be eligible for the third and fourth grant extensions, the government says you need to declare you’re actively trading and intend to continue to trade.
There isn’t currently any guidance on how to apply for the grant extensions.
If you’re not eligible, you can claim for Universal Credit (more below), which you should record as part of your income from self-employment. You may also consider applying for the Coronavirus Business Interruption Loan Scheme, mentioned earlier.
Read more about the Self-employed Income Support Scheme.
Income Tax and VAT deferred for the self-employed
Recently, the government has announced that Self-Assessment taxpayers can defer their tax payments even further.
You could already move the payment due on the 31st of July 2020 to 31st of January 2021.
The new deferral means that anyone who needs to pay up to £30,000 in tax by 31st of January 2021 can now delay making that payment in full until 31st of January 2022.
Businesses will need to use HMRC’s Time to Pay service, but there aren’t currently any details about how this will work in practice.
The government has previously recommended that businesses who can make their tax payments should do so.
The government also announced changes to its VAT deferral scheme. Businesses who chose to defer VAT payments between March and June 2020 will now be able to make interest-free payments over the 2021-22 tax year, rather than paying in full by March 2021.
We’re waiting on details about how businesses can use HMRC’s Time to Pay service to defer their 31st January 2021 tax bill.
The previous 31st of July 2020 deferral was applied automatically.
If you’ve deferred your VAT payments, then you’ll need to opt-in to the scheme to make smaller payments over the 2021-22 tax year. There’ll be more details about this over the coming months.
If you can make your VAT payments in March 2021 then you should do so.
More time to pay Corporation Tax
If your business is registered with Companies House, you can apply for a three-month extension to the deadline for filing your accounts. Businesses granted this extension won’t get the usual late payment penalty.
You need to apply for the extension using the fast-tracked application system. It takes 15 minutes, and any business giving Covid-19 (coronavirus) as the reason will get an automatic and immediate extension, according to the government website.
Read more about Corporation Tax guidelines.
‘Time to Pay’ coronavirus helpline
HMRC’s Time to Pay service is available for all businesses with outstanding tax bills as well as those who are in financial distress. If coronavirus has caused you difficulty with paying your tax bill that won’t be solved by the tax deferrals mentioned above, you can try the special coronavirus helpline on 0800 024 1222, but be aware it may take longer than usual to speak to an adviser.
Decisions about any extra time you get to pay your bill will be made on a case-by-case basis.
Benefits for self-employed workers during the coronavirus pandemic
If you’re not eligible for Statutory Sick Pay because you’re self-employed or earn below the Lower Earnings Limit of £118 a week, the government is making it easier to claim for Universal Credit or Contributory Employment and Support Allowance during the Covid-19 outbreak.
Universal Credit (UC)
You’ll be able to claim Universal Credit and get advance payments upfront with no need to go to a Jobcentre, if your work has reduced or stopped because of coronavirus.
Any payments you get will be based on your actual earnings, and you’ll need to declare any self-employed earnings and expenses at the end of each monthly assessment period.
The government website has details on eligibility and how to claim Universal Credit.
Read more about benefits for self-employed people.
Employment and Support Allowance (ESA)
ESA is for people with a disability or health condition that affects how much they can work. During the coronavirus pandemic, you can apply for ‘new style’ ESA if you can’t get Statutory Sick Pay and you or your child are ill or self-isolating because of coronavirus.
Once you’ve been assessed, you’ll be placed into one of two groups. The amount you’ll get depends on whether you can get back into work:
- up to £74.35 a week if you’re able to get back into work
- up to £113.55 a week if you’re unable to get back into work
The government website has details on eligibility and how to claim ESA.
Relief from paying back loans and credit cards
The Financial Conduct Authority (FCA) has asked lenders to use flexibility built into their rules to support customers during the coronavirus outbreak, taking into account individual circumstances.
If you’re given a payment holiday, your lender should record it in a way that doesn’t impact your credit score.
The FCA’s current guidance on payment holidays ends on 31st October 2020. After that, they say lenders should give ‘tailored support’ for people still struggling – but any changes to payments will be recorded with credit reference agencies.
Lots of the major lenders have already made statements on this, so it’s worth speaking to yours if you’re now having difficulty keeping up with personal loan or credit card repayments.
Mortgage payment holidays
You can apply for mortgage payment holidays until the 31st of October 2020. You can apply online with your mortgage provider, but you need to make sure you keep them updated at the earliest opportunity.
It has to be agreed with your lender – don’t simply stop making payments.
The FCA has said that if borrowers are still struggling after the 31st of October, lenders should move to ‘tailored support’ based on individual circumstances. The FCA says this should be in the form of further payment deferrals, reduced payments or an extension to the repayment term.
Unlike the three-month payment holidays, lenders will need to report any changes to repayments after the 31st of October to credit reference agencies.
Coronavirus business and self-employed support in Scotland, Wales and Northern Ireland
Some of the support measures available to help small businesses through the pandemic are administered by the devolved governments. You can find out more about small business support measures specific to the devolved nations on gov.uk.