Last reviewed 5 March 2021
There are a number of schemes that the government is providing to help businesses during the coronavirus crisis. Some schemes are coming to an end, whilst new support is also being introduced. This is a summation of the main schemes that are available.
Job Support Schemes
The Coronavirus Job Retention Scheme (furlough) was put in place to cover periods from March 2020 during which employers were unable to offer full working hours to their employees as a result of coronavirus. Employees were to remain employed but were not to undertake any work for the employer. The rules for claims changed from 1 November 2020 and were updated again following the Budget of 3 March 2021. The scheme from 1 November provides employers with grants of up to 80% of the salary of employees, capped at £2,500 a month. From July 2021, the grant will reduce to 70% and will reduce again to 60% for August and September 2021, with corresponding reductions in the maximum cap.
The extended Scheme permits both full and flexible furlough which means it provides assistance to both businesses who are required to close, and those who can stay open but face reduced demand. It is open to all UK employers including those that have not used the Scheme before. Employees will be eligible for entrance into the Scheme if they were on the employer’s PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. From 1 May 2021, employers will be able to furlough employees on the payroll on 2 March 2021, provided the employer made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.
There are different rules for different types of employees. The UK Government has provided guidance for different types of employees (such as supply teachers and apprentices) at https://tinyurl.com/C19empl. This includes links to different situations in England, Northern Ireland, Wales and Scotland.
Employers must agree with employees that they are to be furloughed. This agreement must be consistent with employment, discrimination and equality laws. A written record of the agreement needs to be kept for five years including the number of hours employees work and the number of hours they are furloughed.
Employees can be fully furloughed (not undertake any work for the business) or flexibly furloughed (working for the business for some hours and on furlough for other hours when they would normally be working). Whilst employees cannot work for the business, nor organisations linked or associated with the employer, whilst on furlough they can take part in training, volunteer for another employer or organisation or work for another employer.
Taxes and National Insurance is to be deducted from any amounts paid to employees including furlough scheme grants. Pension contributions also need to be paid. From 1 August 2020 employers are not able to claim for employer NICs and pension contributions. Employees retain the same rights that they have at work, such as Statutory Sick Pay, annual leave, maternity rights, redundancy payments etc.
The steps to take when calculating the amount to claim under the furlough scheme can be found at https://tinyurl.com/C19claimamt. This page has links to pages that help calculate the claim and the web page where a claim can be made online.
The Kickstart scheme pays the wages of 16-25 year olds on Universal Credit that go on 6 month work placements. In addition, employers can claim £1,000 for new traineeships for 16-24 year olds. Grants of £2,000 are payable for new apprenticeships created for under 25s, and £1,500 for new apprentices aged 25 or over in the period 1 August 2020 and 31 January 2021. Incentive payments increase to £3000 for an apprentice of any age from April 2021, and the scheme has been extended until September 2021.
Applications can now be made directly regardless of the number of placements offered, though employers may still choose to apply via a gateway. Applications can be made at www.gov.uk.
Self-Employed Income Support
Grants are available for the self-employed that were trading in 2019/20 with profits of less than £50,000 in 2018/19 or less than £50,000 on average in the three years to 2018/19. A grant (which was taxable) of up to 80% of average monthly profits, with a maximum grant of £7,500, and payable in a single amount covering three months of profits. A second grant was made available in June 2020 for 70% of average monthly profits for a further three months, and capped at £6,750. The government has recently announced it will make a third grant for a three-month period 1 November 2020 to 31 January 2021. This is calculated at 80% of three months average monthly trading profits paid in a single installment and capped at £7,500. The online service for the third grant will be available from 30 November 2020.
A further grant may also be made for the period from 1 February to 30 April 2021 depending on the Covid-19 circumstances.
Business rates are no longer being charged in the retail, hospitality and leisure centres. The relief varies in each country of the UK.
In England businesses in the retail, hospitality and leisure sectors will not have to pay business rates for the 2020 to 2021 tax year. This includes shops, restaurants, cafes, bars, pubs, cinemas, music venues, sports clubs, gyms hotels, guest houses and self-catering accommodation. In addition, nurseries will not have to pay business rates in England if the nursery is on Ofsted’s Early Years Register and provides care and education for children up to five years old. Local authority nurseries are not eligible for the relief. The local council should apply the rebate automatically to all these sectors in England and the local council should be contacted if the relief is not given.
A similar 100% relief applies in Scotland to retail, hospitality and leisure business. This is again applied automatically. In addition, all non-domestic properties in Scotland get a 1.6% rates relief, reversing the change in poundage for 2020/21.
In Wales there are various relief schemes for different sectors. This includes:
Retail, leisure and hospitality rates relief scheme;
Small business rates relief scheme;
Charitable and non-profit organisations rates relief; and
Empty property relief.
The specific relief for Covid-19 is that all retail, leisure and hospitality businesses with a rateable value of £500,000 or less receive a 100% rate relief in 2020/21. The details of the various rate relief schemes are at https://tinyurl.com/busratewales.
In Northern Ireland the 2020/21 business rates bill issued in August 2020 will indicate whether a four-month or 12-month rates holiday has been granted. The four-month rates holiday (1 April to 31 July 2020) applied to all business ratepayers except the public sector and utilities. The twelve-month rates holiday applies to businesses in the hospitality, tourism, leisure, retail, childcare and airport sectors. If a 12-moth holiday has not been granted and the business believes that it should have been Land and Property Services should be contacted on 0300 200 7801.
The government is increasing the cash grants to businesses in England that are closed in local lockdowns to help support fixed costs. These grants are linked to rateable values and up to £3,000 per month (payable fortnightly) is available compared to the £1,500 every three weeks that was previously available. These maximum amounts are paid to business with a rateable value of £51,000 or above for each 14-day period the business is closed. Businesses with a rateable value less than £51,000 will get reduced grants. Applications are to be made through the local council’s website. Similar grants are payable in Northern Ireland, Scotland and Wales (see below).
Loans for Businesses
Various loans are available to businesses. These are guaranteed by the government to ensure their availability and the rate of interest. The largest businesses can obtain a Covid-19 Corporate Financing Facility. This is a one-year commercial paper loan t rates similar to those charged before the Covid-19 crisis. Businesses with a turnover of over £45 million can apply for Coronavirus Large Business Interruption Loan Scheme loans. The government will guarantee 80% of the loan with a maximum loan of up to £25 million for borrowers with a turnover up to £250 million and £200 million for larger businesses.
SMEs are eligible for the Coronavirus Business Interruption Loan Scheme. These loans have no interest or fees in the first year and are 80% guaranteed by the government. Loans of up to £5 million are available to businesses with a turnover of up to £45 million with a personal guarantee from the business for the remaining 20%. Loans below £250,000 do not require any guarantee. It has recently been announced that the government guarantee is being extended so lenders will have the ability to extend the length of the loans from a previous maximum of six years to ten years.
The bounce back loan scheme for SMEs provides loans of between £2,000 and 25% of turnover. The maximum loan available is £50,000 with 100% of the loan guaranteed by the government. Loans originally had to be repaid in six years, but that has now been extended to ten years. No interest or fees are charged for the first 12 months and interest of 2.5% will be charged after 12 months. Interest only payments can be made for a period of up to six months (and this facility can be utilised three times in the period of the loan) and an application can be made to suspend payments for up to six months (but only on one occasion and only after at least six payments have been made).The scheme is open to applications up until 31 January 2021. Loans are available to businesses that are based in the UK, established before 1 March 2020 and have been adversely impacted by the coronavirus. Bounce back loans cannot be claimed by businesses that are claiming Business Interruption Loan Schemes, Large Business Interruption Loan Schemes and the COVID-19 Corporate Financing Facility.
The Future Fund provides government loans to UK based companies for amounts of £125,000 to £5 million subject to equal matching by private investors. The scheme is open to applications until 31 January 2021 and applications are to be made to the British Business Bank. These loans are convertible loans for businesses that rely on equity investment and are unable to access other government business support programs as they are either pre-revenue or pre-profit.
VAT and Income Tax
Employers are eligible for a temporary income tax and national insurance contributions exemption where they reimburse employee costs for necessary equipment purchased by employees to enable them to work from home.
VAT has been cut from 20% to 5% for food and non-alcoholic drinks from pubs, bars cafes and similar premises and for accommodation and attractions. This cut in the VAT rate will now end on 31 March 2021.
VAT payments to HMRC have been deferred for the period 20 March to 30 June until 31 March 2021. This no longer needs to be paid as a lump sum, but can be paid in 11 repayments in the 2021-22 financial year; no interest is due on these deferred amounts. HMRC will introduce and opt-in process in the New Year.
In addition, there is a deferral of the self-employed personal income tax for taxpayers with up to £30,000 in income tax liabilities. These payments will benefit from a 12-month extension. Thus, payments deferred from July 2020 and those due in January 2021 do not need to be paid until January 2021. Other time to pay tax liabilities can also be agreed with HMRC for other tax and VAT liabilities.
The government has created the future fund to support high growth companies that are facing financial difficulties.
Cash grants are available for small businesses and SMEs focusing on research and development.
Businesses with fewer than 250 staff will be refunded sick pay payments for two weeks. Guidance on Coronavirus Statutory Sick Pay Rebate Scheme can be found at https://tinyurl.com/C19SPay.
Specific relief in Northern Ireland
There are a number of specific reliefs that are available in Northern Ireland, Scotland and Wales.
In Northern Ireland this includes, but is not limited to:
Taxi Drivers Financial Assistance Scheme;
Heritage Recovery Fund;
Grants of up to £500,000 for organisations in the arts and cultural sector;
The New Apprentice Incentive Scheme;
Business and Planning Support Scheme;
A cash grant is available in Northern Ireland, the Localised Restrictions Support Scheme. This is financial support for businesses that are required to close or severely limit operations. This scheme is open to cafes, pubs, restaurants, hotels, guesthouses, bed and breakfast establishments, close contact services (such as hairdressers, spars, nail bars, tattoo parlors, etc. and any other business required to close under the Health Protection Regulations. The amount of grant paid will vary according to the Net Annual Value of the Property. The largest grant of £1,600 per week is payable to a business in sole occupation of a property with a NAV of more than £51,000. Further details can be found at https://tinyurl.com/C19NILRSS.
Northern Ireland also operates a Covid Restrictions Business Support Scheme for businesses that are required to close under the Health Protection Regulations but are not eligible for the Localised Restrictions Support Scheme. Also eligible are businesses that have not been forced to close but is part of the direct supply chain to a business that is forced to close. Eligible businesses will receive a grant of £600 a week for each week that the Health Protection Regulations are in place.
The various support schemes for Northern Ireland can be found at https://tinyurl.com/C19NIsupport.
Specific relief in Scotland
Extra support in Scotland is detailed at https://tinyurl.com/C19Scotrelief. This includes, from 16 November 2020, the Flexible Workforce Development fund that is available to levy payers and SMEs for training costs. Levy payers can access up to £15,000 and SMEs can access up to £5,000 through college and Open University Training in 2020/21. There are also schemes for relief for creative freelancers, a screen hardship fund and a culture collective fund.
Cash grants are also available in Scotland through the Strategic Framework Business Fund. This is available to a business that is required to close by law or significantly change its operations. Applications are to be made through the local authority website. The amount of the grant varies according to the rateable value of the property occupied by the business. The maximum grant is £3,000 for a four-week period where the rateable value is over £51,000. A maximum of £15,000 in any four-week period can be claimed by a business operating from multiple premises. Grants are not payable to businesses that are not mentioned in the eligibility guidelines, that have breached Covid-19 regulations or have connections to tax havens.
Specific relief in Wales
Wales is operating an Economic Resilience Fund through local councils. This is more complex than other cash grant schemes. A £1,000 payment is available to businesses eligible for Small Business Rate Relief occupying a property with a rateable value of £12,000 or less. Retail, leisure and hospitality businesses forced to close in the firebreak lockdown occupying a property with a rateable value between £12,001 and £51,000 will be eligible for a £5,000 payment. Further discretionary grants are available. A £2,000 grant may be available to a business forced to close due to the lockdown occupying a property with a rateable value of £12,000 or less. £1,000 may be available where the business is materially affected by the lockdown for 21 days or more prior to the start of the lockdown.
Details of the Economic Resilience Fund are available at https://businesswales.gov.wales/coronavirus-advice/. This also includes details of assistance various business sectors including but not limited to the innovation and cultural sector taxi businesses and life sciences, amongst other sectors.
Further information can be obtained from the UK government website at https://www.gov.uk/coronavirus/business-support