Coronavirus: The Government’s support for businesses explained

Business women working from home with child on floor - Government support for businesses coronavirus COVID-19 pandemic

More Government support for businesses was published on Monday 11th May 2020 and presents the latest grants and support available.

Chancellor of the Exchequer, Rishi Sunak, has announced a series of measures to support businesses and the self-employed in response to all the disruption caused by coronavirus. But what exactly are they? And who are they for?

There’s no question that we’re living in unprecedented times. However, thanks to recent measures put in place by the UK government, there is at least some support in place to help businesses manage the landscape so dramatically changed by coronavirus. In this article we take a quick look at some of the key measures outlined by the government, focusing on what they are, who they’re for and how they can help.

This information is correct as of 6th April 2020, you can find out more on all the measures below and keep up to date with the latest information as it changes on the Government’s coronavirus Financial Support page.

1.Coronavirus Job Retention Scheme (aka furlough)

What is it?

Who is it for?

The Job Retention Scheme does what it says on the tin in that it’s a scheme designed to help workers avoid redundancy and keep their jobs. It involves putting one or more employees on “furlough” – a term that means employees are still very much employed, they’re just not currently working. The scheme works by reimbursing employers with 80% of a furloughed employee’s wages, up to £2,500 a month.

It’s available to all UK employers with PAYE as part of their payroll. The scheme is initially open for 3 months and employees can return to work once things get back to normal.

2. Tax deferrals

What is it?

Who is it for?

Again, tax deferrals do pretty much what the name suggests – give businesses the option to defer VAT payments for a little while at least.

The option is available to any UK VAT registered business with a VAT payment due between 20th March 2020 and 30th June 2020. If that’s you, you have the option to defer the payment until the 31st March 2021. If you complete an Income Tax Self-Assessment and your payment is due on the 31st July 2020, you can defer your payment until 31st January 2021.

3. Statutory Sick Pay Relief Package

What is it?

Who is it for?

If an employee claims Statutory Sick Pay (SSP) as a result of coronavirus, with this package employers can claim for a refund. The refund covers up to 2 weeks’ SSP per employee.

Only small and medium UK businesses with fewer than 250 employees (as of 28th February 2020) will be eligible. Employers will need to have records of any staff absences. However, a GP note isn’t necessary.

4. A 12-month Business Rates Holiday

What is it?

Who is it for?

Business rates are the taxes paid on most non-domestic properties. Under the new scheme, businesses in some of the most hard-hit sectors will not have to pay business rates for the 2020-2021 tax year.

All retail, hospitality, leisure and nursery businesses in England will be eligible. That includes properties being mainly used as shops, restaurants, cafes, bars, pubs, cinemas and live music venues. However, there’s nothing for you to do right now except wait for local authorities to action the support and reissue any bills where necessary.

5. A Small Business Grant

What is it?

Who is it for?

If your small business already pays little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) or tapered relief, there is still support available in the form of additional funding. The government is providing one-off grants of £10,000 to help those businesses struggling to meet ongoing business costs.

The grant is available to businesses based in England that occupy a property and receive small business rate relief or rural rate relief as of 11th March. Again, there’s nothing for you to do on this one except wait for a letter from your local authority. They will write to all eligible business owners directly.

6. The Retail and Hospitality Grant Scheme

What is it?

Who is it for?

A scheme that provides support to retail, hospitality and leisure businesses in the form of a cash grant of up to £25,000 per property. The size of the grant all depends on what your property’s rateable value is.

A grant of £10,000 is available to business properties with a rateable value of up to £15,000. If you have business property with a rateable value that’s more than £15,000 (but less that £51,000) you could get a grant of £25,000. Again, local authorities will be writing to all eligible businesses.

7. The Business Interruption Loan Scheme

What it is?

Who is it for?

A scheme that helps smaller businesses affected by coronavirus access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years. The government is covering the first 12 months of interest and lender fees, so there are no upfront costs and initial repayments are lower. They have also stopped lenders from requesting personal guarantees for loans under £250,000 and have made a few operational changes to speed up approvals.

You can apply for a loan if you’re a UK business with a turnover of no more than £45 million a year and meet the British Business Bank eligibility criteria. Since its launch the government has bolstered the scheme, so all viable small businesses affected by coronavirus (and not just those unable to secure regular commercial financing) are now eligible. The scheme is open for applications and to apply you should talk to your bank or one of the 40 accredited finance providers as soon as possible to discuss your business plan.

8. New Large Business Interruption Loan Scheme

What is it?

Who is it for?

A new extension of the above scheme that provides financial support to larger businesses so they can continue operating. The aim is to make sure that even more firms are able to benefit from government-backed support during this difficult time. It enables banks to make loans of up to £25 million which have a government guarantee of 80%. They’ll be offered at commercial rates of interest and further details will be announced later this month.

The new Large Business Interruption Loan Scheme is for organisations with an annual turnover of between £45 million and £500 million.

9. Corporate Financing Facility

What is it?

Who is it for?

Cash flow is a big problem for a lot of businesses right now, but with this new lending facility the Bank of England can buy short-term debt from larger companies. It means any short-term liabilities or cash flow problems can financed.

The scheme is available now and all non-financial companies that meet the criteria set out on the Bank of England’s website can apply.

10. Self-employment Income Support Scheme

What is it?

Who is it for?

If you’re self-employed and have lost income due to coronavirus you can now claim a taxable grant worth 80% of your trading profits. That’s up to a maximum of £2,500 per month for the next 3 months. Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.

You’ll be eligible for the scheme if you have a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. At least half of your income during these periods must come from self-employment. You don’t need to get in touch with HMRC now – they’ll use existing information to check your eligibility and invite you to apply once the scheme is up and running. However, you’re not covered by the scheme if you pay yourself a salary and dividends through your own company. If you use a PAYE scheme, you’ll instead be covered by the Job Retention Scheme.

This information is correct as of 6th April 2020, you can find out more on all the measures below and keep up to date with the latest information as it changes on the Government’s coronavirus Financial Support page.

More Government support for businesses was published on Monday 11th May 2020 and presents the latest grants and support available.

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