Coronavirus (COVID-19) Government Support Measures

The Coronavirus (COVID-19) outbreak has impacted almost every aspect of life in the UK since early 2020 and has prompted government to impose various restrictions in an attempt to control the rate of infection. The effects on the UK economy have been disruptive and far-reaching.

In an attempt to support individuals and businesses adversely affected, the government created a number of support grants and loan arrangements. This information sheet outlines the major schemes created.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is open to all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. Qualifying businesses – with employees placed on furlough – can claim 80% of furloughed workers wage costs, up to a cap of £2,500 per month per employee from HMRC.

The scheme is set-up to allow back-dated claims to 1 March 2020, and will run in its current form until 31 July 2020. The CJRS will close to new entrants on 30 June 2020.

The final date employers can furlough staff for the first time will be 10 June 2020. The scheme will then become more flexible allowing employees to resume working part-time from 1 July 2020. This scheme will be closed down on 31 October 2020.

A bullet-point summary of the changes announced is set out below:

From 1 July 2020, employers can bring back employees to work part-time, for any amount of time and any shift pattern. Any claim under CJRS will be limited to normal hours not worked.
June/July 2020 – Government will continue to pay 80% of costs up to the £2,500 cap.
August 2020 – Government will pay 80% of wages up to £2,500 cap, but employers will have to cover employers’ NIC and pension costs for the hours the employee does not work.
September 2020 – Government will pay 70% of wages up to a reduced £2,187.50 cap. Employers will pay employers’ NIC, pension costs and 10% of wages to a total cap of £2,500.
October 2020 – Government will pay 60% of wages up to a reduced £1,875 cap. Employers will pay employers’ NIC, pension costs and 20% of wages to a total cap of £2,500.
The cap will be proportional to hours not worked.
The CJRS will be closed-down 31 October 2020.

The above changes to a flexible approach cloak a raft of detail that government is not publishing until 12 June 2020. Those responsible for making CJRS claims will need to wait for these further clarifications as they will explain how employers should calculate claims.

Self-Employed Income Support Scheme

Earlier in this COVID-19 pandemic the Chancellor announced a scheme to assist self-employed workers. The scheme was to run initially for 3 months with a single grant payment made, from 1 March 2020 up until 31 May 2020. Those that qualified received a cash grant from HMRC based on 80% of profits, up to £2,500 per month.

To be eligible, the following conditions will be considered:

Applicants must be self-employed or a member of a trading partnership,
Have lost trading profits due to COVID-19,
Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
Have trading profits of less than £50,000 and more than half of total income from self-employment. These criteria must meet at least one of the following conditions:
- Your trading profits and total income in 2018-19,
- Your average trading profits and total income across up to the three years between 2016-17, 2017-18 and 2018-19.

On 29 May 2020 the Chancellor, Rishi Sunak, extended the scheme for a further 3 months. The scheme is now running until 31 August 2020 giving qualifying self-employed workers up to 6 months financial support from the Government.

A bullet-point summary of the changes is set out below:

Applications covering the June – August 2020 period will open in August.
Grant available will be 70% of eligible earnings (previous quarter 80%).
Maximum grant for the three-months will be £6,570 (previous quarter £7,500) paid in a single instalment.
Eligibility criteria remains unchanged.
A self-employed person can claim for the second grant, to August 2020, even if they had not claimed for the first grant.
More information on these changes will be published 12 June 2020.

If you are eligible to make a claim for this second grant under the scheme you will still be subject to the same rules regarding eligibility. You will need to confirm that your business has been adversely affected by the coronavirus outbreak.

If you did not claim for the first quarter, to 31 May 2020, as your business at that time was not adversely affected, but will be affected in the quarter to 31 August 2020, it will be possible to claim for the second quarter.

And finally, claims for the first quarter (March-May 2020) will close 13 July 2020.

Support for businesses paying tax and VAT

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.

VAT registered businesses can defer any VAT payments due between 20 March 2020 and 30 June 2020. There is no application process required to defer the relevant payment. However, businesses can still choose to pay any VAT due as normal. If you choose to defer your VAT payment as a result of Coronavirus then you must pay the VAT due to HMRC on or before 31 March 2021.

Business rates support

The Business Rates retail discount in England will be increased to 100% in 2020-21 and expanded to the leisure and hospitality sectors. The rates discount for qualifying pubs will be increased to £5,000:

Businesses that received the retail discount in 2019-20 will be rebilled by their local authority as soon as possible.
Those businesses eligible for the newly expanded retail discount and/or the new pubs discount may need to apply to their local authority to receive the discount.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

Small businesses that do not qualify for these rates support initiatives may be able to benefit from the Small Business Grant Scheme. Contact your local authority if you have not claimed this yet.

Regional variations may apply.

Coronavirus Business Interruption Loan Scheme

The government launched a temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.

You are eligible for the scheme if: your business is UK based, with turnover of no more than £45 million per year and your business meets the other British Business Bank eligibility criteria.

Lenders are banned from requesting personal guarantees on loans under £250,000. For loans over £250,000 personal guarantees will be limited to 20% of any amount outstanding on the Coronavirus Business Interruption Loan Scheme lending after any other amounts have been recovered from business assets.

Support for larger firms

Under the COVID-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible.

The Coronavirus Large Business Interruption Loan Scheme will be made available to enable banks to make loans of up to £25m for firms with turnover of more than £45m and up to £200m loans for firms with turnover in excess of £250m. This will allow all viable firms with an annual turnover of more than £45m access to the 80% government guarantee.