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Coronavirus: latest government measures to support UK businesses

A summary of government action to help small businesses deal with the cash flow pressures brought on by coronavirus (Covid-19).

What has the government said about Covid-19?

Back in March, Chancellor Rishi Sunak promised £330bn of government-guaranteed loans and other measures to help UK businesses weather the ongoing Covid-19 storm. 

Sunak described Covid-19 as an public health and economic emergency, promising government intervention on a scale that was “unimaginable only a few weeks ago.” He said the government will “stand behind businesses small and large” to “get [them] through this.”

The initial £330bn of guarantees, Sunak said, will mean “any business who needs access to cash to pay their rent, salaries, suppliers or purchase stock will be able to access a government-backed loan or credit on attractive terms. And if demand is greater than the initial £330bn, I will go further and provide as much capacity as required.” 

Sunak added: “This struggle will not be overcome by a single package of measures or isolated interventions.”

Since then a wide raft of additional measures have been announced, some of the most notable being:

  • Bounce Back Loans for small and micro-businesses
  • The Coronavirus Job Retention Scheme
  • VAT and Income Tax deferral periods

Summary of key announcements

The Chancellor has set out a “package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.” This includes…

  • Young people work in modern office.
    Coronavirus Job Retention Scheme

    HMRC will reimburse 80% of ‘furloughed workers’ wage costs, up to a cap of £2,500 per month. The furlough scheme will close down on 31 October and be replaced by a Job Support Scheme.

  • Mug and tissues
    Sick pay

    Employees will receive up to two weeks’ sick pay, payable from their first day of absence because of Covid-19 and employers will be able to claim this back.

  • people in bokeh, street of London
    Business rates holiday

    A 12-month business rates holiday for all retail, hospitality and leisure businesses in England.

  • Looking Down Buchanan Street as Glasgow's with Many of Christmas Shoppers
    Rate relief grant funding

    Small-business grant funding of £10,000 for all firms in receipt of small business rate relief or rural rate relief.

  • Five pound note
    More grant funding

    Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.

  • bank note
    Business interruption loan

    The Coronavirus Business Interruption Loan Scheme will support long-term viable businesses that need to ease their cash-flow pressures caused by interruption to their normal trading as a result of Covid-19. The deadline for applications is 31 September. Small and micro businesses are advised to apply for a Bounce Back Loan. 

  • Help to pay your tax

    Through the HMRC Time To Pay Scheme, “viable” (ie otherwise profitable) businesses and self-employed people experiencing short-term cash flow problems as a result of COVID-19 may be able to agree a payment plan for tax they owe. Income Tax and VAT payments can also be deferred until later in the year.

Coronavirus Job Retention Scheme

In perhaps the most unprecedented measure, the government has announced it will step in to cover staff wages for any business affected by Covid-19. 

The Coronavirus Job Retention Scheme (CJRS) enables employers to furlough employees and apply for a grant that will cover a proportion of their wages. This proportion is being gradually scaled back from 80% of monthly wage costs (up to £2,500 a month) down to 60% by October. After 31 October, the scheme will be replaced by the Job Support Scheme.

  • In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay ER NICs, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
  • In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay ER NICs, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. 
  • In November, the furlough scheme will be replaced by the Job Support Scheme. This will top up staff wages for businesses who can’t afford to take them back full-time. According to the Treasury: “To be eligible, employees must work at least 33% of their normal hours. For the hours not worked, the government and employer will pay a third of wages each. So employees working 33% of hours will receive at least 77% of their wages.” This means the government will pay a maximum of 22% towards an employee’s wages. 
  • In February 2021, businesses will be able to claim a Jobs Retention Bonus of £1,000 for each employee who is bought back from furlough full time and been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021. 

You can only continue to claim through CJRS if:

  • you have previously furloughed the employee for three consecutive weeks between March 1 and 30 June
  • you submitted your claim before 31 July.

The online portal for grant applications is open via GOV.UK

Further details on the scheme and the eligibility criteria can be found on GOV.UK. The Chartered Institute of Personnel and Development (CIPD) have also produced this useful set of FAQs on the scheme.

Coronavirus Business Interruption Loan Scheme

The government has advised businesses experiencing serious disruption because of Covid-19 to check with their insurance provider to see if they are covered. 

On GOV.UK it states: “Many businesses are unlikely to be covered, [because] most business interruption insurance policies are dependent on damage to property, which will exclude pandemics. Some businesses may have purchased a specific add-on relating to notifiable diseases, but some of these will still specify damage to the building. Some businesses may have purchased supply chain or denial of access cover, which may meet their needs in this case.”

As part of its spring budget in early March, the government announced the setting up of a “new temporary Coronavirus Business Interruption Loan Scheme (CBILS), delivered by the British Business Bank, to support businesses to access bank lending and overdrafts.” 

Under CBILS, 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 won’t charge businesses or banks for the guarantee, and the scheme will support loans of up to £1.2m in value. “This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.”

  • The application deadline has now been extended until the end of November.
  • The loan length has been extended from 6 years to 10 years, enabling businesses to reduce their repayment liabilities. 
  • Businesses can also choose to just pay the interest for up to six months. Businesses suffering serious financial issues may be able to get repayments temporarily suspended too. 

To apply, you can either speak to your bank or use Informi’s Funder Finder tool which features CBILS-accredited lenders.

Bounce Back Loan scheme

Many businesses have struggled with the application process for CBILs and fall short of the eligibility criteria. 

To address this, the government introduced the Bounce Back Loan scheme aimed at small and micro-businesses. 

  • Apply for a loan up to £50,000.
  • 100% underwritten by the government.
  • No fees or interest paid in the first 12 months.
  • No need for credit checks or to validate the viability of your business.

As with CBILS, the government has announced that it will be relaxing some of the repayment terms in light of the continued disruption:

  • The application deadline has now been extended until the end of November.
  • The loan length has been extended from 6 years to 10 years, enabling businesses to reduce their repayment liabilities. 
  • Businesses can also choose to just pay the interest for up to six months. Businesses suffering serious financial issues may be able to get repayments temporarily suspended too. 

The scheme is available through a growing list of high street banks and challenger banks. To apply, you should contact your bank in the first instance. More details can be found on GOV.UK

06:57

Video: Explaining CBILS and Bounce Back Loans

by Alternative Business Funding

Our partners Alternative Business Funding discuss the funding landscape for small businesses with reference to the Coronavirus Business Interruption Loan Scheme and Bounce Back Loans. 

Cuts to VAT for retail and hospitality

In a bid to restart the economy and boost consumer spending, the Chancellor has announced VAT will be cut from 20% to 5% for retail and hospitality businesses. The VAT cut will apply until 31 March 2021 and includes:

  • Cafes and restaurants
  • Takeaways
  • Pubs
  • Hotels
  • B&Bs
  • Campsites and caravan sites
  • Cinemas

In addition, businesses will be able to participate in a new “Eat Out to Help Out” scheme. During August customers will be able to get 50% off their meals from Monday to Wednesday when they dine out at participating businesses. Your business will need to register online via GOV.UK in order to participate. 

How will businesses be helped with sick pay?

The government has announced that it will allow SMEs to reclaim Statutory Sick Pay paid for sickness absence because of Covid-19 (up to two weeks’ SSP per eligible employee). 

Employees can get Statutory Sick Pay from their first day off work (usually they don’t get it for the first three days). So, all employees absent through Covid-19 will receive Statutory Sick Pay of £94.25 per week for two weeks and employers will be able to claim this back (the mechanism for which will be set up as soon as possible says the government).

Employers are advised by the government to maintain records of staff absences and SSP payments, but employees won’t need to provide a GP fit note.

Self-employed workers and freelancers will be able to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.

Which businesses will get a business rates holiday?

The government is to introduce a business rates retail holiday for the 2020/2021 tax year for businesses in the retail, hospitality and leisure sectors in England.

As explained on GOV.UK: “Businesses that received the retail discount in the 2019-2020 tax year will be re-billed by their local authority as soon as possible.”

  • A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Enquiries concerning eligibility or provision of the reliefs should be directed to your local authority.

In addition, the government has promised extra protection for commercial tenants facing eviction due to missed rent payments. The Chancellor confirmed: “We are taking steps to change the law so that no company can be forced out of its premises due to loss of income. 

 

Small business rate relief and rural rate relief

The government has announced that it will make available additional funding to local authorities to support those that already pay little or no business rates because of small business rate relief [SBBR]. “This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.”

  • If your business gets SBRR or rural rate relief, your local authority will contact you – you don’t need to apply.

What if I cannot pay my tax bills?

  • If you’re worried that your business won’t have enough cash to pay tax it owes to HMRC – as a result of Covid-19 – the government is advising you to call HMRC’s dedicated helpline on 0800 0159 559.
  • Staffed by some “2,000 experienced call handlers”, the helpline operates from Monday to Friday 8am to 8pm and Saturday 8am to 4pm (charges apply).
  • Your business may be able to come to a Time To Pay (TTP) agreement with HMRC, meaning self assessment payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022. Read our guide – Coronavirus: what if my small business can’t pay its tax bill? 
  • Any businesses who deferred VAT payments during 2020 will be able to pay their bill in smaller instalments.  According to GOV.UK: “Rather than paying a lump sum in full at the end of March 2021, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.”

What about filing company accounts?

Companies House has confirmed that any companies unable to file their accounts on time due to Covid-19, can make an application to extend the period allowed for filing by up to three months. Making an application is essential as any late filing companies will still receive an automatic penalty if they fail to do this. However, Companies House has stated any companies issued with a late filing penalty due to Covid-19 will have appeals treated sympathetically.

Companies House has also confirmed it will be temporarily easing its strike-off activity for late-filing companies. For more information on the above and guidance on how to file documents online visit GOV.UK.

Privately available help

Help from major UK lenders appears to be readily available for micro, small and medium sized businesses, with Lloyds Banking Group offering £2bn of assistance, HSBC and NatWest both providing £5bn each and lenders such as Barclays, Santander and the Co-operative Bank all offering assistance to their business customers. 

It is not just lenders who have been providing assistance. Large businesses are playing their part too. For example, supermarket Morrisons has confirmed it will be pay all its suppliers with a turnover below £1m immediately instead of between 14 and 30 days as was its standard practice. 

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Coronavirus (Covid-19)The latest business guidance and support