The nationwide lockdown has been devastating for many businesses. With experts predicting that the UK economy could contract by as much as 25% to 35% in the second quarter of 2020, many companies across the country have been forced to close their doors in the wake of the coronavirus pandemic.

To provide support for both businesses and self-employed workers, the Chancellor has announced a raft of measures designed to provide government support for business. So, from the well-publicised ‘furlough’ scheme to deferrals of tax payments, here’s a complete guide to the package of aid that has been announced so far.

Coronavirus Job Retention Scheme

In the current climate, many businesses have been forced to lay off workers as they simply cannot afford their wage costs while trading has temporarily ceased.

If a client cannot maintain their current workforce because of Covid-19, they can ‘furlough’ employees and request a government grant that will cover 80% of their normal monthly wage costs, up to £2,500 per month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidised furlough pay.

Note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

This is a temporary scheme in place for three months starting from 1 March 2020, although the Chancellor has indicated it may be extended. The online portal where a business can claim their grant is expected to be operational by the end of April 2020.

Help with Statutory Sick Pay

If your client’s business had fewer than 250 employees at 28 February 2020, they can reclaim the cost of any Statutory Sick Pay (SSP) caused by the coronavirus, up to a limit of 14 days per individual.

Your client must keep records of the employee’s absence and SSP payments, but the employee will not need to provide a doctor’s note.

Business Interruption Loans

Under the Coronavirus Business Interruption Loan Scheme, SMEs can apply for loans of up to £5 million for up to six years. The business loan scheme will be delivered by the British Business Bank and clients can access the loans via their high street bank.

The government will cover the first 12 months of interest payments and any lender-levied fees, meaning businesses using the scheme will benefit from lower initial repayments and won’t have to pay any upfront fees.

After it was reported that just 1.4% of businesses who had enquired about this scheme has received financial help, the government has committed to speeding up the application process so that businesses can access funds more quickly.

Business rates support

No business operating in the retail, leisure and hospitality sectors in England will pay any business rates in the 2020/2021 tax year. Nursery businesses will also be exempt from business rates in 2020/21.

If your client has a business in the retail, hospitality or leisure sector with a rateable value of less than £15,000, they will be eligible for a cash grant of £10,000.

If the rateable value of a client’s retail, hospitality or leisure business is £15,000 to £51,000 then a £25,000 grant is available.

These grants will be made through the local authority and clients should speak to them in the first instance.

A £10,000 grant is also available to businesses that qualify for Small Business Rate Relief or Rural Rate Relief. This will be also administered by the local authority and, if a business is eligible, they will be contacted directly.

Deferral of VAT payments

All businesses in the UK will be allowed to defer their Valued Added Tax (VAT) payments for three months.

This deferral will apply from 20 March 2020 until 30 June 2020 and is an automatic offer (there is no need to apply). Businesses have until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.

Protection from eviction

If a client cannot pay their commercial rent because their operations have been significantly affected by the coronavirus, they will be protected from eviction.

The government has announced that no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. This period could be extended.

Note that clients will remain liable for any rent due.

The Self-Employed Income Support Scheme (SEISS)

As well as helping businesses with grants, loans and tax deferment, the Chancellor has also announced a package of measures designed to help self-employed and freelance workers.

The Self-Employment Income Support Scheme (SEISS) is designed to support self-employed individuals (and members of partnerships) who have lost income due to the Covid-19 pandemic.

The scheme will allow self-employed workers to claim a taxable grant worth 80% of their trading profits (an average of the last 36 months) up to a maximum of £2,500 per month for three months. Again, this period may be extended if needed.

To qualify, a client must:

  • Have traded in the 2019/20 tax year
  • Have submitted their Income Tax Self-Assessment tax return for the tax year 2018/19
  • Have trading profits of less than £50,000
  • Earn more than half of their income through self-employment

The grant will be paid directly into your bank account as a lump sum. HMRC will contact individuals who are eligible for the scheme and invite them to apply online.

Get in touch

If you or your clients have any questions or concerns about the current position of their business, or how they can access financial support, please get in touch with us. Email or call 0116 2407070.