Menu

Call Us0333 0146 683
Knowledge centre

Coronavirus: what support is available for small businesses and the self-employed?

9-minute read

Coronavirus: what support is available for small businesses and the self-employed?
Lauren Hellicar

Lauren Hellicar

31 March 2020

Updated: 6 April 2020 – we’ll update this article with new information as it comes in.

With information on the coronavirus (Covid-19) outbreak changing almost hour by hour, it’s hard to figure out what support is available to your small business.

That’s why we’ve pulled together a list of ways you can get financial help to weather the storm until you get back to business as usual.

Self-Employed Income Support Scheme

The Chancellor's Self-Employed Income Support Scheme (SEIS) pays you 80 per cent of your average profits over the last three years, or up to £2,500 a month. Members of partnerships are also eligible for this support.

You’ll need to take in trading profits of no more than £50,000, and make the majority of your income from being self-employed, to be eligible for the taxable grant.

Mr Sunak said the scheme will cover 95 per cent of people who make the majority of their earnings through self-employment.

How do I get this support?

You’ll need to have a tax return for 2019. If you haven’t yet filed yours, you’ll be able to do so in four weeks' time, the Chancellor said.

HMRC will contact you directly if you’re eligible. You’ll need to fill in a simple online form and the money will be paid directly into your bank account.

The support payment system is due to be ready no later than the beginning of June. If you’re struggling now, the Coronavirus Business Interruption Loan Scheme (see more details below) will be made available to most, according to the Treasury.

Income Tax and VAT deferred for the self-employed

Anyone due to make payment on account in July 2020, won’t need to pay their Self Assessment Income Tax bill until January 2021. However, the government website suggests you should still pay your second payment on account on 31 July if you’re able to.

You get more time if you’re VAT-registered, too. VAT payments due between 20 March and 30 June don’t need to be paid for three months, but you can still pay if you choose to.

How do I get this support?

You don’t need to do anything to get the Income Tax deferral – it’ll be applied automatically to all UK businesses. You’ll have until the end of the 2020-21 tax year to pay any Income Tax liability you accumulate.

The deferred VAT payment deadline will be applied automatically, but you still need to submit your returns. If you’re due a VAT refund during this period, the government will pay it as usual.

More time to pay Corporation Tax

As of 25 March 2020, if your business is registered with Companies House, you can apply for a three-month extension to the deadline for filing your accounts. Businesses granted this extension won’t get the usual late payment penalty.

How do I get this support?

You need to apply for the extension using the fast-tracked application system. It takes 15 minutes, and any business giving Covid-19 (coronavirus) as the reason will get an automatic and immediate extension, according to the government website.

Benefits for self-employed workers during the coronavirus pandemic

If you’re not eligible for Statutory Sick Pay because you’re self-employed or earn below the Lower Earnings Limit of £118 a week, the government is making it easier to claim for Universal Credit or Contributory Employment and Support Allowance during the Covid-19 outbreak.

Universal Credit

The Universal Credit Minimum Income Floor will be temporarily relaxed for those who have Covid-19 or are self-isolating in line with government advice. You’ll be able to claim Universal Credit and get advance payments upfront with no requirement to go to a Jobcentre if you’re advised to self-isolate.

How do I get this support?

According to the Treasury, “self-employed people can now access Universal Credit in full.

“A self-employed person with a non-working partner and two children, living in the social rented sector, can receive welfare support of around £1,800 per month.”

The government website has details on eligibility and how to claim Universal Credit.

Employment and Support Allowance

If you’re eligible, and ill or self-isolating due to coronavirus, you’ll be able to claim Employment and Support Allowance (ESA) of £73.10 a week, from day one of your sickness rather than the usual day eight. You need to be over 25 to receive ESA.

How do I get this support?

The government website has details on eligibility and how to claim ESA.

£500 million Hardship Fund

Local authorities will have access to a new £500 million Hardship Fund so they can support economically vulnerable people and households. It’s aimed at providing more Council Tax relief through measures like the existing Local Council Tax Support schemes.

How do I get this support?

The government website says the Ministry of Housing, Communities and Local Government (MHCLG) will provide more information on this shortly.

Relief from paying back loans and credit cards

The Financial Conduct Authority (FCA) has asked lenders to use flexibility built into their rules to support customers during the coronavirus outbreak, taking into account individual circumstances.

If you’re given a payment holiday, your lender should record it in a way that doesn’t impact your credit score.

How do I get this support?

Lots of the major lenders have already made statements on this, so it’s worth speaking to yours if you’re now having difficulty keeping up with personal loan or credit card repayments.

More time to pay your tax bill

HMRC’s Time to Pay service is available for all businesses with outstanding tax bills and who are in financial distress. A special helpline has been set up for businesses having difficulty finding the money to pay their tax bill specifically due to the Covid-19 outbreak.

How do I get this support?

You can call the dedicated HMRC helpline on 0800 0159 559. Decisions about the extra time you get to pay your bill will be made on a case-by-case basis.

Mortgage payment holidays

If you own your own home, there’s good news from mortgage lenders. They’ve agreed to offer payment holidays to customers in financial difficulty due to the Covid-19 outbreak. This could mean you don’t have to pay anything towards your mortgage for up to three months.

How do I get this support?

Speak to your mortgage provider to find out what support they can offer you.

Landlords banned from evicting tenants

Similarly, mortgage payment holidays for landlords bring good news for tenants. Along with residential mortgage customers, buy-to-let landlords are now eligible for the three-month payment holiday from their mortgage.

This recognises the fact that tenants may struggle to keep up with rent payments if their income is affected by the pandemic. Landlords are also now banned from starting proceedings to evict tenants for at least three months.

How do I get this support?

The government advises landlords and tenants to work together to come up with an affordable rent repayment plan. Tenants’ individual circumstances are to be taken into account when creating the plan.

Coronavirus business grants

The Chancellor is making £25,000 cash grants available to retail, hospitality and leisure businesses with a rateable value between £15,001 and £51,000.

He's also providing one-off grants of £10,000 to smaller businesses being disrupted by Covid-19. These grants are being given to businesses with a rateable value of £15,000 or less, or businesses that currently get Small Business Rate Relief (SBBR), Rural Rate Relief (RRR) or tapered relief.

On top of this, the government has said it’ll relax planning regulations to allow pubs and restaurants to offer takeaways without a planning application, giving these businesses a way to keep bringing in cash despite being empty.

How do I get this support?

You don’t need to do anything – the government will write to you with more information if you’re eligible.

The government says it’ll provide guidance for local authorities shortly. If you have questions, you should contact your local authority.

If you’re not sure how to get in touch with them, you can find your local authority on the government website.

Business rates holiday for tax year 2020-21

The government is temporarily cutting business rates to 0 for all retail, leisure and hospitality businesses, in response to the Covid-19 outbreak. This reduction applies in England for tax year 2020-21 for properties below £51,000 rateable value.

How do I get this support?

You don’t need to do anything to get this support – it’ll be applied to your April 2020 Council Tax bill. Your local authority may need to reissue your bill to remove the business rate charge. They’ll do this automatically, as soon as possible.

To benefit from this support, your business property needs to be completely or mainly used:

  • as a shop, restaurant, cafe, drinking establishment, cinema or live music venue
  • for assembly or leisure
  • as a hotel, guest and boarding premises or self-catering accommodation

You can use the government’s business rates calculator to find out the amount you’ll no longer have to pay this year.

Business rates reduction for nurseries

Nurseries in England will also get a year off paying business rates for tax year 2020-21.

How do I get this support?

To be eligible, the building needs to be occupied by providers on Ofsted’s Early Years Register, and completely or mainly used to provide the Early Years Foundation Stage.

Like retail, leisure and hospitality businesses mentioned above, you don’t need to do anything to get this business rates holiday if you’re eligible.

Protection if you can’t pay your commercial rent

The government announced that commercial tenants who can’t pay their rent as a result of the Covid-19 outbreak will be protected from eviction. This means you won’t be forced out of your business premises if you miss a rent payment up until 30 June – this period may be extended by the government.

How do I get this support?

Commercial tenants and landlords are being encouraged to come to voluntary arrangements on repayment.

Gov.uk makes it clear that this is protection from eviction if you can’t pay your commercial rent right now, because of the pandemic. It’s not a rent holiday, and commercial tenants will still be liable for the rent.

Coronavirus Business Interruption Loan Scheme

Under a new coronavirus business loan scheme, if you have a turnover of up to £45 million you can apply for loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years. The government will encourage lenders to part with their cash by guaranteeing up to 80 per cent of any losses, and there will be no upfront loan charges. On top of this, the government will cover the first 12 months of interest payments.

The government has extended the CBILS to all viable small businesses affected by the pandemic – not just businesses that can't get regular commercial financing. It has also banned lenders from requiring you to use your own property or savings to guarantee a loan under £250,000.

Besides making operational changes to speed up lending approvals, the Chancellor, along with the Governor of the Bank of England, Andrew Bailey, has written to banks 'asking them to support small and medium-sized enterprises in any way they can'. This support includes making sure interest rates are reasonable, and making sure the benefit of the government guarantee to those borrowing under the CBILS is passed on.

How do I get this support?

The scheme, delivered through the British Business Bank, is now available through participating lenders. British Business Bank eligibility criteria apply.

All major banks will offer this scheme, according to the government website. It advises speaking to your own business banking provider now, to ensure you get any cash you’re eligible for as quickly as possible.

Help to pay employees’ salaries

If you have staff you’d otherwise have to lay off due to the coronavirus outbreak, the Coronavirus Job Retention Scheme will pay 80 per cent of an employee’s salary, up to a maximum of £2,500 a month.

This support will be backdated to 1 March and is open for three months, but this may be extended, if needs be.

How do I get this support?

  1. Identify your employees as ‘furloughed workers’, which means staff who have to take unpaid leave.
  2. Tell the affected employees they’re now ‘furloughed workers’.
  3. Tell HMRC which employees are furloughed and how much they earn. The government expects the online system to be ready by the end of April.

If you need cash flow support now, you may be eligible for a Coronavirus Business Interruption Loan, mentioned above.

Full refund on statutory sick pay due to Covid-19

SMEs with fewer than 250 employees as of 28 February 2020 will get a full refund from the government on 14 days of statutory sick pay per employee off sick with Covid-19. The eligible period will start the day after the Statutory Sick Pay regulations are officially extended to those staying at home.

How do I get this support?

According to gov.uk, the government will set up the repayment system for employers as soon as possible. Make sure you keep records of all absences and statutory sick pay payments due to Covid-19 (this is good practice for your business for any sickness, at any time). Employees won’t need to provide a GP fit note for coronavirus.

Coronavirus business and self-employed support in Scotland, Wales and Northern Ireland

Some of the support measures available to help small businesses through the pandemic are administered by the devolved governments. You can find out more about small business support measures specific to the devolved nations on gov.uk.

Look after your business’s greatest asset

If you’re self-employed, you are your business’s most valuable asset – so look after yourself. The Mental Health Foundation offers useful advice on looking after your mental health during the coronavirus outbreak. Equally, if you’re a small business owner with employees, you can share these tips with your staff.

Sign up for our newsletter

Looking for the latest news and features to help you stay ahead? Sign up for our monthly newsletter and get the inside track on the issues that matter to you.

Sign up now

Find this article useful? Spread the word.

Share
Tweet
Post

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter

© Copyright 2020 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.