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

15-minute read

Lauren Hellicar

25 September 2020

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Updated: 12 October 2020 – we’ll update this article with information as it comes in.

With information on the coronavirus (Covid-19) outbreak constantly changing, it can be hard to figure out what support is available to your small business. To get you started, 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.

Job Support Scheme for businesses facing reduced demand

In September 2020, the government announced a new Job Support Scheme. It replaces the furlough scheme, which ends on 31 October.

The Job Support Scheme starts on 1 November and will last six months. It’s designed to protect ‘viable’ jobs in businesses facing lower demand this winter because of Covid-19.

Businesses will pay employees for time worked, with the cost of hours not worked split between the employer, the government (through wage support) and the employee (through wage reduction). The government’s contribution is capped at £697.92 a month.

Employees must work at least a third of their normal hours.

The government says this will ensure employees earn a minimum of 77 per cent of their normal wages.

How do I get this support?

You don’t need to have used the furlough scheme to take part. You need to have a UK bank account and UK PAYE schemes.

Larger businesses will need to have a financial assessment test, but there’s no such requirement for small and medium-sized businesses.

Employees need to have been on the payroll on, or before, 23 September 2020.

The scheme will be open from 1 November 2020 to the end of April 2021.

You can make a claim online through gov.uk from December and you’ll be paid on a monthly basis.

Grants are paid in arrears. This means that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.

Find out more about the Job Support Scheme at gov.uk.

Job Support Scheme for businesses forced to close

After announcing the Job Support Scheme at the end of September, the Chancellor expanded it in October to offer more help for businesses that are forced to close in local lockdowns.

This part of the scheme will pay your employees two thirds of their normal salary, up to £2,100 a month, if you close your doors and they can’t work for a week or more.

Unlike the previous blanket furlough scheme, it targets businesses that close in specific areas. If a business is able to remain open but faces reduced demand, they can still access the Job Support Scheme measures described above.

Businesses need to pay employer National Insurance and pension contributions.

How do I get this support?

This is part of the Job Support Scheme, so the application process is the same as described above.

Local Restrictions Support Grant (LRSG) for businesses forced to close

On 9 October, Rishi Sunak expanded the funding available through the Local Restrictions Support Grant (LRSG).

The grant will help businesses in England that were open and trading as normal before being forced to close for at least two weeks because of lockdown restrictions.

You need to be paying business rates on your premises, but local councils may also offer grants to businesses that don’t pay business rates at their discretion.

Small businesses with properties that have a rateable value of less than £15,000 will get £1,300 per month.

Medium-sized businesses with properties that have a rateable value of between £15,001 and £51,000 will get £2,000 a month.

Larger businesses can claim £3,000 a month.

As this is a grant, the money doesn’t have to be paid back.

How do I get this support?

You can apply by visiting your local council’s website. You can find your local council here.

Bounce Back Loan Scheme for small businesses

The Bounce Back Loan Scheme (BBLS) provides loans between £2,000 and £50,000, with the government giving accredited lenders a 100 per cent guarantee for the loans they pay out.

The government is also picking up the bill for any fees and interest for the first year, and small business owners won’t need to repay anything towards their Bounce Back Loan in the first 12 months.

After the first year, borrowers will have to pay “2.5 per cent interest for the remaining period of the loan”, according to the government website.

In September 2020, the government announced changes to the BBLS, designed to give businesses more flexibility in how they repay the loan. These include:

  • new and existing loans can be repaid over 10 years, rather than six
  • you can take one payment holiday lasting six months, but you have to have made six payments to use this option
  • you can choose to make interest-only repayments three times over the course of the loan, with each interest-only period lasting up to six months

The government is calling these changes a ‘pay as you grow’ scheme for businesses.

But remember that any extensions to your loan, as well as payment holidays or interest-only payments, mean that you’ll end up paying more interest overall.

How do I get this support?

There are currently 11 lenders taking part in the scheme – you can apply for a Bounce Back Loan on the government website.

Read more about the Bounce Back Loan Scheme.

In September 2020, the government extended the deadline for applying for a new Bounce Back Loan from 4 November 2020 to 30 November 2020.

£750 million for innovative small businesses

Small to medium-sized enterprises (SMEs) focused on research and development will have access to £750 million of grants and loans, according to the Treasury. That’s in addition to the Future Fund – £500 million of loans being set aside for high-growth firms.

Rishi Sunak, Chancellor of the Exchequer, said: “Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis.”

How do I get this support?

The funding will be available through national innovation agency Innovate UK and its grants and loan scheme. If you’re one of the agency’s existing 2,500 customers, you’ll be able to opt in to a scheme fast-tracking up to £200 million of grant and loan payments. On top of this, £550 million of extra support is being made available for existing customers.

If you’re a research and development intensive small business but not an existing Innovate UK customer, you may still benefit from £175,000 of support they’re setting aside for around 1,200 firms.

The first payments started in mid-May, and there’s more information on the government website.

Continuity grants were available until 29 May 2020, but continuity loans are available until all the money is allocated, or 31 December – whichever is earlier.

Coronavirus business grants

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

He also provided one-off grants of £10,000 to smaller businesses. To qualify for the £10,000 grant your business needed to have a rateable value of £15,000 or less, or you needed to already be getting Small Business Rate Relief (SBBR), Rural Rate Relief (RRR) or tapered relief.

How do I get this support?

This scheme closed on 28 August 2020. Unclaimed money was returned to the government.

If you have questions, the government’s advice says to 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.

Read more about grants for small businesses.

Business rates holiday for tax year 2020-21

The government is temporarily cancelling business rates for all retail, leisure and hospitality businesses, in response to the Covid-19 outbreak. The business rates holiday applies in England for tax year 2020-21 for:

  • shops
  • restaurants, cafés, bars, pubs
  • cinemas, live music venues
  • assembly or leisure properties, like sports clubs, gyms, spas
  • hospitality properties, like hotels, guest houses, self-catering accommodation

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.

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

Read more about business rates.

Business rates holiday for nurseries

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

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 (care and education for children up to age 5).

How do I get this support?

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. Your local council will automatically apply the discount 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.

In June, the government extended its initial ban on evictions until the end of September 2020.

How do I get this support?

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

The government introduced a new code of practice in June, designed to help struggling businesses and landlords work together on rent payment issues.

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 (CBILS)

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. 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.

In September 2020, the government announced that lenders can now extend the loan term up to 10 years (previously it was six).

How do I get this support?

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

Your business needs to:

  • be based in the UK
  • have an annual turnover of up to £45 million
  • have a borrowing proposal the lender would consider viable, if it wasn’t for coronavirus
  • have been adversely impacted by coronavirus (you can self-certify for this)

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.

In September 2020, the government announced that businesses will now have until the 30 November to apply for the CBILS.

Read more about the Coronavirus Business Interruption Loan Scheme.

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Coronavirus Job Retention Scheme (CJRS) – help to pay furloughed employees’ salaries

The Coronavirus Job Retention Scheme (CJRS) was one of the Chancellor’s headline measures to help support businesses through the coronavirus outbreak.

If you have staff, including apprentices, you’d otherwise have to lay off due to the Covid-19 outbreak, the CJRS will pay a portion of an employee’s salary, up to a maximum of £2,500 a month.

But the CJRS closes on 31 October.

In September, the government pays 70 per cent of wages up to a cap of £2,187.50 for the hours the employee is on furlough.

In October, the government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee is on furlough.

Employers need to top up their employee’s wages to make sure they receive 80 per cent of their wages, up to a cap of £2,500.

The government has also announced a Job Retention Bonus, which is a £1,000 one-off payment to employers for every employee they claimed for under the CJRS, who remains continuously employed until 31 January 2021. These payments will be made to employers from February 2021.

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. Work out how much you need to claim for using the government calculator

Once you know how much you need to claim for, you can apply through the Coronavirus Job Retention Scheme (CJRS).

You’ll find full details of how to claim under the CJRS on gov.uk.

Read more about furloughing employees under the Coronavirus Job Retention Scheme.

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. Any sickness you claim for needs to have started on or after 13 March 2020.

How do I get this support?

You don’t need a doctor’s note from your employee, but they do have to either:

  • have had coronavirus
  • be unable to work because they’re self-isolating
  • or be shielding in line with public health guidance

The online repayment system for coronavirus-related SSP is now available on the government website.

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).

Read more about statutory sick pay.

Self-Employment Income Support Scheme (SEISS)

The Self-Employment Income Support Scheme (SEISS) is made up of a series of grants designed to support self-employed people whose business has been adversely affected by coronavirus.

The first grant paid 80 per cent of three months' average monthly trading profits over the last three years, capped at £7,500. The claims deadline for this grant was 13 July 2020.

The second grant pays 70 per cent of three months' average monthly trading profits, capped at £6,570. Applications close on 19 October 2020.

And in September 2020, the government announced it is extending the scheme by two more grants, but at a much reduced level.

The next grant is for November 2020 to January 2021. It covers 20 per cent of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £1,875 in total.

The final grant is for February 2021 to April 2021, but the government hasn’t announced what level this will be.

Only those currently eligible for SEISS will be able to apply for the extension (see more about SEISS eligibility below).

For the purposes of SEISS, your average trading profit will be your total trading profits or losses for tax years 2016-17 + 2017-18 + 2018-19 divided by three.

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

While you’ll still owe Income Tax and National Insurance on any money you get through the SEISS, it’s a grant rather than a loan. This means you won’t need to pay it back.

How do I get this support?

You’ll need to have a tax return for 2018-19. You can’t be a limited company or operating a trade through a trust.

Other eligibility criteria include:

  • you traded in tax year 2019-20
  • you’re trading when you apply, or you would be if the pandemic hadn’t stopped you
  • you plan to keep trading in tax year 2020-21
  • you’ve lost trading profits because of coronavirus

You can make a claim for the second grant payment on the gov.uk website. Applications close on 19 October 2020 and you don’t need to have made a claim for the first grant.

To be eligible for the third and fourth grant extensions, the government says you need to declare you’re actively trading and intend to continue to trade.

There isn’t currently any guidance on how to apply for the grant extensions.

If you’re not eligible, you can claim for Universal Credit (more below), which you should record as part of your income from self-employment. You may also consider applying for the Coronavirus Business Interruption Loan Scheme, mentioned earlier.

Read more about the Self-employed Income Support Scheme.

Income Tax and VAT deferred for the self-employed

In September 2020, the government announced that Self-Assessment taxpayers can defer their tax payments even further.

You could already move the payment due on 31 July 2020 to 31 January 2021.

The new deferral means that anyone who needs to pay up to £30,000 in tax by 31 January 2021 can now delay making that payment in full until 31 January 2022. Interest will be applied to the outstanding balance from 1 February 2021.

Businesses will need to use HMRC’s Time to Pay service online.

The government has previously recommended that businesses who can make their tax payments should do so.

The government also announced changes to its VAT deferral scheme. Businesses who chose to defer VAT payments between March and June 2020 will now be able to make interest-free payments over the 2021-22 tax year, rather than paying in full by March 2021.

How do I get this support?

You can use HMRC’s Time to Pay service to defer your 31 January 2021 Self Assessment tax bill. You need to have no:

  • outstanding tax returns
  • other tax debts
  • other HMRC payment plans set up

The previous 31 July 2020 deferral was applied automatically.

If you’ve deferred your VAT payments, then you’ll need to opt-in to the scheme to make smaller payments over the 2021-22 tax year. There’ll be more details about this over the coming months.

If you can make your VAT payments in March 2021 then you should do so.

Visit our Self Assessment and tax resource for guides on self-employed and small business taxes.

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.

Read more about Corporation Tax.

Time to Pay coronavirus helpline

HMRC’s Time to Pay service is available for all businesses with outstanding tax bills and who are in financial distress. If coronavirus has caused you difficulty with paying your tax bill that won’t be solved by the tax deferrals mentioned above, you can try the special coronavirus helpline.

How do I get this support?

You can call the dedicated HMRC helpline on 0800 024 1222, but be aware it may take longer than usual to speak to an adviser. Decisions about any extra time you get to pay your bill will be made on a case-by-case basis.

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 (UC)

You’ll be able to claim Universal Credit and get advance payments upfront with no need to go to a Jobcentre, if your work has reduced or stopped because of coronavirus.

How do I get this support?

Any payments you get will be based on your actual earnings, and you’ll need to declare any self-employed earnings and expenses at the end of each monthly assessment period.

The Treasury said, “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.

Read more about benefits for self-employed people.

Employment and Support Allowance (ESA)

ESA is for people with a disability or health condition that affects how much they can work. During the coronavirus pandemic, you can apply for ‘new style’ ESA if you can’t get Statutory Sick Pay and you or your child are ill or self-isolating because of coronavirus.

Once you’ve been assessed, you’ll be placed into one of two groups. The amount you’ll get depends on whether you can get back into work:

  • up to £74.35 a week if you’re able to get back into work
  • up to £113.55 a week if you’re unable to get back into work

How do I get this support?

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

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.

The FCA’s current guidance on payment holidays ends on 31 October 2020. After that, they say lenders should give ‘tailored support’ for people still struggling – but any changes to payments will be recorded with credit reference agencies.

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.

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?

You can apply for mortgage payment holidays until 31 October 2020. You can apply online with your mortgage provider, but you need to make sure you keep them updated at the earliest opportunity.

It has to be agreed with your lender – don’t simply stop making payments.

The FCA has said that if borrowers are still struggling after 31 October, lenders should move to ‘tailored support’ based on individual circumstances. The FCA says this should be in the form of further payment deferrals, reduced payments or an extension to the repayment term.

Unlike the three-month payment holidays, lenders will need to report any changes to repayments after 31 October to credit reference agencies.

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.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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