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Covid-19 Support Hub

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

16-minute read

Simply Business Editorial Team

6 January 2021

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Updated: 6 January 2021 – 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.

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

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.

The CJRS was originally due to close on 31 October 2020, but has now been extended until 30 April 2021.

The grant available through the CJRS is now 80 per cent of wages up to a cap of £2,500.

You don't need to contribute for the hours the employee doesn't work – you'll only pay employer National Insurance Contributions (NICs) and pension contributions.

You can use ‘flexible furloughing’ as well as full-time furloughing, and you can top up your employee’s wages if you want to. When on furlough, employees can’t do any work that makes money or provides services for you. And if you’ve made employees redundant since 23 September, you can rehire and furlough them.

The government has postponed the Job Retention Bonus, which was due to be a one-off £1,000 payment for each employee kept on after furlough.

How do I get this support?

The extension will work in the same way as the previous version of the scheme. Gov.uk says that claims can be made:

  • in respect of an employee for a minimum seven day claim window
  • in advance

All employers with staff can claim support – you don’t need to have used the scheme previously. You should be using a UK bank account and UK PAYE.

The application process involves:

  1. Identifying your employees as ‘furloughed workers’, which means staff who have to take unpaid leave
  2. Telling the affected employees in writing they’re now furloughed or flexibly furloughed
  3. Working out how much you need to claim for using the government calculator

You can read more about claiming through the furlough scheme at gov.uk.

Job Support Scheme (postponed)

The Job Support Scheme was due to start on 1 November 2020. However, after further lockdowns, the Job Support Scheme remains postponed.

The Job Support Scheme was supposed to replace the furlough scheme, which now ends in April 2021.

The Job Support Scheme was due to be available for six months. It aimed to protect ‘viable’ jobs in businesses facing lower demand because of Covid-19.

Through the Job Support Scheme, businesses were due to 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).

How do I get this support?

As the Job Support Scheme is being postponed, we’re waiting for further guidance about whether there’ll be a future version of the scheme, and what it could look like.

Based on the information that was already announced, you didn’t need to have used the furlough scheme to take part.

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

Businesses forced to close in local ‘tiered’ restrictions can access funding available through the Local Restrictions Support Grant (LRSG). The grant has also applied in national restrictions, too.

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 local 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 £1,334 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.

Top-up grants for retail, hospitality and leisure businesses

On 5 January 2021, Rishi Sunak announced additional funding for retail, hospitality and leisure businesses in the form of a one-off top up grant.

The grant is provided on a property by property basis to support businesses forced to close with the latest national lockdown restrictions.

Small businesses with a rateable value of £15,000 and under will get £4,000.

Medium-sized businesses with a rateable value of between £15,000 and £51,000 will get £6,000.

Larger businesses with a rateable value of more than £51,000 will get £9,000.

This is in addition to existing business support, including the Local Restrictions Support Grant and business rates relief.

How do I get this support?

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

The government has also made £594 million available to local authorities to support businesses that aren’t eligible for the grants. This funding is discretionary.

Local Restrictions Support Grant for open businesses

Within the tier system, even if a business isn’t forced to close, they’re likely to suffer severely reduced demand.

That’s why there are grants available for businesses in tiers two and three in England that have been ‘severely impacted’ by coronavirus since 1 August 2020.

These grants are worth up to £2,100 each month that tiered restrictions apply – plus they’re retrospective, so areas that have already faced restrictions are eligible.

Local authorities will administer the grants and businesses will receive funding equivalent to:

  • £934 a month for properties with a rateable value of £15,000 or under
  • £1,400 a month for properties with a rateable value over £15,000 and below £51,000
  • £2,100 per month for properties with a rateable value of exactly £51,000 and over

Local authorities will also get an extra five per cent outside of the above amounts, to distribute to businesses that fall out of the business rates system.

In the event of national restrictions, other available grants mean that this one won’t apply.

The government says that while businesses can use the money however they like, it expects that many businesses will use the grants to cover high fixed property-related costs.

How do I get this support?

The government is leaving it up to local authorities to decide on precise eligibility criteria for these grants. The guidance is that the support is for businesses that don’t legally have to close, yet are still facing severely reduced demand.

This means you’ll need to speak to your local authority about whether you can access the grant.

The scheme will run until April initially, with a review in January.

Additional Restrictions Grant for businesses that aren’t covered by other grants

Local authorities can give out this discretionary funding to businesses that aren’t eligible for other grants. The government gives examples of who the funding could be given to:

  • businesses which supply the retail, hospitality, and leisure sectors
  • businesses in the events sector
  • business required to close but which do not pay business rates

You can’t get funding if your business is in administration, insolvent or has been struck off the Companies House register.

How do I get this support?

You’ll need to speak to your local authority about this grant.

Christmas Support Payment for wet-led pubs

This is a one-off £1,000 payment for wet-led pubs subject to tier two and tier three restrictions in December 2020.

Pubs that predominantly serve alcohol rather than food were severely impacted by restrictions over Christmas, not least because of the requirement to serve a ‘substantial meal’ with alcohol.

How do I get this support?

You’ll need to speak to your local authority about this grant.

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.

Following the November 2020 lockdown announcement, the government said that any business that has borrowed less than the maximum (25 per cent of turnover) can top up their loan. They can only use this option once.

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.

The deadline for applying for a new Bounce Back Loan is now the end of March 2021.

Coronavirus Future Fund

The Future Fund offers convertible loans of between £125,000 and £5 million to UK-based innovative companies that are facing financial hardship.

This support is primarily suited to businesses that rely on equity investment. The business needs to be UK-incorporated and to have raised at least £250,000 in equity investment from third-party investors in the last five years.

How do I get this support?

The application deadline for the Future Fund is now 31 January 2021. You can apply with the British Business Bank.

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

There are calls to extend the business rates holiday for tax year 2021-22.

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 five).

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.

The government has extended its initial ban on business evictions until March 2021. It says that businesses that can pay rent should continue to do so, as the ban is designed to protect businesses struggling the most.

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 2020, 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.

Businesses will now have until the end of March 2021 to apply for the CBILS.

Read more about the Coronavirus Business Interruption Loan Scheme.

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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

More details and 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 paid 70 per cent of three months' average monthly trading profits, capped at £6,570. Applications closed on 19 October 2020.

And in September 2020, the government announced it's extending the scheme by two more grants.

The third grant is for November 2020 to January 2021 and will pay 80 per cent of your average trading profits for three months, up to a cap of £7,500.

Because of subsequent lockdowns, this third grant is more generous than originally announced.

The final grant is for February 2021 to April 2021, but the government hasn’t announced at 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 can make your application on the gov.uk website.

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

To be eligible for the third and fourth grant extensions, the government says you need to declare that you intend to continue to trade. You should be either:

  • actively trading but facing reduced demand because of coronavirus
  • temporarily unable to trade because of coronavirus, if you were previously trading

While you need to have been eligible for the previous grants, you don’t have to have claimed them.

The window for claiming the third grant opened on 30 November 2020 and closes on 29 January 2021. The window for claiming the fourth and final grant is still to be announced.

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.

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 make that payment in instalments, delaing paying it 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.

The FCA has announced that payment holidays should continue to be available. This means that consumers who haven't had a payment deferral yet can apply for one of up to six months, unless it's not in the consumer's interest. The FCA is clear that if you can continue to make payments, you should.

Borrowers can apply for a one-month deferral of high-cost, short-term credit.

If you're no longer eligible, the FCA's previous guidance said that lenders should give ‘tailored support’ for people still struggling – but any changes to payments will be recorded with credit reference agencies.

If you’re given a payment holiday, your lender should record it in a way that doesn’t impact your credit score – but beyond the payment holiday itself, any other changes to payments will be recorded.

How do I get this support?

The FCA has said to contact your lender, but keep in mind they’re likely extremely busy. The application deadline for payment holidays is 31 March 2021. All payment holidays must end by 31 July 2021.

It might be worth checking the FCA's website, as well as your lender's website, for any further updates.

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.

And after the government announced a second lockdown on 31 October 2020, the FCA confirmed that it’s updating its guidance so that mortgage borrowers who haven’t yet had a mortgage payment holiday can ask for one.

You should carefully consider whether you need a payment holiday. If you can still make mortgage repayments, you should – this is only for those in financial difficulty.

How do I get this support?

The FCA has stated that mortgage payment holidays could last up to six months. If you’ve already had a payment holiday for less than six months, you can ask for another one, bringing your total deferral up to six months.

The FCA says to contact your lender, but keep in mind they’ll be extremely busy. You need to apply by 31 March 2021 and all payment holidays need to end by 31 July 2021. Remember that mortgage payment holidays have to be agreed with your lender – don’t simply stop making payments.

It might be worth keeping up to date with the FCA's announcements on its website.

The guidance says that if borrowers have already benefited from a six-month payment holiday, 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 payment holidays, lenders will need to report these types of changes to repayments 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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