Coronavirus: latest government measures to support UK businesses

The UK has been grappling with the impact of the Covid-19 pandemic since March 2020. As well as the devastating health toll, the pandemic has severely disrupted economic activity with many businesses having to pause operations or shut down entirely. 

At the beginning of January 2021, all of the UK nations went into lockdown for the third time since the pandemic began. However, the successful rollout of the vaccination programme is offering hope that normal life will resume by the summer. Prime Minister Boris Johnson has recently announced the government’s roadmap for lifting restrictions – with June 21 the provisional date for the full reopening of the economy. The phased approach to lifting restrictions is covered below. 

There are a wide raft of support measures in place to assist businesses affected by the pandemic. These include:

• Business rates relief
• Bounce Back Loans for small and micro-businesses (to be replaced by the Recovery Loan Scheme from April 2021)
• The Coronavirus Job Retention Scheme
• VAT and Income Tax deferral periods
• Restart Grants to support High Street businesses to reopen

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.

• CJRS was first introduced back in March 2020 and has been tweaked at various points. 
• Currently, the government will pay 80% of monthly wage costs (up to £2,500 a month). Employers will need to pay national insurance and pension contributions.
• The scheme has now been extended until 30 September 2021. 
• From 1 July 2021, government contributions will drop to 70% (up to £2,187.50), employers paying the remaining 10% (up to £312.50). 
• From 1 August 2021, government contributions will drop to 60% (up to £1,875), employers paying the remaining 20% (up to (£625)
• 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. 

To be eligible for the extension to CJRS, employees must have been on the payroll by 30 October 2020

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.

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 2020, 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 March 2021. 
• 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.

From April 2021, the scheme will be placed by the Recovery 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 March.
• 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.

From April 2021, the scheme will be placed by the Recovery Loan Scheme. 

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 30 September 2021. After this, the rate will increase to 12.5% for a further six months. The following businesses will be able to benefit from the VAT cut:

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

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.

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. 

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.

• 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.”

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.

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.