COVID-19 Financial Support

Please find below details of the major Government schemes available for individuals and businesses to support them financially during the COVID-19 crisis.

Should you have any questions, please contact us as soon as possible. 

 

For Individuals:

Self-employed Income Support Scheme

The deadline to apply for the third SEISS grant closed on 29 January 2021.

In the Budget of 3 March 2021, the fourth and fifth grants were announced.

The fourth grant - due to cover the months of February-April 2021 - will be open to claims from April, and will be equivalent to 80% of average monthly profits up to a total for the three months of £7,500.

The fifth grant - due to cover the months of May-September 2021 - will be open to claims from late July. Unlike all previous payments, the rate of this will be determined by a turnover test:

  • Those individuals whose turnover has fallen by 30% or more will be eligible for the full grant equivalent to 80% of average monthly profits up to a total of £7,500 for the period
  • Those individuals whose turnover has fallen by less than 30% will be eligible for a grant equivalent to 30% of average monthly profits up to a total for the period of £2,850

Further information on how the turnover test will be assessed are expected in due course.

Those who became newly self-employed in 2019/20 and have submitted their self-assessment tax return by 2 March 2021 will be eligible to claim for both the fourth and fifth grants subject to meeting the eligibility criteria.

All SEISS grant payments for each grant claim will be made as a single lump sum within a few days of claim.

The average monthly profits will be calculated from the profits of the last 3 submitted tax returns, although will be based on shorter periods where the person has been self-employed for less than the full 3 years.

To be eligible for the fourth and fifth payments of this scheme, you must:

  • Have been adversely affected by the COVID-19 pandemic
  • Have been registered as self-employed in the 2019/20 tax year
  • Have continued to trade throughout the 2020/21 tax year and intend to continue to trade
  • Have submitted your 2018/19 tax return by 23 April 2020 (if applicable) and your 2019/20 tax return by 2 March 2021
  • Have the majority of your income from self-employment
  • Have average self-employed profits of up to £50,000 per annum over the 2017/18, 2018/19 and 2019/20 tax years

All those eligible will be contacted by HMRC directly and asked to complete an online form through the Government Gateway to request the payment of the grant. The payment will be made directly to their nominated bank account.

If you have not yet claimed, HMRC have an eligibility checker where you can check whether HMRC believes you will be eligible for the grant. You will need your personal Unique Taxpayer Reference and National Insurance number, and Government Gateway ID (if you are registered). If you do not have a Government Gateway account, you can also set this up through the eligibility checker. 

This tool does not allow you to make the claim itself but does allow you to check your eligibility and provide up to date contact details through the Government Gateway.

Those who pay themselves a salary and dividends through their own company are not covered by this scheme, but they will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes, and they can be furloughed.

 

Self-assessment - Time to Pay Arrangement

To apply for the Time To Pay arrangement online, the self-assessment liability that you are seeking to defer should relate to the 2019/20 second payment on account (which was automatically deferred from 31 July 2020) and/or the balancing payment which would usually be due on 31 January 2021 and the first payment on account towards 2020/21.

All previous self-assessment liabilities and returns should be up to date. The maximum liability eligible for the 12 months payment plan via the online Time To Pay application is £30,000. You will need your own Government Gateway account linked to your Personal Tax Account to apply online.

Individuals without an online Government Gateway account or who wish to request a Time To Pay arrangement for a liability of more than £30,000 will still need to arrange this over the phone with HMRC.

Should you require any assistance on this, or would like help with cashflow or budgeting, please contact us.

 

For Individuals and Business:

Dedicated HMRC Time to Pay Helpline

Anyone who is in financial distress caused by the fallout from Coronavirus and has outstanding tax liabilities, or has tax liabilities approaching in the next few weeks, can call the dedicated HMRC helpline on 0800 024 1222 to arrange a deferred payment plan.

  

For Business:

Coronavirus Job Retention Scheme

All employers are able to apply to receive a grant to pay up to 80% of the gross wages of any employees who have been furloughed up to a maximum of £2,500 per employee from 1 November 2020 to 30 June 2021. Eligible employees must have been notified to HMRC through the Real Time Information (RTI) system by way of a Full Payment Submission (FPS) on or before 30 October 2020.

For the month of July 2021, the government grant available will fall to 70% of the gross wages of any furloughed employee. For the months of August and September 2021, the government grant will fall further to 60% of the gross wages of any furloughed employees. It will therefore be necessary for employers to cover 10% of gross wages in July 2021 and 20% of gross wages in August and September 2021 to any furloughed employees' wages.

Throughout the remaining term of the CJRS, the employer will remain responsible for the payment of the Employer's National Insurance Contributions and any Employer Pension Contributions.

Directors of owned-managed companies without work will also be able to furlough themselves provided that they are paid through a PAYE scheme and submissions had been made prior to the above date. Statutory duties of a director will not be counted as work, so the statutory duties may continue whilst the director is on furlough, although no income generating activities may be conducted. Note that the scheme does not cover anything taken as dividends.

Employers will have the flexibility to bring back furloughed employees on a part-time basis with the employer responsible for any hours worked. Any part-time working arrangement must cover at least a week and be agreed in writing with the employee. When making the grant claim, employers will need to report hours worked and normal working hours for each employee that they are claiming for.

For furlough claims made for periods from 1 November 2020, newly furloughed employees do not need to have been furloughed previously.

For those employees not previously eligible for CJRS, the wages to be used for the furlough calculations will be 80% of the wages payable in the last pay period ending on or before 30 October 2020 (if fixed salary), or if on variable pay, 80% of the average payable between 6 April 2020 (or start of employment if later) and the day before their furlough begins. The same period will be used to calculate normal hours worked.

For employees previously eligible for CJRS under the old scheme which ran until 31 October, the furlough calculation will remain the same as previously used, as follows:

  • For salaried employees, the gross salary paid in the last pay period before 19th March 2020 should be used to calculate the furloughed amount . Do not include commissions, fees or bonuses. Further clarification is awaiting in respect of the rates applicable for the November CJRS extension.
  • For employees with variable wages, the higher of the following can be used for the furlough calculation (subject to clarification in respect of the November CJRS extension):
      • the same month's earning from the previous year
      • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, use the average of their monthly earnings since the started work for the business.

To access the portal to apply for the Coronavirus Job Retention Scheme grant, employers will need to have access to 'PAYE for Employers' using the business's Government Gateway ID to apply (or an agent authorised to access this on their behalf).

Employers will need to make a monthly claim for the CJRS grant with the start and end of each claim period being in the same calendar month. Claims may be made in anticipation of, during or after a payroll run, with grant payments expected to be paid 6 working days after the claim is made.

Monthly claims must be made by day 14 of the month following.

Employers will be free to top up the payments to 100% as they wish, but they are not obliged to.

Please do seek assistance from your HR or employment law adviser as Employment Law will still apply, and some contracts may have to be negotiated further before an employee is furloughed.

NB. Due to the extension of the CJRS, the Job Retention Bonus originally planned to be paid to employers at the rate of £1,000 for each previously furlough employee still employed at 31 January 2021 has been scrapped.

 

Coronavirus Business Interruption Loan Scheme (“CBILS”)

The Coronavirus Business Interruption Loan Scheme (“CBILS”) is intended to help SMEs with cashflow issues. The deadline for applications is 31 March 2021. We have included some of the key details and criteria below.

CBILS encourages lending to viable UK businesses that would otherwise be turned down for a loan or other form of debt finance, due to inadequate security.

To be eligible for support via CBILS, your business must:

  • Be UK based, with turnover of no more than £45 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see list of ineligible business sectors)
  • Have a sound borrowing proposal but have inadequate security to meet a lender’s normal requirements
  • Be up to date in respect of any accounts and tax filings due (even if tax is not necessarily fully paid)
  • Be able to confirm that they have not received other public support of de minimis state aid beyond €200,000 equivalent over the previous three years

CBILS guarantees facilities to fund the future growth or expansion of a business from £50,001 to £5 million. Finance terms are from three months up to 10 years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

No interest will be due for the first 12 months of any CBILS backed lending. No personal guarantees will be required on lending agreed less than £250,000.

How to Apply?

Any small business interested in CBILS should, in the first instance, approach one of the 40+ accredited lenders with their borrowing proposal. Note that a business plan and financial forecast will be required and we can assist you with this if you wish. We recommend that existing available plans are used as a starting base point to illustrate the impact of the virus on the trading and cash flows of the business.

Please contact us if you require assistance in your application for funding as we have a number of relationships with lenders who may be able to assist. 

What about Charities?

A specialist support scheme for UK charities is available instead of the CBILS arrangements called the 'Resilience and Recovery Loan Fund'. Applications close on 31 March 2021.

Charities that have been trading for a minimum of 2 years and have a turnover between £400,000 and £45million are eligible, provided that at least 50% of income is derived from trading activities, remain a viable business if it were not for COVID-19 and they have been adversely affected by the COVID-19 pandemic.

Loans of £100,000 to £500,000 - capped at 25% of turnover - can be applied for through Social Investment Business and three lending partners. Loans will be interest and fee free for the first 12 months, with interest charged at 6.5% for the remaining term. Loans will be available on 1-3 year terms.

 

Bounce Back Loan Scheme

The Bounce Back Loan Scheme is an 'easy to apply for' loan scheme aimed at small and medium businesses. The deadline for applications is 31 March 2021

The loans provided under the scheme will range from £2,000 to £50,000 (capped at 25% of the business's turnover) and will be 100% guaranteed by the government. Funds will be available within a matter of days from application.

An eligible business is one that can self-declare it:
  • Has been affected by the COVID-19 pandemic
  • Was not a ‘business in difficulty’ as at 31 December 2019 (broadly this means that accumulated losses did not exceed more than half of business’s capital at this point)
  • This point does not apply to SME’s less than 3 years old
  • Is not currently in bankruptcy or liquidation
  • Has not already obtained BBLS lending
  • Has not obtained CBILS lending in respect of the COVID-19 pandemic unless the BBLS will refinance the whole of this lending facility
  • Is engaged in trading or commercial activity in the UK and was established by 1 March 2020
  • Will use the loan only for business - not personal - purposes, and are able and intend to meet the repayments in the future.
  • Derives more than 50% of its income from trading activities
  • This point does not apply to charities or further education colleges
  • Is not a credit institution, insurance company, public-sector organisation or a state funded primary or secondary school

No repayments will be due, and no interest or fees charged, in the first 12 months of the loan with the government covering these costs during this period. No personal guarantees will need to be given on the loans, and whilst the loans will be 100% guaranteed by the government, the applicant business remains responsible for the repayment of the loans.

After the first 12 months, the rate of interest on the loans will be set at 2.5% per annum with loan length being a maximum of 10 years, repayable on a flexible 'Pay as You Grow' basis including interest-only repayment period and payment holidays. There will not be any early repayment penalty on the loans.

How to apply?

A short standard online self-certified application will be required for these loans and will not require the business to provide any detailed future forecasts. The loans are being provided through a selection of banks and other lenders - the list of which is available at the British Business Bank website. It is recommended that the business's bank is approached first, although the business may use any provider it wishes.

If the business has previously obtained a loan of up to £50,000 through the Coronavirus Business Interruption Loan Scheme (CBILS), it will be possible to transfer this to the Bounce Back Loan Scheme via the lender up to 4 November 2020.

 

Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme ('CLBILS') is available to UK based businesses with an annual turnover between £45-500million to access loans of up to £25million. The deadline for applications is 31 March 2021.

The scheme is available through commercial lenders, with the government providing lenders with an 80% guarantee on individual loans for viable businesses (were it not for the Coronavirus pandemic) that would otherwise struggle to access the finance they require at this time.

Banks, insurers and re-insurers, public sector bodies, grant-funded further education establishments and state-funded primary and secondary education schools are not eligible for this scheme.

For further information and assistance in applying, please contact our Corporate Finance team.

 

Larger firms - Covid-19 Corporate Financing Facility

To support liquidity amongst larger firms, the Covid-19 Corporate Financing Facility (CCFF) means that the Bank of England will buy short-term debt from larger firms, who are in otherwise sound financial health but suffering short-term cashflow difficulties.

The CCFF will operate for at least 12 months from 20 March 2020 and for as long as assistance is required to relieve cash flow pressures on larger firms. 

The minimum size of funding per firm will be £1million and all offers must be rounded to the nearest £0.1million.

To obtain further details, it is recommended that you first discuss your options with your current bank, but our Corporate Finance specialists will also be able to offer their assistance if you wish to access this funding.

 

Deferral of VAT (originally due between 20 March - 30 June 2020)

VAT payments due between 20th March and 30th June 2020 were to be deferred automatically. Businesses are now being given the opportunity to either pay the deferred liability in full before 31 March 2021, or alternatively over 2-11 months with no interest or penalties to pay, provided that the total deferred balance is paid by the end of March 2022.

In order to be eligible for the payment scheme - which is open from 23 February to 21 June 2021 - the business must:

  • join the payment scheme itself using the Government Gateway used to manage your VAT (your agent or accountant cannot do this for you)
  • still have deferred VAT to pay
  • be up to date with its VAT returns
  • join by 21 June 2021
  • pay the first instalment when you join
  • be able to pay the deferred VAT by Direct Debit

The month in which you decide to join the scheme will determine the maximum number of instalments that are available. To allow for direct debit processing, the maximum number of instalments (including the first payment) is set up below:

  • Join by 19 March 2021 - up to 11 instalments
  • Join by 21 April 2021 - up to 10 instalments
  • Join by 19 May 2021 - up to 9 instalments
  • Join by 21 June 2021 - up to 8 instalments

Anyone unable to use the online application can speak to HMRC by phone on 0800 024 1222, which is also the number to call if you require extra help to pay.

Taking advantage of the payment scheme does not affect any other time to pay arrangements that may already be in place with HMRC for other debts and outstanding taxes.

 

5% VAT Rate - Hospitality and Tourism sector

 

From 15 July 2020 to 30 September 2021, a large range of supplies made by the hospitality sector will be subject to the reduced rate (5%) of VAT rather than the standard rate. This will apply tot the supply of the following:

  • Food and non-alcoholic drinks from restaurants, bars, cafes, and similar premises
  • Accommodation
  • Admission to attractions

This temporary rate of VAT will then be increased to 12.5% between 1 October 2021 and 31 March 2022, before being restored to 20% from 1 April 2022.

 

Business Rates Relief - Retail, Hospitality and Leisure sector

All businesses in the retail, hospitality or leisure sector will be provided with a 15-month business rates holiday which will end on 30 June 2021.

Business rates relief will continue for all eligible premises in this business sector at the rate of 66% from 1 July 2021 to 31 March 2022.

Details of the eligibility criteria for this relief as announced in the Budget on 3 March 2021 is yet to be announced.

 

Business Grants - effective from November 2020

Any businesses with premises located in England who are required to close as a result of local or national restrictions will be eligible for monthly grants to be distributed by local authorities equivalent to the following:

Rateable value of premises

Tier 2

Tier 3 / National lockdown

Up to £15,000

£934

£1,334

£15,001-£51,000

£1,400

£2,000

£51,000

£2,100

£3,000

It will be up to the local authorities in each area to determine which businesses are eligible for this grant funding.

In addition, as announced on 5 January 2021, businesses in the retail, hospitality and leisure sectors who are forced to close as a result of the new lockdown restrictions, will be eligible for a further one-off grant which will be awarded on a per property basis according to the rateable value of the closed property as follows:

  • £4,000 grant for properties with a rateable value of £15,000 or under
  • £6,000 for properties with a rateable value between £15,001 and £51,000
  • £9,000 for properties with a rateable value over £51,000

From April 2021, and as announced in the Budget on 3 March 2021, Restart Grants will be payable by local authorities amounting to up to £6,000 per premises for non-essential retail businesses, and up to £18,000 per premises for hospitality, accommodation, leisure, personal care and gym businesses.

A further £425 million of discretionary grant funding will be provided to local authorities in addition to the Restart Grants.

 

Kickstart Scheme

A new £2billion fund will be launched to cover the cost of 25 hours work per week at the National Minimum Wage (plus any Employers’ National Insurance and Employers’ Pension costs) for 16-24 year olds currently claiming Universal Credit. This will be on the basis of 6 month work placements.

Employers will be able to top up any payment of wages over and above the National Minimum Wage if they wish.

Applications for the scheme will open in August, with the first jobs expected to start in the Autumn running to December 2021, with an option to be extended further.More information is expected to be made available before August.

 

Apprenticeship & Traineeship Schemes

Employers who take on new apprentices will be able to claim a payment of £3,000 per each new apprentice that that hire between 1 April and 30 September 2021.

These payments will be in addition to the existing £1,000 payment already available for new apprentices aged 16-18 years old or those aged under 25 on an Education, Health and Care Plan.

Employers providing work experience or traineeships for 16-24 year olds will also be eligible for government funding of £1,000 per trainee. Registered employers are not required to pay trainees for a work placement unlike apprenticeships.

Traineeships will include classroom-based lessons in maths, English and CV writing and will include up to 90 hours of unpaid work experience over a 6 week to 6 month period.

 

 

Small business technology grant

A non-repayable grant of £1,000-£5,000 is now available to all small and medium sized businesses based in England.

The grant may be used for the business to:

  • Access new technology or other equipment to assist or improve the existing business operations, or to help diversify; or 
  • To help pay for professional, legal or financial advice (including accountants, legal professionals, HR or IT/digital specialists)

There is no requirement for the business to contribute financially in order to obtain the grant.

The funding is available through local Growth Hubs - details of your local Growth Hub can be found at www.lepnetwork.net/local-growth-hub-contacts and clicking on your local area.

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