Sustainability

COVID-19 financial support for businesses and how to access it

As well as presenting an unprecedented challenge to healthcare organisations and professionals, the COVID-19 pandemic also brings economic challenges incomparable to anything encountered previously.

In response, the UK government has announced several support packages for businesses. These include grants, low interest loans and, for the first time in history, the subsidisation of employee salaries. These are just the most pertinent examples, too. The severity of the global economic situation has been acknowledged and, in opposition to comparable economic events such as The Great Recession of the late noughties, pre-emptive action has been swift. These support packages are more than substantial, too, with state efforts to keep businesses operational, people employed and economies afloat certain to equate to trillions of pounds spent.

Whilst the levels of fiscal relief being made available to businesses are substantial, however, a repository of information – a single source wherein details of the various schemes, which businesses are eligible and, most important of all, how they can access them – cannot be found. ROCK have therefore compiled the following list of packages and measures along with detailed descriptions of the type of organisations that are eligible for them and what they will need to do to take advantage of them. This information is reviewed regularly and updated when further information becomes available.

Share On:

Author:

Laura Steele
Laura Steele Chief Financial Officer

The Coronavirus Job Retention Scheme

What is it?

Previous economic troughs have seen a decline in demand for various goods and services. This outbreak, though, has eliminated them in their entirety. Policies regarding social distancing and, following this, enforced closures and restrictions on movement have seen businesses’ cash flow cease entirely within a matter of weeks. The cost of employing a workforce can amount to as much as 70% of an organisation’s total outgoings1 and businesses whose incomes have slowed considerably because of such measures are certain to consider making redundancies.

Mass unemployment, though, would make a swift economic recovery virtually impossible and, as a direct result, the UK’s government have unveiled their Coronavirus Job Retention Scheme, a never before seen intervention that will see the state cover 80% of employees’ wages where required.

Essentially, businesses that would otherwise make staff redundant can instead label them ‘furloughed workers’ and claim up to 80% of their salary every month. The maximum amount a business can claim currently stands at £2,500 per employee and is set to last for three months. Chancellor Rishi Sunak has, however, stated on record that this scheme will be extended “if necessary”.2

What businesses are eligible?

All businesses with employees are eligible for this scheme.

When will it come into effect?

At the time of writing (27th March 2020) no official commencement date has been provided. A treasury spokesperson informed the BBC that HMRC will begin making payments “within weeks” on the 20th March.3 The scheme will cover wages backdated to the start of March once live.

*as of the 20th April 2020, this scheme is now live. In order to apply, businesses will need to be registered for PAYE online. Further information can be found here.

**this scheme will be closed for new applications from the 30th June 2020. 

How can businesses access the scheme?

The first step will be for organisations to identify which employees they should retain and which they will need to furlough. Once done, they should inform the latter of their change in status immediately.

Following this, employers will need to utilise a not yet developed online portal to inform HMRC of both the employees they have placed on temporary leave and their earnings. HMRC is set to contact companies and provide information on how to access this portal shortly. They are also likely to inform organisations of how employee reimbursement is to function within the same correspondence.

VAT payment deferrals

What are they?

With multiple businesses’ incomes having slowed or ceased, many need immediate access to capital. Businesses have therefore been given the option to defer VAT payments for up to three months if necessary.

For organisations that only require greater liquidity for a short space of time, this could be a feasible and sensible option – particularly if it allows them to remain afloat without spending all of the money they’ve saved to pay said bill.

What businesses are eligible?

Just as all businesses can leverage the Coronavirus Job Retention Scheme, all businesses, irrespective of their size, sector, etc. can refrain from paying their VAT bills until the 2021-2022  tax year.

When will it come into effect?

This scheme is already active.

How can businesses access the scheme?

Any organisation that pays their VAT bill via direct debit should cancel this in advance of it being taken. In all other circumstances, organisations can simply refrain from paying this bill. They should, however, factor this into their budgets for the 2021-2022 tax year.

Reclaiming Statutory Sick Pay (SSP)

What is it?

All employers are obligated to offer their employees at least £94.25 per week if they are unable to work due to sickness. Approximately 80% of the population is expected to contract the coronavirus at some point3 and it is also estimated that as many as 20% of the population could be too unwell to work as a result of the outbreak.4

Concerned that the resultant outlay will adversely and significantly impact the financial health of SMEs, the government have stated that they will cover up to two weeks SSP for employees of such businesses if their application can be attributed to the COVID-19 outbreak.

What businesses are eligible?

Any business that had fewer than 250 employees on the 28th February 2020 will be able to claim back two weeks of SSP for each employee that claims as a result of the coronavirus.

When will it come into effect?

No formal date has been announced, but official government sources have stated that they are liaising with businesses and will provide remediation models as soon as possible.

How can businesses access the scheme?

At the time of writing, no information has been made available on how businesses can claim back SSP costs accrued as a result of coronavirus, but this post will be updated as soon as this information becomes available. In the interim, businesses should keep a detailed record of each employee that claims SSP under these circumstances. Fortunately, employees will not need to obtain a note from their GP. If an organisation requires documentation before paying SSP, they can instruct their employees to get an isolation note from NHS Direct. Alternatively, employees can download a note from the NHS’s website if they require time off because they share a home with someone that has developed symptoms consistent with COVID-19.

Business rate holidays

What are they?

Businesses operating within the hospitality, retail and leisure sectors have, as a result of policies created to stem the outbreak, been disproportionately affected by it. They will, therefore, be exempt from paying business rates – often colloquially referred to as business property tax – throughout this financial year.

What businesses are eligible?

Firstly, the business must occupy a property or properties that are predominantly used as restaurants, shops, cafes, public houses or live music venues, for assembly and leisure or temporary accommodation.

In England and Scotland, all of these businesses are eligible for this scheme and nurseries that pay business rates and are based in England are also entitled. In Wales, only businesses with a rateable value of £51,000 or less will qualify, though public houses with rateable values between £51,000.01 and £100,000 will receive a £5,000 discount on their annual bill.

Northern Ireland is offering a business rate holiday to all business ratepayers, but only for April, May and June at the time of writing.

When will it come into effect?

This scheme will commence in April 2020.

How can businesses access the scheme?

Irrespective of whether the scheme is implemented by central government (England) or devolved administration (Wales, Scotland and Northern Ireland), eligible businesses will not need to do anything to access them. Their local authority will simply refrain from adding business rates to relevant council tax bills concerning the 2020-2021 tax year.

Grants for businesses in hospitality, retail and leisure

What are they?

Recognising that the smallest businesses operating within sectors that have been most affected by coronavirus will need additional help, authorities are providing such organisations with access to cash grants of £25,000.

What businesses are eligible?

The organisation must operate predominantly in one of the relevant sectors. Their rateable value will also need to fall within certain thresholds depending upon the nation within which they operate. These are as follows:

  • Businesses in England and Northern Ireland will be entitled to a grant of £25,000 if they have at least one property with a rateable value between £15,000 and £51,000
  • In Scotland, this grant will be issued when properties’ rateable values are between £18,000 and £51,000
  • In Wales, the range is £12,001 to £51,000
When will it come into effect?

Authorities have not yet announced when these grants will be available. They have, however, stated that any business entitled to a grant will automatically be informed of this.

How can businesses apply for these grants?

Whilst authorities are yet to state when these grants will be made available, it has been confirmed that, if they are entitled, businesses will automatically be informed of this by their local authority, who will also issue them with the relevant funds. Any business seeking to ensure that they are entitled should therefore contact their local authority.

The Small Business Grant Scheme

What is it?

A House of Commons briefing paper dated the 16th December 2019 confirmed that 5.6 million businesses have fewer than nine employees. These ‘micro-businesses’ account for 96% of all business in the UK. They also employee 33% of the country’s entire workforce and generate 22% of its turnover.5 Due to their small size, however, they are particularly vulnerable to sudden market changes. These businesses can access a £10,000 coronavirus-related grant as a result.

What businesses are eligible?

Businesses based in England or Scotland and in receipt of small business rate relief or rural rate relief are eligible. Alternatively, businesses based in Wales or Northern Ireland do not need to be claiming this relief, but must simply be entitled to it. They will also need to have a rateable value of £12,000 or less if they are located in Wales.

When will it come into effect?

No official announcement has been made with regards to when these grants will be issued. Eligible businesses will automatically be informed of their entitlement, however.

How can businesses apply for these grants?

All organisations that are entitled to these grants will be contacted by their local authority in due course. These authorities will also be responsible for administering these grants and some have already begun to include further information on this scheme on their websites.

*as of the 30th March 2020, small businesses in Scotland and Wales can now apply for coronavirus business grants through their local authority’s website. Applicants in Northern Ireland will instead need to apply through this link.

The Coronavirus Business Interruption Loan Scheme (CBILS)

What is it?

A scheme created by the government and backed by the Bank of England that provides business with access to various forms of credit. Vitally, the government will pay all interest throughout the first 12 months of the agreement as well as any arrangement fees. This scheme covers credit up to the value of £5 million and for periods of up to six years.

Who is eligible?

Businesses that wish to leverage the Coronavirus Interruption Loan Scheme must be based in the UK and generate no more than £45 million in turnover per year. They must also be able to show one of forty potential lenders that the agreement would still have been feasible in the event of the coronavirus pandemic not having taken place and that the credit will be sufficient to help the business trade through short to medium-term difficulties attributable to the coronavirus outbreak.

Additionally, banks and building societies, insurers and reinsurers (not brokers), public-sector organisations, various membership organisations and trade unions are not eligible.

When will it come into effect?

Business can now apply for credit via the Coronavirus Interruption Loan Scheme.

How can businesses apply?

Businesses that want to take advantage of this scheme can approach one of forty approved lenders directly. You can find a list here.

The Self-Employment Income Support Scheme

What is it?

A survey conducted by the Office for National Statistics revealed that 4.8 million people in the UK were self-employed in 2017. The same survey revealed that they, therefore, accounted for more than 15% of the UK’s workforce.6 This figure is likely to have grown since this report’s publication in February 2018 and the adverse effect of such a large portion of the population’s purchasing power rapidly diminishing would be significant.

In response, on the 26th March 2020, the government announced that certain self-employed individuals throughout the UK will soon be to able to claim back up to 80% of their trading profits. This will allow them to claim a maximum of £2,500 per month to cover the profits they would have generated in March, April and May – though it has been stated that further months will be included if necessary.

Who is eligible?

Individuals can apply if they are self-employed or part of a partnership. They will also need to have submitted their Self Assessment tax return for 2018-2019, have traded in 2019-2020 and intend to continue trading in 2020-2021.

Applicants will also need to show that they are currently trading and that their profits have been affected by the COVID-19 outbreak. In the event they are not trading, they will need to show that they have ceased to do so exclusively because of coronavirus. Finally, any applicant’s profits from self-employment will need to be both below £50,000 and more than half of their overall income.

When will it come into effect?

HMRC are currently in the process of identifying those who may apply for these grants as well as developing the mechanisms through which their applications will be reviewed.

How can people apply?

Those who can apply for these grants will be automatically identified and then contacted by HMRC who will inform them of the steps they will need to take in order to apply. It has also been reported that grants will be issued in a single lump sum and that payments are expected to begin in June of this year.

Time to Pay

What is it?

Any business or self-employed individual with outstanding tax payments and that are concerned about paying them on time as a result of COVID-19 may be able to get these payments deferred.

Who is eligible?

Any business or self-employed person with outstanding tax liabilities is eligible.

When will it come into effect?

This scheme is active.

How can businesses/people apply?

Any business or self-employed individual that has missed or feels they are likely to miss a tax payment because of COVID-19 should call HMRC on 0800 0159 559. If you have not yet missed a payment, however, HMRC has requested that you refrain from contacting them until closer to the due date to help them manage the large number of calls they are currently receiving.

The COVID-19 Corporate Financing Facility

What is it?

In order to help large organisations through the coronavirus outbreak, the Bank of England and HM Treasury jointly developed the COVID-19 Corporate Financing Facility. This scheme will see the Bank of England purchase short-term corporate debt as a means of allowing businesses to quickly raise capital to pay employees, suppliers, etc.

Who is Eligible?

This scheme is open to large firms that can prove that they were financially stable prior to the COVID-19 pandemic and that make a ‘material contribution’ to the nation’s economy.

When will it come into effect?

This scheme is currently active.

How can businesses apply?

Businesses that believe they meet the criteria listed above should contact their bank. Provided this body agrees they are eligible, they will purchase their short-term debt in the form of commercial papers.

Help with insurance claims

What is it?

Whilst a number of businesses will have insurance policies that would appear to provide them with financial cover for both COVID-19 and enforced government closures, the terms are sufficiently nebulous for insurers to deny resultant claims.

As a result, the UK government has liaised with insurers to ensure that the enforced closures that have been in place from the 21st March will be covered under policies that contain this clause. They also added COVID-19 to the list of what are known as notifiable diseases on the 5th March 2020. As a result, any insurance policy including cover for losses caused by notifiable diseases or unspecified notifiable diseases are valid. Organisations with event cancellation policies that reference notifiable diseases should be able to claim for unavoidable and wholly necessary cancellations of all events, too.

Who is eligible?

All businesses with cover concerning notifiable diseases and government enforced closures are eligible and it is highly advisable that all organisations that have been forced to close or cancel events because of the coronavirus should check their policies carefully as a result.

When does this come into effect?

This is already in effect.

How can businesses apply?

Businesses should firstly review their insurance policies and, if they believe that they are covered for the circumstances discussed above, go through the claims process set out by their insurers.

References:

  1. Paycor (2019), The biggest cost of doing business: A Closer Look at Labor Costs, https://www.paycor.com/resource-center/a-closer-look-at-labor-costs
  2. BBC (2020), Coronavirus: Government to pay up to 80% of workers’ wages, https://www.bbc.co.uk/news/business-51982005?intlink_from_url=https://www.bbc.co.uk/news/topics/ckj4xk3kywgt/rishi-sunak&link_location=live-reporting-story
  3. Independent (2020), Coronavirus could kill half a million Britons and infect 80% of UK Population, https://www.independent.co.uk/news/health/coronavirus-news-latest-deaths-uk-infection-flu-a9360271.html
  4. BBC (2020), Coronavirus: Up to fifth of UK workers ‘could be off sick at same time’, https://www.bbc.co.uk/news/uk-51718917
  5. House of Commons Library (2019), Business statistics (briefing paper number 06152), https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf
  6. The Office for National Statistics (2018), Trends in self-employment in the UK, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07

**this article was last updated on the 9th June 2020

More Insights

sustainability thumbnail.jpg
Sustainability

Prolonging sustainable practice beyond crisis

12/06/2020

View more
hotel of the future thumbnail.jpg
Digital Transformation

Hotels of the future: how IoT can transform the hospitality industry

06/01/2020

View more
best place to work IT thumbnail.jpg
Culture

How we built the best place to work in IT

03/12/2019

View more
Jane Onboarding Thumbnail 700x500.jpg
Performance Improvement

IT onboarding at ROCK

19/11/2019

View more

Hello, welcome to the ROCK live chat.

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×