Resources for UK Businesses Affected by COVID-19 (Coronavirus)

COVID-19: Support for UK Businesses and How to Stay Afloat

Uk Covid19 Business Resources

April 9th, 2020

The risk of COVID-19 (Coronavirus) in the UK has been raised to high, and to try and stop the spread of this disease, the UK government is heading towards locking down the country.

Schools, childcare, and other educational settings have been closed. Exceptions are being made for the children of key workers and vulnerable children. Pubs, restaurants, and leisure venues must stay closed or face being fined. At the moment, only food shops and pharmacies are remaining open.

While UK residents are being urged to avoid social contact and travel, businesses are suffering. However, the UK Chancellor has set out a package of targeted measures to support public services, businesses, and people during this time.

Updates:

Date

Update

March 29, 2020

The UK government released new insolvency laws to give businesses extra time to continue trading during the COVID-19 pandemic.

March 27, 2020

The UK government has updated their support for UK businesses trading internationally.

March 25, 2020

All stages of the 329-page emergency bill has officially been passed through the house of commons. This bill streamlines the laws regarding forced closures of premises and businesses, border controls, and enforce social distancing. This bill will pass through the House of Lords on Wednesday and may still be amended.

March 24, 2020

UK Prime Minister, Boris Johnson, has announced a country-wide lockdown, with all non-essential services and businesses to close for the next 3 weeks. The businesses that will not need to close include supermarkets, petrol stations, post offices, launderettes, bike shops, pet shops, hardware stores, and banks, as well as major construction works.

March 20, 2020

All SMEs operating as bars, restaurants, cafes, pubs, gyms, cinemas, theatres, and leisure centers have been asked to close and not reopen until advised.

March 17, 2020

The interest free period for the COVID-19 Business Interruption Loan Scheme has been extended from 6 months to 12 months.

Schemes That Will Be Available Across the UK:

The UK government has pledged £330 billion in government-backed loans and guarantees to assist UK-based businesses to combat the economic shock from the COVID-19 pandemic.

Coronavirus Job Retention Scheme:

Under this scheme, all UK employers are eligible to access support to pay part of their employees' salaries for those who are not working currently and would otherwise have been laid off during this time of crisis. Affected employees must be designated as furloughed workers and must be made aware of this change as this change is still subject to employment laws and may be subject to negotiation.

The information about furloughed employees must be submitted to HMRC through a new online portal (to be released soon). HMRC will then reimburse 80% of furloughed workers' wage costs up to £2,500 per month for the next 3 months. HMRC is still working on setting up these systems as their current systems are not able to facilitate payments to employers.

Deferring VAT and Income Tax Payments:

The UK government will defer Valued Added Tax (VAT) payments for 3 months. This deferral is valid from March 20, 2020, to June 30, 2020. All UK businesses are eligible for the VAT deferral, which is an automatic offer with no applications required. Taxpayers will then have until the end of the 2020-2021 tax year to pay any liabilities that have accumulated during the deferral period. Any VAT refunds and reclaims will be paid by the government, as normal.

For the self-employed, the Income Tax payments that are generally due by July 31, 2020, will be deferred to January 31, 2021. This deferral is an automatic offer to all self-employed individuals and no applications are required. There will be no penalties or interest for late payment.

HMRC has scaled their Time to Pay service to offer support to all businesses and self-employed individuals that are in financial distress and have outstanding tax liabilities. The arrangements for the Time to Pay service are based on individual needs and circumstances on a case-by-case basis. Eligible businesses are those that pay taxes to the UK government and have outstanding tax liabilities.

Businesses and self-employed individuals who have missed a tax payment, or who may miss one, due to COVID-19 should call HMRC's helpline on 0800 0159 559.

Statutory Sick Pay Relief Package for SMEs:

Small and medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) for sickness absences due to COVID-19. The refund will cover up to 2 weeks SSP per eligible employee who has been off work due to COVID-19.

Eligibility for SSP relief will require UK-based businesses to have less than 250 employees as of February 28, 2020. Employers will need to keep records of staff absences and payments of SSP but employees will not need to provide a GP fit note. However, if the employer requires evidence, the employees can get an isolation note from NHS 111 Online.

This scheme is still being developed. We will update our article as further details are released.

Support for Self-Employed Workers:

The UK government is temporarily relaxing the Universal Credit Minimum Income Floor for self-employed individuals and those who earn below the Lower Earnings Limit of £118 a week. This support will be available to those individuals who have COVID-19 or who are self-isolating and include the following:

  • Universal Credit for advance payments with no Jobcentre requirements if you've been advised to self-isolate.
  • Employment and Support Allowance of £73.10 per week from day 1 of your sickness for eligible individuals over the age of 25.
  • A £500 million Hardship Fund to support economically vulnerable people and households, accessed through the Ministry of Housing, Communities, and Local Government.

Any self-employed individual or partnership with an income tax return for the tax year 2018-2019 who has been affected by the COVID-19 pandemic can also apply for the Self-Employment Income Support Scheme. This scheme includes a cash grant of up to 80% of the average monthly profits from the last three tax years, with a maximum of £2,500 a month for the next 3 months.

This scheme is only available to those with a trading profit of less than £50,000 a year that constitutes more than half of your total taxable income. The HMRC will contact you if you are eligible to apply. This scheme is only available through GOV.UK, so do not click on any other links.

Coronavirus Business Interruption Loan Scheme:

This week (starting on March 23, 2020), the British Business Bank will deliver a temporary Coronavirus Business Interruption Loan Scheme to support small and medium-sized businesses with access to bank lending and overdrafts. Lenders will receive a guarantee of 80% on each loan from the government and the government will further not charge businesses or banks for this guarantee.

The Scheme will support loans of up to £5 million for UK based businesses with a turnover of less than £45 million per year. Your business must meet British Business Bank's eligibility criteria. You can view the eligibility criteria as well as British Business Bank's list of accredited lenders and partners, on their website.

COVID-19 Corporate Financing Facility:

The Bank of England will buy short-term debt from larger companies to support larger firms that have been affected by short-term funding limitations. This will support corporate finance markets and ease credit supply to larger firms.

This scheme will come into effect this week of March 23 - 27, 2020 and is available to all UK businesses. More information is available on the Bank of England's website.

Relaxed Insolvency Laws:

The wrongful trading provisions will be temporarily suspended so that struggling business owners can accept government grants without exposing themselves to personal liability if their business should go under. These new rules will apply from 1 March 2020, but business owners should still carefully evaluate the viability of their businesses during the enforced lockdown. Not all insolvency laws will be relaxed, so you should consider asking for professional advice to make the right decision for the future of your business.

In addition to the relaxed wrongful trading provision, the new insolvency framework will include:

  • A temporary moratorium from creditors enforcing their debts while the business attempts to restructure or save itself.
  • Protection for supplies so that businesses can continue to trade during the moratorium.
  • A new restructuring plan with creditors bound to that plan.
  • Key safeguards for creditors and suppliers to ensure they are paid while the business finds a solution.

Support for UK Businesses Trading Internationally:

For those UK-based businesses that export or deliver goods and services to other countries and that have been affected by the COVID-19 pandemic, the UK government will offer DIT and financial support. The DIT support will provide assistance with customs authorities and offer advice on intellectual property and business continuity.

DIT will help businesses whose supply chains have been affected to find other suppliers from within DIT's global network. If your business is operating in other countries, contact your local UK embassy or consulate for local guidance or read the UK government's Overseas Business Risk advice.

Financial Support:

UK businesses trading internationally may also make use of any of the schemes and grants put into place by the UK government and detailed in this article. This includes:

Financial Support for Exporters:

The UK Export Finance (UKEF), together with banks and insurance brokers, will help businesses of all sizes to fulfill and get paid for export contracts. It will provide loans, guarantees, and insurance on behalf of the government to protect against delayed payments or transit restrictions.

If your business is facing late payments, the UKEF will guarantee bank loans through the Export Working Capital Scheme. This scheme provides partial guarantees covering up to 80% of the risk to lenders and helps UK exporters to access working capital finance for export-related contracts. This will help your business to fulfill more overseas contracts than you typically can.

The UKEF's Export Insurance Policy will ensure that export businesses can get paid if a contract is terminated by events outside of the business's control. The business will receive up to 95% cover against loss suffered due to specified risks.

For overseas businesses that buy your goods and services, the UKEF can provide financial support through their Direct Lending Facility scheme. This scheme includes a loan of up to £3 billion to overseas buyers. Loans for individual transactions can also be made in 8 currencies with a value limit of £200 million.

The UKEF also has a £4 billion support capacity for UK businesses that export to China. It also has a high capacity of support for other markets affected by COVID-19. For support information across other regions, email customer.service@ukexportfinance.gov.uk.

International Business Travel:

The UK government has advised against all but the most necessary international business travel. Many airlines have also suspended flights and many airports have closed altogether. You can visit gov.uk to view the FCO's travel advice for each country.

Loan Schemes:

There are many High Street Banks that are providing support to small businesses affected by COVID-19, including:

  • Halifax.
  • Barclays.
  • HSBC UK.
  • Lloyd's Banking Group.
  • NatWest.

However, businesses thinking about applying for funding through the Covid Corporate Financing Facility and the Coronavirus Business Interruption Loan Scheme should carefully consider their long-term cash flow situation, as both these loans will need to be repaid at a future date.

Schemes That Will Be Available in England:

12-Month Business Rates Holiday:

A business rates holiday will be introduced for all retail, hospitality, and leisure businesses in England for the 2020 - 2021 tax year and businesses that received the retail discount in the 2019 - 2020 tax year will be rebilled by their local authority.

Eligible businesses will be based in England and be in the retail, hospitality, and leisure sector. The properties that will benefit from this holiday will be occupied hereditaments (items of property that can be inherited) that are mainly or wholly being used as shops, restaurants, cafes, drinking establishments, cinemas, live music venues, hotels, guest and boarding premises, self-catering accommodation, and for assembly and leisure.

This scheme requires no action from employers and will apply to April 2020 council tax bills.

The UK government will also introduce a Retail and Hospitality Grant Scheme to provide England-based businesses in the retail, hospitality, and leisure sector with cash grants of up to £10,000 to £25,000 per property, depending on the rateable value of the property. Your local authority will write to you if you are eligible for this grant.

Support for Nurseries in England:

A business rates holiday will be introduced for nurseries in England for the 2020 - 2021 tax year for hereditaments that are occupied by providers on Ofsted's Early Years Register and that are mainly or wholly used for the provision of the Early Years Foundation Stage. This scheme requires no action and will apply to April 2020 council tax bills.

Small Business Grant Scheme:

The Small Business Grant Scheme will support small businesses that pay little or no business rates due to small business rate relief (SBBR), rural rate relief (RRR), and tapered relief. A one-off grant of £10,000 will be awarded to eligible businesses to help them meet their ongoing business costs.

Eligible businesses will be based in England, receive SBBR and/or RRR, and occupy a property. Your local authority will write to you if you are eligible for this grant.

International Travel Restrictions:

To try and prevent the spread of COVID-19, employees with international roles should have returned home and should now be working from their home base. However, this could have unexpected tax liabilities with a potential impact on the tax status of the employer. Some countries will introduce concessions to their usual rules but it is vital for employers to have a strategy to deal with international employees.

As yet, the UK government has not made any concessions for corporate residence issues or related tax issues.

Schemes That Will Be Available in Scotland:

Small Business Grants:

The Scottish Government has pledged £2.2 billion to provide funds to small businesses in those sectors that are facing the worst economic impact due to COVID-19. This package will include:

  • 100% non-domestic rates relief for businesses in the retail, hospitality, and leisure sectors.
  • £10,000 grants for small businesses that receive the Small Business Bonus Scheme or Rural Relief.
  • £25,000 grants for retail, hospitality, and leisure properties with a rateable value of between £18,000 and £51,000.
  • 1.6% rates relief for all properties across Scotland.
  • The urging of local authorities to relax planning rules so that pubs and restaurants can temporarily act as takeaways.

These schemes have not yet been finalized. We will update our article as information is released.

FindBusinessSupport.gov.scot is a great resource for information on support for Scottish-based businesses that are being impacted by COVID-19.

Schemes That Will Be Available in Northern Ireland:

Small Business Grant Scheme:

A £370 million fund is being made available to small and medium-sized businesses that have been impacted the most by COVID-19. Grant schemes of £10,000 each will be awarded to approximately 27,000 small businesses and payments of £25,000 each will be awarded to around 4,000 businesses in the retail, tourism, and hospitality sectors.

This money is being made available to the most vulnerable businesses first while other measures are being explored. Your local authority will write to you if you are eligible for this grant.

gov.uk is a useful resource for information on support for Northern Irish-based businesses that are being impacted by COVID-19.

Schemes That Will Be Available in Wales:

Small Business Grants:

The Welsh government has pledged £1.4 billion to help small businesses during the COVID-19 pandemic. A £25,000 grant will be awarded to all retail, leisure, and hospitality businesses with a rateable value of £12,001 to £51,000 while those businesses that have a rateable value of less than £12,000 will receive a £10,000 grant.

All retail, leisure, and hospitality businesses with a rateable value of less than £51,000 will also receive a business rates holiday for the financial year of 2020 - 2021.

This support will be administered through the Business Rates system, so businesses that qualify will not need to do anything to apply. Your local authority will write to you if you are eligible for this grant.

Resources for COVID-19 Support for Businesses in Wales:

Does Your Business Interruption Insurance Cover You for COVID-19?

Business Insurance is usually broken into sections, so you will need to see if you have a business interruption section, which generally provides coverage if your business is closed due to property damage. Business Interruption Insurance can cover against viruses and diseases, but they usually cover for known diseases, such as anthrax, chickenpox, dysentery, typhoid fever, measles, rabies, tuberculosis, and yellow fever. However, they don't usually cover new diseases like COVID-19.

You will need to look through the Business Interruption section for anything related to "Notifiable Diseases", which COVID-19 has been labeled as by the UK government, or contagious and/or infectious diseases. If your policy covers these diseases without a specified list, you may have coverage for COVID-19 in specific scenarios.

If COVID-19 can be covered, it will only be in specific scenarios, such as your business being forcibly closed by government or local authorities or the notifiable disease is present at your business or within a specified distance of your business.

Business insurance is not likely to cover any losses due to a reduction in customers or delays with suppliers or stock due to COVID-19. Also, it will not be worth your while to switch insurers or buy new insurance that covers COVID-19 as it is no longer seen as an unforeseeable event.

FAQs:

Do I still have to pay business taxes?

No, all income tax payments that are generally due by July 31, 2020 will be deferred to January 31, 2021 for self-employed individuals. Valued Added Tax (VAT) payments will be deferred from March 20, 2020, to June 30, 2020

Where can I apply for a Coronavirus Business Interruption Loan?

The Coronavirus Business Interruption Loan will support loans of up to £5 million for UK based businesses with a turnover of less than £45 million per year. Your business must meet British Business Bank's eligibility criteria and you can view these criteria as well as British Business Bank's list of accredited lenders and partners, on their website.