This article was last updated on 22nd September 2020. For the most up-to-date information about the support measures outlined in this post, please refer to our guide on government grants and schemes.
Wondering what financial support you can claim to help your business through the coronavirus (Covid-19) crisis? In this guide you’ll find a list of all the temporary measures the government has introduced to help UK businesses and self-employed workers and an explanation of how to apply for each measure.
Read on to take it all in or click on a link below to jump to a specific section:
- Bounce Back Loan Scheme
- Coronavirus Business Interruption Loan Scheme
- Deferral of Self Assessment payments on account
- Deferral of VAT payments
- Extended deadline for Making Tax Digital (MTD) for VAT
Limited company directors
The government has introduced the following new measures to help directors of limited companies over the next few months:
Extended deadline for filing company accounts
Companies that would otherwise have had to file their company accounts between 1st July 2020 and 5th April 2021 have been granted an automatic three-month extension to their filing deadline.
How to apply for more time to file your company’s accounts
This is an automatic extension so you don’t need to apply for it.
Suspension of wrongful trading rules
The government has suspended wrongful trading rules to enable company directors to keep their businesses going without the threat of personal liability.
Wrongful trading is when directors allow a company to keep trading even when they know that the company is unable to pay its debts. Under normal circumstances, a company's creditors can sue the company's directors personally for wrongful trading. However, in light of the current climate, the government has suspended the wrongful trading rules for a three-month period beginning on 1st March 2020.
How to apply the suspension of wrongful trading rules to your company
There is no application or approval process to follow. The rules have been automatically suspended for three months, starting from 1st March 2020.
Self-employed sole traders and partners in partnerships
Self-Employment Income Support Scheme
If you’re a self-employed sole trader or a partner in a partnership and you expect to lose profit as a consequence of the coronavirus crisis, you may be eligible for the Self-Employment Income Support Scheme. This consists of two taxable grants:
- The first grant is worth up to 80% of your trading profits, up to a maximum of £2,500 per month.
- The second grant is worth up to 70% of your trading profits, up to a maximum of £2,190 per month.
For the first grant, the scheme is backdated to 1st March 2020 and is open for applications until 13th July. The second grant will be open for applications from August 2020 and you will be entitled to apply for it even if you didn’t apply for the first grant.
In order to claim this grant, self-employment must be your main source of income. The amount you can claim will be based on your average monthly profits over the last three years. The grant is also dependent on you having filed your 2018-19 tax return.
HMRC will pay the grant directly into your business bank account in a single instalment.
You won’t qualify for the Self-Employment Income Support Scheme If:
- you earn over £50,000 taxable profit
- you are not currently trading
- you are not planning to continue trading in the 2020/21 tax year
How to claim a grant through the Self-Employment Income Support Scheme
To claim a grant through the Self-Employment Support Scheme, follow the application process on the government's website. Successful applicants should receive the grant as a single payment in their bank account within six working days of their claim being accepted.
If you’re self-employed and unable to work because you have been forced to self-isolate or have become ill with coronavirus, you can claim Universal Credit at the same rate as Statutory Sick Pay (SSP) for employees (£94.25 per week). A couple of temporary changes to the way that Universal Credit applications are assessed have been put in place during the coronavirus crisis:
- the Minimum Income Floor (an assumed level of income that's usually used to work out if claimants are eligible to claim Universal Credit) will not apply
- new claimants will not need to attend the Jobcentre to demonstrate gainful self-employment
How to claim Universal Credit
You can find out if you’re eligible on the Universal Credit section of the government’s website or you can apply for Universal Credit online.
Businesses with employees (including limited company directors who are employees of their own company)
If your business employs staff, you may be eligible to receive financial support from the government under one or both of the following temporary schemes:
The Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme allows employers to access financial support to pay part of their employees’ wages during the coronavirus crisis. The government introduced the initiative to enable employers to retain employees who they may otherwise have been forced to lay off during the pandemic. The table below shows what employers can claim back under the scheme:
|Furlough dates||Percentage of wages paid by HMRC||Maximum claim amount per employee per month||Employer's National Insurance and pension contributions included in the claim?|
|1st March to 31st July||80%||£2,500||Yes|
|1st to 31st August||80%||£2,500||No, employers must pay these|
|1st to 30th September||70%||£2,187.50||No, employers must pay these|
|1st to 31st October||60%||£1,875||No, employers must pay these|
To access the scheme you must:
- have created and started a PAYE payroll scheme on or before 19th March 2020
- have a UK bank account
The scheme will be open to all UK employers until the end of October and payments can be backdated to 1st March 2020.
Employees you can claim for must have been on the company payroll on 19th March 2020 and can be on any type of contract, including:
- full-time contracts
- part-time contracts
- agency contracts
- flexible or zero-hour contracts
For more information about which employees are eligible see the government’s guidance.
How to make a claim through the Coronavirus Job Retention Scheme
You can now access a portal on HMRC’s website to submit a claim. You'll need to know in advance how much you're claiming for each employee.
If you use FreeAgent’s payroll, you can amend your employee payslip details to include furloughed days. This automatically produces a monthly report in FreeAgent, which contains the details you’ll need for your Coronavirus Job Retention Scheme claim.
If you don’t use FreeAgent, we’ve created a handy furlough claim calculator for monthly payroll to help you work out the numbers you need.
Statutory Sick Pay (SSP) refund
Employers can claim a refund of up to two weeks’ SSP for employees who are off sick because of coronavirus. Remember that this includes you if you’re a limited company director on the company payroll, as you’re effectively an employee of your own company.
To be eligible for the refund, your business must be based in the UK and it must have had fewer than 250 employees on 28th February 2020.
There are a few other temporary changes to the rules on qualifying for SSP, which we’ve highlighted in our guide on how to claim sick pay during the coronavirus crisis.
How to claim an SSP refund for your business
All business types
Bounce Back Loan Scheme
The [Bounce Back Loan Scheme](https://www.freeagent.com/glossary/bounce-back-loan-scheme/) allows small and medium-sized businesses affected by the coronavirus crisis to secure loans from £2,000 to £50,000 for a loan term of up to six years.
The loans are 100% guaranteed by the government and businesses don’t have to make any repayments or pay interest or fees during the first 12 months of the loan period.
If your business is based in the UK, has been negatively affected by coronavirus and was not ‘an undertaking in difficulty’ on 31st December 2019 then you're able to apply for the scheme.
If you’re already receiving funding through the Coronavirus Business Interruption Loan Scheme (see below), then you can't apply for a loan through the Bounce Back Loan Scheme. However, you may be able to transfer your existing loan to the Bounce Back Loan Scheme through your Coronavirus Business Interruption Loan Scheme lender.
Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme enables businesses to access bank loans, overdrafts, asset finance and invoice finance up to the value of £5 million, for up to six years. The government will make a ‘Business Interruption Payment’ to cover any fees from lenders, as well as the first 12 months of interest payments. The government will also provide a guarantee of 80% on each loan free of charge, subject to certain conditions and restrictions.
To be eligible your business must:
- be based in the UK
- have a turnover of less than £500 million per year
- be qualified through the British Business Bank’s eligibility criteria
Under the scheme, directors of limited companies should not be asked to provide a personal guarantee against the loan if they are borrowing less than £250,000.
How to apply for the Coronavirus Business Interruption Loan Scheme
There are 40 accredited providers of the scheme, including all the major UK banks. You can access the scheme by contacting one of the providers directly. If you qualify for the scheme you can apply for it regardless of whether you have previously been refused a loan from another finance provider.
Deferral of Self Assessment payments on account
If you were due to make a payment on account towards your Self Assessment tax bill on 31st July 2020, you can either:
- defer the payment until 31st January 2021
- set up a plan to pay in instalments
- make the payment on account as usual
HMRC won’t charge penalties or interest on deferred payments. If you’re worried that you’ll struggle to make your payment on account, even with a deferment, you should take a look at HMRC’s Time To Pay scheme.
How to defer your payment on account
This is an automatic extension so you don’t have to apply for it. If you don’t make your payment on account on time, HMRC will automatically assume that you’re deferring the payment.
Deferral of VAT payments
If you’re due to make a VAT payment between 20th March 2020 and 30th June 2020, you can either:
- defer the payment until 31st March 2021
- pay the VAT as usual
HMRC won’t charge interest on deferred payments. Any payments due outside the deferral period should be made as normal but if you think you’ll struggle to make them you should take a look at HMRC’s Time To Pay scheme. The deferral does not cover VAT MOSS payments, which must be made as usual.
How to defer VAT payments
You don’t need to inform HMRC if you wish to defer payment. If you don’t make VAT payments on time in this period, HMRC will automatically assume that you’re deferring the payments. If you pay VAT by direct debit and wish to defer, you should contact your bank to cancel the payment as soon as possible.
Bear in mind that you must still file your VAT returns on time so that HMRC can see how much it can expect to collect once the deferral period ends.
Extended deadline for Making Tax Digital (MTD) for VAT
The deadline for setting up digital links between your accounting system and HMRC for MTD for VAT has been extended by a year. The deadline is now your business’s first VAT return period that starts on or after 1st April 2021.
If you file VAT returns using FreeAgent then the digital link is already in place and you can continue to file MTD-compatible VAT returns to HMRC from your FreeAgent account.
How to apply for the MTD for VAT deadline extension
This is an automatic extension so you don’t have to apply for it. If you already have digital links in place between your record-keeping system and HMRC then you can continue to file MTD VAT returns as normal.
Businesses with property
There are a number of additional measures that have been introduced in England, Scotland, Wales and Northern Ireland to help small businesses with property to cover their costs.
Businesses with property in England
In England, the government has introduced a business rates holiday for retail, hospitality, leisure and nursery businesses for the 2020-21 tax year. Retail, hospitality and leisure businesses may also be eligible for a cash grant of up to £10,000 or £25,000, depending on the business’s rateable value.
Businesses with property in Scotland
The Scottish government has announced a 1.6% discount to non-domestic rates for all businesses throughout 2021. It has also announced 100% rates relief for businesses in the retail, hospitality and leisure sectors.
In addition, a one-off grant of £10,000 or £25,000 is available, depending on the business’s rateable value.
Businesses with property in Wales
The Welsh government has announced two grants for businesses with property in Wales:
- A grant of £25,000 for retail, leisure and hospitality businesses that occupy properties with a rateable value of between £12,001 and £51,000.
- A £10,000 grant to all businesses with a rateable value of £12,000 or less that are eligible for small business rates relief.
Businesses with property in Northern Ireland
All businesses in Northern Ireland will pay zero rates for three months. The Northern Ireland Executive has also announced a one-off grant of £25,000 for businesses in the hospitality, tourism and retail sectors that pay rates on a property with a rateable value of between £15,000 and £51,000. There is also a one-off grant of £10,000 available to businesses that are currently in receipt of small business rate relief.
Businesses renting commercial property
Changes to evictions for businesses that miss rent payments
The government has promised that commercial tenants in England, Wales and Northern Ireland who cannot pay their rent because of coronavirus will be protected from eviction. This means that landlords should find it more difficult to evict tenants if they miss a payment before 30th June 2020.
In Scotland, new temporary legislation means landlords now need to give an extended minimum notice period of up to six months to evict tenants.
What you need to do
The changes in all parts of the UK are legal measures, so your landlord must follow the rules while the laws are in place. There is nothing you need to do but many commercial landlords are already reaching voluntary arrangements with tenants. If you haven’t done so already, it’s a good idea to discuss your options with your landlord.
Additional support for businesses in Scotland and Wales
If your business is registered in Scotland or Wales, you may also be eligible to receive additional financial support from schemes introduced by the Scottish and Welsh governments.
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.