John Chesworth, executive chairman of Harrison Drury, outlines the support announced by the government to support businesses and individuals during the coronavirus COVID-19 outbreak.
Last updated March 31
As government continues to respond to the coronavirus pandemic through its daily news conferences and other announcements, we’re aiming to keep this post up-to-date with the latest measures for businesses and individuals.
We already have a host of coronavirus guides on our Insights page. Our team is here to help make it possible for businesses and employers during this difficult time.
Help for businesses
Coronavirus Job Retention Scheme
Perhaps one of the most valuable measures to be announced thus far, the government’s Coronavirus Job Retention Scheme (CJRS) allows employers to ‘furlough’ workers, effectively laying them off temporarily, but retaining them on the payroll.
The aim of the scheme is to support the economy by underwriting workers’ wages and allowing employers to retain key staff, rather than having to make them redundant. Government will pay the wages of furloughed workers, with employees receiving 80% of their usual salary, up to £2,500 per month.
My colleague Kate Shawcross offers a more in-depth look at how the CJRS scheme works. Sarah Astley also offers some advice for businesses who may need to look at more permanent solutions for retaining employees, such as changing working hours, pay and other terms of employment.
Support for businesses paying sick pay
Legislation has been brought forward to enable small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness due to COVID-19. This refund will cover up to two weeks’ SSP per eligible employee off work due to suffering COVID-19.
The government will work with employers over the coming months to set up the repayment mechanism for employers needing to reclaim SSP as soon as possible.
The eligibility criteria for this scheme includes:
- Employers with fewer than 250 employees will be eligible. This is determined by the number of people they employed as of 28 February 2020.
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.
- The eligible period for the scheme will commence from the day after regulations on the extension of Statutory Sick Pay to those staying at home comes into force.
Support for businesses that pay business rates
A business rates ‘holiday’ will be introduced for retail, hospitality, leisure and nursery businesses in England for the 2020 to 2021 tax year.
A £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.
Additional funding to support small businesses
There will be additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR). Furthermore, a one-off grant of £10,000 will be provided to businesses currently eligible for SBBR or rural rate relief.
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority and you do not need to apply. It’s expected that funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.
Business Interruption Loan Scheme
The government has announced that it is making £350bn available in financial support, which is to include £330bn available in Business Interruption Loans to support businesses during this difficult time.
The new temporary loan scheme will be delivered by the British Business Bank and will support businesses to access bank lending and overdrafts. Lenders will be provided a guarantee of 80 per cent on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The guarantee will come with no charge and the scheme will support loans of up to £5m in value. The government will cover the first 12-months of interest payments and any lender-levied charges.
Funding support for larger businesses
The government has also introduced a new COVID-19 Corporate Financing Facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans. This will see the Bank of England buying up short-term debt from larger companies.
Businesses paying tax – Time to Pay
Businesses and self-employed people that are in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements will be agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
You can call HMRC’s dedicated helpline on 0800 0159 559 if you are concerned about being able to pay your tax due to coronavirus COVID-19.
Support for commercial tenants
The government’s Coronavirus Bill offers protection against eviction for commercial tenants for at least the next three months. Hayley Bamber and Abbie Seed from our property team have more details about the protections offered to commercial tenants by the Coronavirus Bill.
Businesses that have cover for both pandemics and government-ordered closure should be covered. The government and insurance industry have confirmed that the government’s initial advice to avoid pubs, theatres and other leisure and hospitality venues is sufficient to make a claim.
Changes to insolvency rules
Another measure that’s been outlined by government is a temporary change to the rules around insolvency to prevent businesses that are unable to meet debts due to the impact of coronavirus from being forced to file for bankruptcy.
Announcing the measure at a recent coronavirus briefing, the business secretary, Alok Sharma, said the wrongful trading law would be suspended to protect directors during the pandemic. The move will allow directors of companies to pay staff and suppliers even if there are fears the company could become insolvent.
In light of the proposed changes, my colleagues Nick Booth and James Robbins have written a piece offering some practical steps business owners should take regarding directors’s duties during the pandemic. Our insolvency and debt recovery team has also offered some tips on managing cashflow during this crisis.
Help for individuals
Support for the self-employed
After an anxious couple of weeks following the government’s unveiling of the Coronavirus Job Interuption Scheme for employers, which effectivley underwrites the wages of furloughed workers, similar measures have now been announced for the self employed.
This Self-employment Income Support Scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next three months, which government says may be extended if needed.
Kerry Southworth in our corporate team gives more details about the Self-employment Income Support Scheme on our Insights page.
Individuals affected by coronavirus will be paid Statuary Sick Pay (SSP) from day one of their sick leave, as opposed to day four.
The government has announced a three-month mortgage payment ‘holiday’ for people affected by coronavirus. Most banks, building societies and other mortageg providers will already be in touch with their customers about this, but contact your provider if you have any queries.
If an entire family is forced to stay at home due to self-isolation and there is no income coming into the household, an application can be made to receive Universal Credit. For further details on eligibility, please refer to the Universal Credit information on the government website.
The emerging landscape for business and individuals
The government is releasing daily updates regarding coronavirus and its guidance to protect people and support businesses in the UK, therefore its current directives may change.