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Coronavirus: Financial measures unveiled to support UK businesses

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Editor’s note: This article was first published on 18 March 2020 and has been updated for relevance.

The government has unveiled a package of financial measures to support UK businesses in light of the coronavirus (COVID-19) outbreak. They have been announced via a series of statements from the chancellor, each of which has added new and extraordinary measures.

In this article, we highlight what was announced on and after the Spring Budget (which took place on 11 March 2020) and what it all means for your business.

Government-backed loans for businesses that need access to cash [updated]

Payments for the self-employed

Salary payments for workers in businesses affected by coronavirus

Statutory Sick Pay for workers affected by coronavirus [updated]

Deferred VAT and income tax

Extra time to file accounts to Companies House

Support for hospitality, retail and leisure businesses

Cash grants for small businesses

Nursery rates relief

Gender pay gap reporting suspended for 2019/20

For businesses hit with cash flow problems because of coronavirus, the government is providing help in a number of ways.

Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme is aimed at small and medium-sized businesses.

This means the government will guarantee 80% of a loan from approved providers that are signed-up with the British Business Bank. Loans can be up to £5m in value.

Additionally, no interest is due for the first six months of the loan’s life.

If your usual lender is on the approved list then you should be able to go to them and apply for a loan.

The intention is to allow lenders to keep lending even if a business might look relatively unattractive because of cash flow problems. Indeed, the purpose of the loans is to get businesses through cash flow troubles.

Loans are limited to UK-based businesses and the turnover of the business must be no more than £45m.

Coronavirus Large Business Interruption Loan Scheme

Then, there is the Coronavirus Large Business Interruption Loan Scheme.

Large businesses that have an annual turnover that exceeds £45m have business activity based in the UK, and are struggling with cash flow due to revenues being deferred or lost due to coronavirus are eligible.

Eligible large businesses can be offered loans by a number of approved lenders (up to £25m for companies with an annual turnover between £45m and £250m; those whose turnover exceeds £250m each year can borrow up to £50m), which are backed by an 80% guarantee from the government.

However, from 26 May 2020, the government will bring in new amends to the scheme. From that point, eligible businesses will be able to borrow up to 20% of their turnover, with a cap of £200m.

A number of businesses aren’t eligible for this scheme:

  • Banks and building societies
  • Insurers and reinsurers (but not insurance brokers)
  • Public sector organisations (including primary and secondary schools)
  • Employer, professional, religious and political membership organisations
  • Trade unions.

Covid Corporate Financing Facility

The Covid Corporate Financing Facility is aimed at large businesses.

To support liquidity within large businesses, the chancellor announced the new lending facility with the Bank of England, which will provide “low cost, easily acceptable paper”. This means that larger businesses can sell their debts.

Bounce Back Loan Scheme

The Bounce Back Loan Scheme is open to small and medium-sized businesses based in the UK that have been negatively impacted by coronavirus, and were not an ‘undertaking in difficulty’ on 31 December 2019.

Loans between £2,000 and £50,000 are available to SMEs as part of the scheme, with businesses allowed to apply for a loan for 25% of their turnover, up to the maximum of £50,000.

The loans are 100% guaranteed by the government, and there’s no fees or interest to pay for the first 12 months.

One condition to be aware of: if your business is getting funding from the Coronavirus Business Interruption Loan Scheme, you can’t access the Bounce Back Loan Scheme.

However, if you’ve received a loan up to £50,000 via the Business Interruption Loan Scheme, you can transfer it to the Bounce Back Loan Scheme – but you’ve got until 4 November 2020 to do so.

Future Fund

And there is the Future Fund, a £500m loan scheme aimed at high-growth businesses. It was created to help eligible businesses access funds needed to keep functioning.

The businesses must be unlisted UK registered companies that have raised at least £250,000 in equity investment from third-party investors within the past five years.

The fund will run until the end of September 2020. The government – which is committing £250m to it (the remainder will be matched by private investors) – and the British Business Bank are partnering to deliver the scheme.

What this means for your business

If your business is struggling, getting funding support from one of these schemes could provide your company with the lifeline it requires to help you stay on top of your cash flow.

It’s worth remembering, though, that if you take out a loan, it will have to be paid back in the future.

The Coronavirus Business Interruption Loan Scheme, Covid Corporate Financing Facility, Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund are available now.

Webinar: Coronavirus business financial support

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Those who are self-employed or a member of a partnership can apply for a grant of up to £7,500 covering three months from March 2020, via the Self-Employment Income Support Scheme (SEISS).

This is similar but not identical to the scheme for full-time employees. As with other coronavirus support measures, the chancellor says SEISS may be extended beyond three months depending on how the situation develops.

There are numerous conditions applied to SEISS.

The first is that you need to have taxable profits (as detailed on your Self Assessment tax return) of less than £50,000.

The government will work out a basic average of your taxable profits since the 2016/17 tax year until now in order to determine eligibility (or fewer years if your business is new). In addition, 50% or more of your income has to come from self-employment.

Also, you need to be actively self-employed or a member of a partnership right now (or would have been if not for the coronavirus), and intend to continue to be so into the 2020/21 tax year.

In other words, you can’t claim the grant if you did some self-employed work a few months ago but are no longer operating as a going concern.

You also needed to have submitted your Self Assessment tax return for the 2018/19 tax year before 23 April 2020.

Those who may be eligible are being contacted by HMRC. You can also use HMRC’s online tool to see if you’re eligible for the SEISS grant.

You must apply for SEISS, even following HMRC’s notification, because it won’t be automatically paid to you.

What this means for your business

How much you get will depend on the aforementioned average of your taxable profits as declared via Self Assessment. The £2,500 mentioned in media reporting of SEISS is the maximum you can claim, and many individuals may end up claiming less.

However, SEISS is the lifeline the self-employed and members of partnerships have been waiting for. The scheme will be up and running from 13 May 2020.

The grant is only available if your business has suffered because of the coronavirus outbreak.

Independently of Statutory Sick Pay (SSP) provisions for staff affected by coronavirus, which are detailed below, the government has created the Coronavirus Job Retention Scheme.

It means that if your business has to give staff a leave of absence because of coronavirus – known as furloughing – then the government will reimburse up to 80% of their wage costs for the period, up to a cap of £2,500 per month.

The scheme is available until October 2020 but possibly longer depending on how the coronavirus outbreak develops.

The intention is that you won’t have to lay-off staff because of the virus.

This is not classed as a benefit for the employee. You will still have to pay the employee’s salary, as you would ordinarily. You will reclaim that salary from the government, according to the caps mentioned earlier.

You’ll need to designate the employee as a furloughed worker, which will be subject to existing employment law, before you will be eligible to claim the benefit.

HMRC’s online portal, which you need to use to make a claim, opened on 20 April 2020.

The eligibility cut off point for the scheme has been extended. It was originally 28 February 2020 but has been moved to 19 March 2020.

And you should also notify the employee. The employee shouldn’t be working for you during this furloughed period. Effectively, they must be sent home.

There are also loans and grants for certain businesses (see below for details) if you need further support to manage your cash flow.

What this means for your business

Of all the chancellor’s measures in response to the coronavirus outbreak, this is the most extraordinary – and also the one that businesses will most warmly welcome.

It’s good for both businesses and their employees. It allows businesses to enter a hibernation period if they find themselves with no other realistic choice, rather than simply go bust when the cash runs out through payroll demands.

Alternatively, some businesses might simply reduce their capacity by furloughing most but not all workers, in order to maintain a skeleton staff provided social distancing allows such a thing.

Coronavirus: Government funding support tool

Use this simple tool to help you understand which government schemes your business is likely to be eligible for and guidance on accessing them.

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During the coronavirus outbreak, the rules for Statutory Sick Pay (SSP) are different, as follows:

  • SSP applies from day one of sickness for employees due to coronavirus, rather than day four. Self-isolation is covered too.
  • The government will cover up to two weeks of SSP for each eligible employee if they have an actual infection of the virus, or are self-isolating because of suspicion they are infected, or they are caring for those within the same household who display coronavirus symptoms and they are therefore self-isolating.

As with the Coronavirus Job Retention Scheme, this operates as a rebate – employers will pay the SSP and then reclaim it from the government. HMRC’s new online service for making claims goes live from 26 May 2020.

The SSP rule changes only apply to small and medium-sized UK businesses with fewer than 250 employees.

You should keep records of staff absences because of coronavirus but employees will not need to provide a GP fit note (formerly known as a sick note) for the employer to claim the SSP rebate. However, employees can claim an alternative to the fit note by calling NHS 111.

What this means for your business

Having the financial strain of paying SSP removed will be good for your business but it will also mean employees are less likely to carry on working if they realise they might be ill, thereby protecting your workforce and indeed the rest of society from virus transmission.

Having to pay the SSP money upfront could create cash flow issues, but the loans and grant systems outlined further down in this article are designed to help.

VAT-registered businesses affected by coronavirus can defer VAT payments for three months until January 2021. The VAT payment date must fall between 20 March 2020 and 30 June 2020.

Additionally, those who are self-employed and who make income tax payments via Self Assessment in July 2020 now have until January 2021 to make that payment.

The government says: “This is an automatic offer with no applications required.”

VAT refunds and reclaims continue as normal, and will be repaid as usual by the government.

What this means for you or your business

As with the other measures here, the goal is to take the strain off cash flow commitments of businesses and individuals at a difficult time for them. The VAT or income tax will still have to paid eventually, of course, but at least there won’t be any penalty or interest applied.

It’s possible the chancellor may extend this VAT and income tax deferment period should the coronavirus outbreak continue. But this is not guaranteed and you shouldn’t plan for such an eventuality.

Companies House has released details of what businesses can do if they can’t file their accounts in time due to coronavirus.

If your business is impacted, you can make an application to Companies House to request an “automatic and immediate” three-month extension to your filing deadline.

To apply, you have to fill in an online application form on the Gov.uk website. You’ll need the following details:

  • Company number
  • Email address
  • Details about your extension reasons
  • Documents that support your application (this is optional)

What this means for your business

If you’re concerned that you won’t meet your deadline to file your accounts because of coronavirus, it pays to apply for an extension.

Companies House is clear in saying if you fail to file your accounts on time and haven’t requested an extension, it will impose an automatic penalty.

It’s also worth noting that if you’ve already extended your accounts deadline or reduced your accounting reference period, your business may not be eligible for further extra filing time.

Businesses in the hospitality, retail and leisure sector continue to feel the sharp impact of the coronavirus outbreak because many have been ordered to close by the prime minister – or are closing voluntarily.

The chancellor has unveiled measures to help these businesses in England that have fixed costs and cash flow challenges.

The first measure for hospitality, retail and leisure businesses in England is a year-long rates holiday for the 2020/21 tax year, where no rates will be due.

While this was initially limited to certain kinds of hospitality, retail and leisure sector businesses, it has since been expanded to apply to all that have a rateable value of less than £51,000.

The government is also providing grants for hospitality, retail and leisure businesses in England. For those that have a rateable value of between £15,001 and £51,000, the grant will be £25,000.

However, those businesses with a rateable value of less than £15k will qualify for small business grant funding, which is discussed below.

There’s no need to pay the grant back.

Businesses should get the grants automatically from their local authority, so there’s not even any need to apply.

However, you might need to get in touch with the authority if it doesn’t have your bank details on record. If yours is a smaller business that already doesn’t pay rates, then this might be the case.

It’s worth noting that Scotland, Wales and Northern Ireland have taken a different approach.

What this means for your business

This rate relief will likely be welcomed by your business and may help to ease some of the pressures that your company is currently facing.

Meanwhile, the grants are designed to help cover the costs of unavoidable overheads, such as employees costs and rent – this support will be of use if your turnover is impacted.

The 700,000 smallest businesses in the UK will receive a cash grant of £10,000. This was initially set at £3,000 but was subsequently increased by the chancellor when the severity of the coronavirus outbreak became clear.

The requirements to receive the £10,000 grant will depend on where your business is located in the UK.

What this means for your business

If the cash grants are applicable to your small business, it’s worth taking advantage of them. If the coronavirus outbreak is slowing your business and your cash flow down, this will provide a welcome boost to your coffers.

It’s worth noting that payments will be paid to and provided by local authorities in England in early April 2020.

Grants are being issued in Northern Ireland now. Timings for Scotland and Wales will be announced in due course.

Another kind of business facing serious problems because of coronavirus are those in the child care sector. To this end, the chancellor has announced a business rates holiday for nurseries in England.

To be eligible, businesses need to be occupied by providers on Ofsted’s Early Years Register, and wholly or mainly used for the provision of the Early Years Foundation Stage.

What this means for your business

Nurseries don’t need to do anything to get the relief – it will apply from the next council tax bill as of April 2020.

The government has suspended the requirement for eligible businesses to report on their company’s gender pay gap due to coronavirus.

That means it’s not enforcing gender pay gap deadlines for the 2019/20 reporting year.

What this means for your business

There’s no expectation for your business to report your gender pay gap data, which means you’ll have a reduction in the amount of admin that needs to be dealt with.

The government has revealed that more than 3,000 employers (26% of all that are expected to report) have submitted their data.

If you still wish to submit your company’s gender pay gap data, your business can do so and the Government Equalities Office will provide any necessary support.

Final thoughts

There are some other measures announced by the government that businesses should pay heed to.

Time to pay/dedicated coronavirus HMRC helpline

In the Spring Budget 2020, the chancellor announced that HMRC would listen sympathetically to those businesses affected by coronavirus and the existing Time to Pay scheme that allows longer to pay tax bills could be used in such cases.

The dedicated HMRC coronavirus helpline for advice and support is 0800 0159 559. Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm.

Social distancing

Employees should work from home, where possible; avoid large gatherings; and avoid non-essential use of public transport.

Business travel

The Foreign and Commonwealth Office (FCO) advises British people against all non-essential travel worldwide.

The government is putting measures in place to help businesses as they face up to the challenge of the coronavirus outbreak.

Take the time to explore which financial support options could help your business keep moving, so you can take the steps that will allow you to keep your cash flow in good stead.

Coronavirus and your business

We’ve gathered information and resources to help navigate this situation, including tools and webinars, to help you understand what financial support is available.

Find out more