It’s perhaps too early to say if we’re in the home straight following coronavirus disruption. But the plans for lockdown gradually easing across the UK are in place. The hope is that normality will begin returning towards the end of 2021.
To help businesses reach that goal, the Budget delivered on 3 March 2021 extended existing coronavirus recovery plans and introduced some new measures.
Below we take a look at these.
Note that this isn’t an examination of the Budget as a whole, which contained many measures aiming to help the economy recover but not all of which are directly linked to coronavirus relief.
We have covered it in this article: Budget 2021: What the outcomes mean for businesses.
In the cases where existing measures are extended, you may wish to consult our previous covering discussing measures such as Coronavirus Job Retention Scheme (CJRS), Self Employment Income Support Scheme (SEISS), and grants/loans.
Those articles go into detail about criteria that you’ll need to know if you haven’t previously used the help.
Here’s what we cover in this coronavirus recovery plan article:
Coronavirus Job Retention Scheme (CJRS)
Self Employed Income Support Scheme (SEISS)
VAT cut for hospitality and tourism sector
Coronavirus Job Retention Scheme (CJRS)
The popular scheme that funds furloughed workers up to 80% for their unpaid hours is extended to the end of September 2021 – with employers to contribute 10% in July 2021, and 20% in August and September 2021.
What it means
The furlough scheme, as it’s better known, was due to end on 30 April 2021. This followed a number of extensions in 2020.
Businesses will be happy to hear that it’s been extended again in the Budget. It now continues until 30 September 2021.
The eligibility and application rules aren’t changing. See our earlier coverage of the CJRS for specifics.
The new rules are as follows.
Until 30 June 2021, the CJRS will continue to pay 80% of furloughed worker salaries for hours not worked, with businesses continuing to pay the employer National Insurance and minimum mandatory pension contributions.
From July 2021 onwards, businesses will once again be required to contribute to the salary for the furloughed hours. This will be 10% for July 2021, and then 20% in both August and September 2021.
The final claim for September 2021 must be submitted by 14 October 2021.
What you need to do
If you’re already using the CJRS then you (or your payroll agent) will be aware of the work required by now, and this hasn’t changed with the extension of the scheme.
If you’re claiming for fewer than 100 employees, you can use HMRC’s online service and input the details manually.
If you’re claiming for more than 100 employees, you should use the spreadsheet template provided by HMRC and complete it before attempting to claim through the online service.
Self Employed Income Support Scheme (SEISS)
Another popular scheme that aims to pay self-employed individuals up to 80% for their unpaid hours will also to run until the end of September 2021, through a fourth and “fifth and final grant” (to quote HMRC).
What it means
As with the furlough scheme, the SEISS receives some renewed attention in the Budget after being extended in 2021.
Self-employed individuals had been eagerly awaiting news of the fourth grant – and the Budget delivered good news.
As with the third, the fourth grant covers 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500 in total.
New to the Budget extension of the SEISS are enlarged eligibility rules, which now include anybody who has recently submitted a Self Assessment tax return for 2019-20.
That fifth grant will be available for the period covering May to September 2021.
Eligibility for this final instalment will be based on your decline in turnover because of coronavirus, with two tiers available:
- Decline of 30% of more: In this case, the fifth instalment is the same as with the third and fourth grants. These individuals will continue to be able to claim 80% of their three months’ average trading profits, capped again at £7,000.
- Decline of less than 30%: These individuals will be able to claim 30% of their three months’ average trading profits, capped at £2,850.
The devil is in the details, of course, and it’s not clear how the decline in turnover will be measured.
There’s a possibility you’ll be asked to product paperwork, so it might be worth reaching out to your accountant sooner rather than later (if you have one) and ensuring your accounting is in tip-top shape.
As with previous SEISS grant instalments, all the government has said so far is that “further details will be published in due course”.
What you need to do
The details of how to claim the scheme haven’t changed; check out our write-up about the specifics of the SEISS.
Remember, though, that the eligibility criteria have changed with the fourth and fifth grants, so it’s no longer the case that only those who applied for the original three grants are eligible.
Claims will once again be made online through the SEISS portal.
Note that HMRC is contacting people by phone if they started their self-employed business last year (that is, they filed a 2019/20 Self Assessment return). This is to check eligibility.
Initially, HMRC will write to you to inform you of the phone call, and then it will phone you.
The number will not be identified as HMRC, so will likely appear as ‘withheld’. You should be careful not to reject any calls moving forward until you’re sure your SEISS eligibility has been officially recognised.
HMRC will use the number they have for you on your online personal tax account. You should check this to ensure it’s still up to date.
You can also call 0800 024 1222 to provide HMRC with the correct number.
If HMRC can’t get through to you by phone, it will write a second time to advise you to get in touch.
Recovery Loan Scheme
Any business can apply for loans from £25k to £10m through to the end of 2021, with the government providing an 80% guarantee. This has replaced the Bounce Back Loans and the CBILS scheme.
What it means
The existing loan schemes provided by the government were extended in 2020 but applications ended on 31 March 2021.
The new Recovery Loan Scheme opened on 6 April 2021 will remain open for applications until 31 December 2021.
As with the earlier schemes, it will effectively underwrite loans up to 80% from commercial lenders, thereby encouraging lending.
Again, it should be stressed that these loans are not offered directly by the government, so the same rules apply as when applying for any other business loan.
And experience has shown thus far that businesses need to prove they’re an attractive prospect to cover the 20% of the loan the lender underwrites themselves.
Two kinds of loans and amounts are available:
- Term loans and overdrafts are available between £25,001 and £10m per business.
- Invoice finance and asset finance are available between £1,000 and £10m per business.
The loan terms vary between three and six years, depending on the type of loan or finance.
Already used one of the above coronavirus relief loan schemes?
The good news is that this doesn’t block you, in theory, from applying. However, the loans will only be available to businesses that are “viable or would be viable were it not for the pandemic”.
What you need to do
The British Business Bank is managing the Recovery Loan Scheme and there are a number of accredited lenders, including RBS, Santander and Barclays.
Visit the British Business Bank website to learn more about the scheme and the participating lenders.
VAT cut for hospitality and tourism sector
The ongoing application of the temporarily reduced rate for these businesses from 20% to 5% is extended until the end of September 2021.
There will then be an interim rate of 12.5% for another six months.
What it means
Launched in July 2020 and due to end on 31 March 2021, those running businesses that are eligible for this VAT rate cut are already likely to be making use of it.
So, its extension is likely to come as a relief and as before, it’s up to you whether you pass the savings on to customers, or use it to bolster your profit margin.
The new 12.5% temporary rate of VAT might take some getting use to, though.
How you administer the scheme varies depending on your VAT accounting,
- Reduced VAT rate for hospitality: The scheme reducing the VAT rate to 5% is once again extended – this time until 30 September 2021. Subsequently, a new 12.5% rate is applied until 31 March 2022, at which point the 20% rate resumes.
- Reduced flat rate VAT for hospitality: The temporary coronavirus relief is also extended for the flat rate scheme, and the reductions are as follows:
- Catering services: 4.5% until 30 September 2021and 8.5% following this until 31 March 2022.
- Hotel and accommodation: 0% until 30 September 2021 and 5.5% following this until 31 March 2022.
- Pubs: 1% until 30 September 2021 and 4% following this until 31 March 2022.
What you need to do
if you’re already making use of the reduced VAT rate then you’ll already have adjusted your accounting, point-of-sale (POS) equipment, documentation and more to reflect any changes.
Put simply, you don’t need to change anything back until the end of September 2021.
If you use the standard VAT scheme then at that point you can apply the 12.5% rate. You may need to speak to your software vendors about how best to implement this in your ledger and VAT accounting.
Restart grants
Yet more grants are available to brick-and-mortar businesses (that is, those that are typically eligible for business rates) following several made available across 2020.
What it means
One-off Restart Grants of up to £6,000 per premises for non-essential retail businesses in England will be made available. Qualifying hospitality, accommodation and leisure premises in England can get higher grants, as follows:
- Rateable value of £15,000 or less: £8,000
- Rateable value of over £15,000 but less than £51,000: £12,000
- Rateable value of £51,000 or above: £18,000
These grants will be administered by English local authorities, which are also getting an additional £425m of discretionary business grant funding to top up the £1.6bn they’ve already been allocated during the coronavirus disruption.
The Scotland, Wales and Northern Ireland regional assemblies will be getting similar amounts.
What you need to do
The first port of all for any coronavirus relief grant should be your local authority because they control the purse strings.
In theory, they should be in touch with you to discuss payment grants, especially if you previously received a Local Restrictions Support Grant (LRSG).
But it won’t do any harm to at least take a look at their website to see what they have to say about the grants.
At this moment, it seems details and indeed the funding is still filtering through to the local authorities.
Final thoughts
With any luck, the coronavirus disruption is in its final stages. The government’s updated coronavirus relief measures reflect this, but there’s still a lot of help available for businesses.
As always, it pays to look into what your business is eligible for and speak to expert voices such as accountants in this regard too.
Editor’s note: This article was first published on 11 March 2021 and has been updated for relevance.
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