Coronavirus: The Latest Government Support & Advice for UK Businesses
Coronavirus (Covid-19) is sweeping the globe, causing countless deaths and impeding the day-to-day lives of millions of people. Along with the devastating human cost, the pandemic has taken a huge bite out of our economy, affecting businesses of all sizes up and down the country. And while some companies are still able to operate (albeit often at a reduced capacity), for many organisations, lockdown effectively means shutdown. In response to this growing financial crisis, the government has introduced a number of measures to protect the economy and help companies stay afloat. In this article, we’ll look at some of the support schemes available to UK businesses, and provide some advice and guidance to help you navigate these troubling times.
How Can I Keep My Costs Down and Ensure My Employees Are Looked After During the Coronavirus Outbreak?
As any business owner knows, people are at the heart of every successful enterprise. But with the country on lockdown and many companies unable to operate, a growing number of businesses are struggling to pay their employees’ wages. If your business has been severely affected by the pandemic and you’re unable to maintain your current workforce, you may be eligible for the Coronavirus Job Retention Scheme
. Introduced by the government at the beginning of March, the scheme allows you to place your staff on temporary leave (or furlough) and apply for a grant to cover a portion of their wages. Here are some of the key points of the Coronavirus Job Retention Scheme:
- The scheme covers 80% of your employees’ wages up to a maximum of £2,500, plus any pension contributions or National Insurance contributions.
- You can only claim for employees that were on your PAYE payroll on or before 19th March 2020.
- Employees that are still working, but are on reduced hours or reduced pay will not be eligible for the scheme.
- You can claim for staff on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.
- Office holders, such as Company Directors or members of a Limited Liability Partnership (LLP) are eligible for the scheme.
- You can also claim for employees that are currently receiving maternity pay, paternity pay, adoption pay or shared parental pay.
In order to qualify for the scheme, you must have:
What Support Is Available for Small Businesses During the Coronavirus Pandemic?
- Created and started a PAYE payroll scheme on or before 19th March 2020
- Enrolled for PAYE online
- Have a valid UK bank account
Even with the Coronavirus Job Retention Scheme, many small and medium-sized companies may struggle to survive over the coming weeks and months. While furloughing your employees may help to reduce the financial burden, there are many other costs to take into account besides wages. Things like rent, bills and other standing charges can put a serious dent in your bottom line. To help SMEs stay afloat during this uncertain time, the government has introduced the Coronavirus Business Interruption Loan Scheme
(CBILS). Supported by all the major banks, the scheme is designed to enable small and medium-sized businesses to easily access financial products and services, such as overdrafts and loans. Here are some of the main points of the CBILS:
- The scheme supports SMEs with an annual turnover of up to £45 million.
- It provides access to loans, overdrafts, invoice finance and asset finance of up to
£5 million for up to six years.
What Support Is Available for Large Businesses During the Coronavirus Crisis?
- It includes a business interruption payment to cover the first 12 months of interest payments as well as any lender’s fees, in order to minimise upfront costs and reduce initial payments.
- The scheme is being offered by 40 accredited lenders, including all major UK banks.
It’s not just small businesses that are suffering as a result of coronavirus and the past few weeks have seen some high-profile casualties. Big-name brands such as Laura Ashley and Oasis have buckled under the pressure and even global giants like Virgin Atlantic are facing administration. In order to protect big business, the government is rolling out a new initiative known as the Coronavirus Large Business Interruption Loan Scheme
(CLBILS). The scheme is designed to support organisations that were viable before the outbreak, but are now facing collapse due to mounting costs and cash flow constraints. Depending on their size, eligible businesses can apply for up to £50 million of finance. In order to qualify for the CLBILS:
- Your business must be based here in the UK
- It must have an annual turnover of more than £45 million
- You have to be able to demonstrate that your business has been adversely impacted by coronavirus
As well as the CLBILS, big companies can also seek support through the COVID-19 Corporate Financing Facility
(CCFF). Supported by commercial lenders and backed by the Bank of England, it works by buying up short-term debt from large companies in order to relieve cash flow pressures and allow firms to finance their liabilities. It’s worth noting that if your business receives CCFF, you’ll no longer be eligible for the Coronavirus Large Business Interruption Loan Scheme. So do your homework and decide which support initiative is best for your business.
Do I Still Need to Pay Taxes During the Coronavirus Crisis?
In addition to the various support schemes on offer, the government has made a few temporary adjustments to the tax system. By extending a number of payment deadlines, it aims to alleviate some of the financial pressure and give UK businesses a little more breathing space. Here are the salient points of the government’s new tax initiative:
- Tax returns — if you’re self-employed and running your own business, you’ll usually be required to file an annual tax return and pay tax on your earnings. The deadline for settling your tax bill is 31st January, with a second payment on account due by 31st July. This year, because of the coronavirus outbreak, you can delay this second payment until 31st January 2021.
- VAT — if you’re registered for VAT and you have a VAT payment due between 20th March and 30th June this year, you can defer the payment until a later date. Deferred payments must be made by 31st March 2021 at the latest.
With many businesses struggling to make ends meet, the government is doing its best to provide help and support where needed. By safeguarding jobs and providing companies with a financial stimulus, policymakers hope to minimise the impact of Covid-19 and maintain a functioning, robust economy.
Details of all the support and advice available to UK businesses during these unprecedented times can be found at gov.uk