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Small business owner? Your complete guide to coronavirus and business support

Over recent weeks, the world economy has all but come to a standstill. Drastic measures to ensure social distancing and to reduce the spread of the coronavirus have meant that millions of businesses have been forced to shut their doors.

If you’re a small business owner, losing income could be devastating for the viability of your business. So, the government has stepped in and announced a range of measures designed to prop up the economy. Here’s your guide to coronavirus and business support.

Support with business rates

All businesses operating in the retail, leisure and hospitality sectors in England will be exempt from business rates for the 2020/2021 tax year. Nursery businesses will also be exempt from business rates in 2020/21.

If you have a business in the retail, hospitality or leisure sector with a rateable value of less than £15,000 then you will be eligible for a cash grant of £10,000. If the rateable value of your retail, hospitality or leisure business is £15,000 to £51,000 then a £25,000 grant is available. These grants will be made through your local authority and so you should speak to them in the first instance.

A £10,000 grant is also available to businesses that qualify for Small Business Rate Relief or Rural Rate Relief. This will be also administered by the local authority and, if you’re eligible, you will be contacted directly.

Coronavirus Job Retention Scheme

In an attempt to help employers to retain staff during the nationwide lockdown, the Chancellor announced a ‘job retention’ scheme in which the government will pay up to 80% of the salary of ‘furloughed’ workers.

If you have furloughed your workers (placed them on a leave of absence) you can claim for 80% of these employees’ usual monthly wage costs, up to £2,500 a month. You can also claim the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

Deferral of VAT payments

All businesses in the UK can now defer their Valued Added Tax (VAT) payments for three months.

This deferral will apply from 20 March 2020 until 30 June 2020 and is an automatic offer (you don’t need to apply). You have until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period.

Help with Statutory Sick Pay

If your business has fewer than 250 employees (at 28 February 2020) you can reclaim the cost of any Statutory Sick Pay (SSP) caused by the coronavirus. The government will fund the cost of this in full, up to a limit of 14 days per individual.

You must keep records of the employee’s absence and SSP payments, but the employee will not need to provide a doctor’s note.

Protection from eviction

If you cannot pay your commercial rent because of Covid-19 your business will be protected from eviction. The government has announced that no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. This period could be extended.

Note that you will remain liable for the rent due.

Business Interruption Loans

The Chancellor has announced a new Coronavirus Business Interruption Loan Scheme. Under the scheme, SMEs can apply for loans of up to £5 million for up to six years. The business loan scheme will be delivered by the British Business Bank and you can access the loans via your high street bank or one of 40 accredited finance providers.

The government will cover the first 12 months of interest payments and any lender-levied fees, meaning you won’t face any upfront costs and will benefit from lower initial repayments.

To be eligible for a business interruption loan you must:

  • Be based in the UK with an annual turnover of no more than £45 million
  • Meet the other British Business Bank eligibility criteria

Claiming on your insurance

The government requested that a range of different businesses and venues should remain closed from 21 March 2020 onwards. Insurers have agreed that this official advice is sufficient for businesses covered for Covid-19 losses to make a claim if an insurer required clarity that the government had ordered businesses to close.

However, most commercial insurance policies are unlikely to offer cover for Covid-19. You should check the terms and conditions of your specific policy and talk to your insurer.

If you have an event cancellation policy that includes unspecified notifiable disease extensions, you should be able to make a claim for the necessary and unavoidable cancellation, abandonment, curtailment, postponement and disruption of your event, subject to the other terms and exclusions of your policy.

Help for the self-employed

The Chancellor has also announced a package of measures designed to help self-employed and freelance workers.

The Self-Employment Income Support Scheme (SEISS) will support self-employed individuals (and members of partnerships) who have lost income due to coronavirus.

The scheme will allow you to claim a taxable grant worth 80% of your trading profits (an average of the last 36 months) up to a maximum of £2,500 per month for the next three months. This may be extended if needed.

Your self-employed trading profits must be less than £50,000 and more than half of your income must come from self-employment.

The grant will be paid directly into your bank account as a lump sum.

Get in touch

If you want any help or advice on managing your finances in this uncertain period, please get in touch. Email hello@sovereign-ifa.co.uk or call 01454 416 653.

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