Small Business info on Coronavirus
For sole traders, self-employed, freelancers and small businesses.
Last updated 12th April 2020
Small Business info on Coronavirus
Last updated on 12/04/2020 with additional information from the Welsh Government announcement on the second phase of support from the Economic Resilience Fund – please see section 18. Please be aware they have not provided any details of support for sole traders, contractor or freelancers, that fall outside of the most recent announcements.
In addition, the Welsh Government have announced that the Covid-19 Wales Business Loan Scheme is now fully subscribed, after only 1 week of being announced.
During this unprecedented period where-as a nation we are experiencing the effects of COVID-19, it can be hard as a business owner of any size to understand what information is out there, is applicable for your circumstances, as it’s coming through thick and fast on a daily basis. Plus, some of it may not seem clear or easy to identify based on the type or size of your business, or sector you are in.
This is why here at Oasis Business Support, which is a south wales based business, we wanted to help and support our fellow small businesses across Wales and further afield to provide a simple document which summarises the information we have gleaned from all the announcements and information available from UK government and Welsh government and departments.
The UK government are doing their best to reassure the nation during this time, advising that they will take new legal powers in the COVID-19 Bill, to enable them to offer whatever further financial support it thinks necessary to support businesses.
At this time, most of this information has come from the UK Government, however, there is an expectation that the devolved governments will closely follow suit.
We are still waiting for further details on any financial support available from the Government for the Self-employed, freelance or contractor sectors.
Upon reading the below summary if you would like to understand what benefits might be available to you, some helpful websites are https://www.turn2us.org.uk or https://www.gov.uk/universal-credit and https://www.gov.uk/guidance/new-style-employment-and-support-allowance.
Please note Oasis Business Support is not a government or financial advisory organisation or body. This document has been created to provide a summary of the information which has been provided and shared via various government bodies, and which includes links to assist businesses in seeking further advice and help.
Key information on areas of financial support available to Small Businesses:
1. CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
UPDATED 25/03/2020 The British Business Bank says self-employed people with an annual turnover of up to £45m can apply under the scheme, as long as they operate through a business bank account, and generate more than 50% of their turnover from trading activity.
This includes sole traders, freelancers, and limited partnerships, operating in all sectors.
The scheme is initially running for six months, businesses will be able to borrow for up to six years. They will be liable to repay the money in full – the guarantee is for the lenders, not the borrowers.
It has also now been advised that not necessarily all small and medium-sized firms be able to borrow money, Firms will have to prove that they are viable businesses which have been trading successfully, but just need extra support to deal with short term difficulties caused by the current disruption. Some firms may not be successful.
- The UK government have advised that a new temporary Coronavirus Business Interruption Loan Scheme, is being introduced and will be delivered by the British Business Bank. The loan scheme will provide a 12-month interest-free scheme starting on the 23 March 2020. These loans are primarily for small and medium-sized businesses to access bank lending and overdrafts.
- The loan scheme is available to all businesses in the UK. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. The government will cover the 12 months of interest payments.
- The reasoning provided for this loan scheme is that it will help smaller businesses who are unable to secure finance due to having insufficient security by providing lenders with a government-backed guarantee against the outstanding facility balance.
- Not all banks are part of the scheme. For banks based in wales we have provided a list below, however, if you are based outside of wales, please refer to the following link;
The full eligibility criteria will be published when the scheme goes live w/c 23 March 2020
- For businesses in wales, please note that the Development Bank of Wales is not one of the participating lenders in this scheme, but the majority of high-street banks are.
2. DEFERRING VAT PAYMENTS
- The Government has agreed to defer the next quarter of VAT payments. That means no business will pay any from now until the end of June, and then you will have until the end of the financial year to repay those bills.
- This is an automatic offer with no application required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
3. CORONAVIRUS JOB RETENTION SCHEME
- This is a scheme available to all UK employers. The Coronavirus Job Retention Scheme allows all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
- The purpose of the Coronavirus Job Retention Scheme is to help cover the cost of wages and will be backdated to March 1st 2020 and will be open initially for at least three months
- Those employees affected will need to be identified as ‘furloughed workers’.
- An employer will need to designate affected employees as ‘furloughed workers,’ and notify those employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, this may be subject to negotiation.
- As an employer, you will need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
- Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – which they advise is above the median income.
- HMRC are currently working to set up a system for reimbursement. As they have confirmed that existing systems are not set up to facilitate payments to employers.
- The government has advised that if necessary, the scheme will be extended for longer.
4. BUSINESS RATE RELIEF AND GRANTS – Updated 29/03/2020
Updated 29/03/2020 – The Welsh Government has decided to make one adjustment to the Non-Domestic Rates (NDR) Relief for the hospitality, retail and leisure sector announced last week, which will differ from that offered in England: to not extend the 100% relief to the small proportion of properties with a rateable value of £500,000 and above.
This will affect fewer than 200 properties across Wales but will release approximately £117 million to kick-start the economic crisis fund. We will be writing to all of the businesses affected and making clear that they will be eligible to apply for discretionary funding to offset some of the costs of NDR if they have a strong case for this.
- Currently, the following sectors are eligible for rate relief: retail shops, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% business rates relief and pubs with a rateable value of between £51,000 and £100,000 will receive a £5,000 reduction on their bill for 12 months.
- If you are a retail, leisure or hospitality business with a rateable value of £12,000 or less are eligible for the 12 months business rates relief and for a grant of £10,000.
- If you are a retail, leisure and hospitality businesses in Wales or the UK with a rateable value of between £12,001 and £51,000 will benefit from one-year business rates relief but are also eligible for a £25,000 grant.
- Businesses that qualify for this support will not need to do anything to apply for this scheme. This will be administered through the Business Rates system. You do not need to contact your Local Authority about this, you will receive information in due course.
- If you are eligible for a business grant, your Local Authority will then be in touch in the coming weeks to provide details of how to claim this money.
- The rate-relief period starts on 1 April 2020.
- Properties that will benefit from the relief will be occupied premise that is wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
5. TIME TO PAY – Self assessment tax
- The ‘time to pay’ agreement with HMRC. Time To Pay has long been a common solution for UK businesses struggling to meet tax liabilities, but it’s been brought to everyone’s attention following the outbreak of the COVID-19.
- Time to pay scheme allows a small business to repay any outstanding tax liabilities in monthly instalments over an agreed period, (typically up to 12 months). If you’re concerned that you won’t be able to make a tax payment due to coronavirus, you should contact HMRC’s dedicated helpline. HMRC Coronavirus Helpline, Telephone: 0800 015 9559
- All businesses and self-employed people 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 are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. Contact HMRC Coronavirus Helpline, Telephone: 0800 015 9559
6. SELF EMPLOYED UNIVERSAL CREDIT (UC)
- To help strengthen the safety net for the Self-employed, the government will be suspending the minimum income floor when calculating UC for everyone affected by the economic impacts of coronavirus. That means every self-employed person can now access, in full, Universal Credit (UC) at a rate equivalent to Statutory Sick Pay for employees, if applicable to them. Please note that Universal Credit is a means–tested benefit for people of working-age, the DWP works out what it thinks you should need to live on, based on your household’s circumstances. Next, it takes away some of the income you have coming in. You will need to enquire what level of benefit is available to you, as it’s based on household income and assets.
- Currently, UC is paid on a monthly basis.
- This change took effect on 13 March and will last for the duration of the outbreak, to ensure that self-employed UC claimants will receive support.
- They are also introducing an Increase in standard Universal Credit of £20 a week, with the same rise for those still on the working tax credit scheme.
- To find out how to claim and more information on UC https://www.gov.uk/universal-credit
7. SELF EMPLOYED TAX PAYMENTS DUE JULY 2020 DEFERRED
- The government have advised that self-assessment income tax payments for July 2020 deferred for six months until January 2021.
- This is an automatic offer with no application required. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.
- No penalties or interest for late payment will be charged in the deferral period.
8. HOMEOWNERS MORTGAGE HOLIDAY (3 MONTHS)
- The government has agreed with mortgage lenders that they will offer repayment holidays of 3 months to households in financial difficulty due to COVID-19. The offer of a payment holiday is based on a case by case basis and can be made available to customers who are up to date with payments and not already in arrears.
How this will work in practice, according to UK Finance:
- Your mortgage repayment will change to £0 for a temporary period of 3 months.
- You will still accrue interest in this time.
- Normally to be eligible for mortgage relief, the lender would need to assess your finances while considering all forbearance options. But during the coronavirus outbreak, this will not apply. Instead, it will be replaced by a more straightforward self-certifying process.
- Lenders will take steps to help make sure that coronavirus mortgage relief doesn’t affect your credit score. Natwest and Lloyds have already confirmed this, other mortgage lenders are expected to follow suit with further details. So, it’s advisable to keep an eye on what your mortgage lender is announcing.
- This special government-led mortgage holiday is only available to you if you are in financial difficulty affected by this coronavirus and don’t already have mortgage arrears. If you do have arrears, please speak to your lender as soon as possible.
9. THE BANK OF ENGLAND BASE RATE - TEMPORARY CUT
- The Bank of England has rolled out an emergency cut in interest rates due to coronavirus. The base rate is now 0.25% – down from what was already a relative historic low of 0.75%. The Bank hopes it will help support the economy during the coronavirus outbreak.
- In terms of your mortgage rate changing, that depends on the type of mortgage you have.
- Base rate trackers will be the first to fall. However, they usually change a month after the base rate, and there is no guarantee the Bank of England’s latest cut will not be reversed post this unprecedented period.
- Variable rates may fall in time if the base rate remains low for a prolonged period
- Fixed rates, of course, stay fixed no matter what happens with the base rate
If your lender is going to change your rate, it is likely they will let you know first. Please contact your mortgage provider to find out what support is available.
10. TENANTS RENT HOLIDAY
- The rent holiday will also apply to landlords whose tenants are experiencing financial difficulties because of COVID-19. The offer of a payment holiday can be made available to renters who are up to date with payments and not already in arrears.
- Emergency legislation will be taken forward so that landlords will not be able to start proceedings to evict tenants for at least a 3 month period. This applies to private and social renters.
- At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
11. SICKPAY FOR THOSE NORMALLY ELIGIBLE
UPDATED 25/03/2020 This applies to SMEs with fewer than 250 employees as of 28 February 2020 who will get a full refund from the government on 14 days of statutory sick pay per employee off sick with Covid-19. The eligible period will start the day after the Statutory Sick Pay regulations are officially extended to those staying at home.
- As part of the emergency legislation measures, the government are now allowing the payment of Statutory Sick Pay from the very first day you are sick instead of four days under the current rules.
- Once the legislation was passed, it was confirmed it will apply retrospectively from 13 March. You should talk to your employer if you are eligible for SSP and need to claim.
- From Friday 20 March onwards, those who have COVID-19 or are advised to self-isolate will be able to obtain an “isolation note” by visiting NHS 111 online and completing an online form, rather than visiting a doctor. For COVID-19 cases this replaces the usual need to provide a “fit note” after seven days of sickness absence. Isolation notes will also be accepted by Jobcentre Plus as evidence of your inability to attend.
- Statutory sick pay is £94.25 per week for up to 28 weeks.
12. SICKPAY FOR THE SELF EMPLOYED OR ON THE LOWER EARNING LIMIT
UPDATED 25/03/2020 The amount of ESA is £73.10 a week, which will be available from day one of your sickness rather than the usual day eight. You need to be over 25 to receive ESA.
- If you are not eligible for SSP such as the self-employed or someone earning below the Lower Earnings Limit of £118 per week – and you have COVID-19 or are advised to self-isolate, you might be able to get assistance via Universal Credit (UC) or the New style Employment and Support Allowance (ESA). Please note that UC is means-tested and based on factors such as household income and your assets eg savings etc. If you do not qualify for UC you can apply for the New Style Employment and Support Allowance, which provides some financial support for an illness that means you are not able to work.
- If you don’t qualify for Universal Credit, many people will be able to seek financial assistance if you have COVID-19 or are advised to self-isolate via the Contributory / New Style Employment and Support Allowance.
- Entitlement to Contributory/New Style Employment and Support Allowance is NOT MEANS TESTED it based on your National Insurance contribution record. However, you will need to have been working for most of the period between April 2017 and April 2019. People affected by Coronavirus and claim Contributory/ New Style ESA will be paid from the first day of the claim.
The government advises if your claim is due to coronavirus you will not have to produce a fit note.
You can visit the following website for more information and find out how to apply for UK or ESA. https://www.turn2us.org.uk or https://www.gov.uk/universal-credit and https://www.gov.uk/guidance/new-style-employment-and-support-allowance.
13. PAYING BACK PERSONAL LOANS
If you are experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19, you should read the following information:
- The Financial Conduct Authority (FCA) called on lenders to use flexibility built into their rules to support consumers, taking into account customers’ individual circumstances. Many major lenders have already made statements to this effect
- If you are experiencing difficulties paying back loans or credit card bills because of COVID-19, you should talk to your lender
- If you agree with a payment holiday with your lender, they should record these in such a way that will not impact on your credit score
14. PUBS & RESTAURANTS
- If you own a pub that serves food or a restaurant in England, you will be able to operate a hot food takeaway to serve people staying at home, without going through the usual planning process.
- The Ministry for Housing, Communities and Local Government (MHCLG) will shortly legislate to bring forward a temporary Permitted Development Right to allow for a change of use from A3 (Restaurant) and A4 (Pub) to A5 (Hot Food Takeaway)
- The intention is that once the legislation has come into force a pub or restaurant will be able to notify their Local Authority that they are now operating as a takeaway without any prior approval.
15. THE CORONAVIRUS SELF EMPLOYMENT INCOME SUPPORT SCHEME – Updated 29/03/2020
This is the package of support the Government is providing for the self-employed that was announced on 26 March 2020 by the Chancellor Mr Sunak.
Please note it may not cover your individual circumstances as there are some groups of self-employed that Mr Sunak, did not provide any additional financial support for, other than the original options mentioned above, such as Universal Credit (if you are eligible) or the Coronavirus Business Interruption Loan (CBILS) which other a 12-month interest-free period, but you will still need to be able to repay the capital during this time and rate relief and deferment periods.
Mr Sunak announced the following :
- Some self-employed individuals will receive direct cash grants.
- Self-employed workers can apply for a grant worth 80% of their average monthly profits to help them cope with the financial impact of Coronavirus.
- This will up to a maximum of £2,500 a month and will be paid in a single lump sum, but will not begin to arrive until the start of June at the earliest.
Criteria of scheme:
- Self-employed people who are eligible can apply for grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.
- HMRC will use the average trading profits from tax returns in 2016-17, 2017-18 and 2018-19 to determine the size of the grant.
- The scheme is open to those who earn under £50,000 a year which the government states will cover up to 3.8 million of the 5 million people registered as self-employed.
- The grants will be taxable and will need to be declared on tax returns by January 2022.
- Unlike the employee scheme, the self-employed can continue to work as they receive support.
- At least half your income needs to come from self-employment as registered on the 2018-19 tax return filed in January to be eligible.
- Anyone who missed the filing deadline has four weeks from now (date of chancellors announcement) to get it done and still qualify.
- The money, backdated to March, will arrive directly into people’s bank’s accounts from HMRC, but not until June.
- Company owners who pay themselves a dividend are not covered.
The scheme DOES NOT COVER the following Self Employed circumstances:
1.) People who became self-employed in the last financial year (2019-2020). The Chancellor said for these people they would have to look to the benefits system for support and the CBILS (coronavirus business interruption loan scheme), mortgage or rent holidays, deferred VAT payments, the deferment of self-assessment income tax payments for July 2020 deferred for six months until January 2021 and rate relief grants. The reason given for this exclusion to the scheme is “To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.”
2.) Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. Plus they can look to the CBILS (Coronavirus business interruption loan scheme), mortgage or rent holidays, deferred VAT payments and the rate relief grants.
3.) Those self-employed with taxable profits above £50,000, including law partners, freelance journalists and other professionals. The Chancellor said, “this group had average incomes of about £200,000.” Mr Sunak said it was “reasonable, proportionate and fair.” But the Chancellor said this group can look to the CBILS (Coronavirus business interruption loan scheme), mortgage or rent holidays, deferred VAT payments and the rate relief grants.
Accessing the grant scheme.
Self-employed people who are eligible for the new CORONAVIRUS SELF EMPLOYMENT INCOME SUPPORT SCHEME scheme will be able to apply directly to HMRC for the taxable grant, using an online form, with the cash being paid directly into people’s bank account, to be paid at the beginning of June.
Support available before receiving the Coronavirus self-employment income scheme due in June.
The Government advised that before grant payments are made, the self-employed will still be able to access other available government support for those affected by Coronavirus including such as “the more generous universal credit and business continuity loans if you have a business bank account.”
16. CHANGES SUGGESTED FOR TAX, AND NI POST CORONAVIRUS FOR THE SELF EMPLOYED - Updated 29/03/2020
One additional announcement Mr Sunak made after the scheme details was his inference he would be looking to raise national insurance contributions for the self-employed once the crisis is over, saying it was “harder to justify” their special tax treatment now the state had treated them as generously as employees.
17. WELSH GOVERNMENT COVID-19 WALES BUSINESS LOAN SCHEME - updated 12/04/2020
UPDATE – The Welsh Government have announced that the Covid-19 Wales Business Loan Scheme is now fully subscribed, after only 1 week of being announced.
The Welsh Government and the Development Bank of Wales have announced the £100m Covid-19 Wales Business Loan Scheme to support businesses affected by the Covid-19 outbreak. The Scheme will be available from the Development Bank of Wales for a limited period. It is intended to provide support to businesses who are experiencing cash flow difficulties as a result of the pandemic.
The loan scheme will work alongside the UK wide Coronavirus Business Interruption Loan Scheme, other Welsh Government and UK Government support offers, providing more vital options for Welsh businesses. Loans of between £5,000 and £250,000 are available to businesses who have been trading longer than 2 years and can demonstrate that they were able to service that level of debt before the outbreak.
- £100m fund
- Loans between £5,000 to £250,000, maximum loan levels apply
- 12-month capital and interest repayment holiday
- No arrangement or monitoring fees
- 2% interest fixed for 6 years (includes the 12 month holiday)
Details of the fund, eligibility and application process can be found on the Development Bank of Wales’s website – https://developmentbank.wales/
18. WELSH GOVERNMENT ECONOMIC RESILIENCE FUND - update 12/04/2020
UPDATE – The Welsh Government announced information on Friday 10th April about this second phase of the Economic Resilience Fund which is available on the Business Wales website. Please be aware they have not provided any details of support for sole traders, contractor or freelancers, that fall outside of the following criteria.
This second phase, which will release £200m of funding, will be targeted at microbusinesses, SMEs and large businesses of critical social or economic importance to Wales.
The first phase saw the £100m Development Bank of Wales’ loan scheme fully subscribed in a week – all applications are being processed.
To be eligible for this second phase of support, businesses, charities and social enterprises, must meet criteria including:
- Micro businesses, including start-ups, employing up to nine employees could be eligible for up to £10k grant support. This includes sole traders employing staff. Businesses in this bracket could qualify for support from the fund if they:
This grant can only be claimed by businesses that meet the following criteria:
- employing between 1 and 9 employees (In addition to the business owner)
- operating address in Wales and have employees in Wales
- VAT registered
- have experienced a drop in turnover greater than >40% as a result of the COVID-19 outbreak (since the 1 March 2020)
- supported businesses must aim to maintain employment for 12 months
- Are not pursuing other forms of Welsh Government non-repayable grant funding support
- Can demonstrate that efforts have been made to sustain business activity
- only one application per businesses
- businesses will need to provide:
- details of reduction in turnover as a result of the COVID-19 outbreak
- evidence of business address by providing VAT registration (within the last 3 months)
The grant is available to microbusinesses that are not eligible for the Business Rate Grant or the support for self-employed grant.
- Small and medium sized firms with between 10 and 249 employees could be eligible for grants of up to £100,000 if they:
– Have experienced in excess of a 60% reduction in turnover since the first day of March
– Are not be eligible for business rate relief grants, or if they are, that amount would be deducted from their allocation from this fund
– Have a sustainable business plan to trade beyond the Covid-19 pandemic
– Confirm no future compulsory redundancies will be made as long as the Coronavirus Job Retention Scheme is in place
– Are not be pursuing any other form of Welsh Government non-repayable grant funding support
The application process for businesses qualifying for financial support from the Economic Resilience Fund will open on Friday 17 April via the Business Wales website.
Businesses can also benefit from a £400 million emergency pot providing:
- Grants of £10,000 for micro-businesses employing up to nine people. This includes sole traders employing staff. Qualifying businesses will be able to apply by mid-April.
- Grants of up to £100,000 for small and medium-sized firms with between 10 and 249 employees. Qualifying businesses will be able to apply by mid-April.
- Support for larger Welsh companies, which are of critical social or economic importance to Wales. This element will be open to qualifying businesses within the next two weeks.
Details of the application process and eligibility are being finalised and will be published by the Welsh Government shortly.
We hope you found this document useful and that it provides helpful information to navigate your way through the information out there to identify what key support and resources might be available to you as a small business during this difficult time.
We will be updating this document on an ongoing basis, so please do refer back to this resource as we hope that no matter the size of your business, this information is of assistance.
If you want the latest information on the government’s COVID-19 Action Plan you can go here: gov.uk/government/publications/coronavirus-action-plan
Other key sources:
HMRC Coronavirus Helpline, Telephone: 0800 015 9559
LATEST LINK: https://businesswales.gov.wales/coronavirus-advice/support/financial-support-and-grants