As new lockdowns are in place across the UK, we provide a recap of some of the most significant of the various support measures that the Government has put in place to date to support businesses that have been adversely affected. The most recent of these is a new package of one-off grants for English businesses in the retail, leisure and hospitality industry. Many of the Government’s measures have been in place for a number of months and are due to be withdrawn before the end of March. Businesses wishing to apply for support should be aware of the various deadlines and act now as there is no certainty that these measures will be extended by the Government. However, as the COVID-19 vaccine rollout is expected to continue until at least autumn, it is unlikely that life will return to normal for some time and it is therefore possible there will be some extensions or we could see alternative measures announced at the Chancellor’s Budget on 3 March 2021.
- In response to the current lockdown in England, the Chancellor has announced a new package of one-off grants will be available for businesses based in England in the retail, leisure and hospitality sectors worth up to £9,000 per property. The value of the grant is dependent upon the rateable value of the property. The Government has confirmed that any business which is legally required to close, and which cannot operate effectively remotely, is eligible for a grant. The Chancellor also announced funding would be allocated to the devolved administrations to provide further support to businesses based in Scotland, Wales and Northern Ireland.
Support for employers
- The Coronavirus Job Retention Scheme (CJRS) is in place until 30 April 2021. Our employer Q&A document and our separate article give further details.
- Businesses with fewer than 250 employees may be eligible for a refund from the Government for statutory sick pay paid for up to two weeks’ absence due to COVID-19.
- The Government has also announced funding for employers in England to create new apprenticeships and traineeships in England. In addition, the kickstart scheme offers funding to businesses in England, Scotland and Wales to employ young people aged 16-24 who have been claiming universal credit and are at risk of long-term unemployment.
Government backed finance
The following Government loan schemes are in place:
- COVID Corporate Financing Facility (CCFF): the CCFF provides funding through the purchase of short-term corporate debt in the form of commercial paper. The CCFF is open to companies making ‘a material contribution to the UK economy’ that meet specified eligibility criteria. The CCFF is closed to new applicants however eligible issuers who had already signed up to the CCFF at 31 December 2020 will continue to be able to issue new commercial paper until the facility closes on 22 March 2021.The Bank of England has published full details.
- Coronavirus Large Business Interruption Loan Scheme (CLBILS): businesses with an annual turnover of more than £45 million can access financial support of up to £200 million. CLBILS is open until 31 March 2021. The British Business Bank has published full details.
Small and medium enterprises (SMEs)
- Coronavirus Business Interruption Loan Scheme (CBILS): UK businesses with annual turnover of no more than £45 million can borrow up to £5 million interest-free for 12 months under a British Business Bank scheme where the Government provides the lender with a guarantee for 80 percent of each loan (subject to a per-lender cap on claims) and covers the cost of the first 12 months of interest. CBILS is open until 31 March 2021. The British Business Bank has published full details.
- Future Fund: provides UK-based companies with between £125,000 and £5 million from Government, with private investors then matching the Government’s commitment. The scheme is open to unlisted UK registered companies that have previously raised at least £250,000 in equity investment from third party investors in the last five years. The Future Fund will close for new applications on 31 January 2021. The British Business Bank has published full details.
- Bounce back loans: small businesses may apply for loans worth up to 25 percent of turnover, with a maximum payment of £50,000. The Government will provide lenders with a 100 percent guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months. After that the interest rate will be set at 2.5 percent per year. The scheme is open to applications until 31 March 2021 and the British Business Bank has published full details.
Tax deferrals and other measures
- Businesses that are struggling to make their tax payments to HMRC by the required deadlines may be able to negotiate a ‘Time to Pay’ agreement with HMRC. Taxpayers seeking ‘Time to Pay’ should be able to justify why a deferral of payment is needed. For taxpayers with a Customer Compliance Manager this is likely to be the quickest route to seek an agreement.
- The Government allowed businesses to defer payments of VAT that were due between 20 March 2020 and 30 June 2020. HMRC have confirmed that taxpayers who opted to defer a VAT liability during that time may either pay in full by 31 March 2021 or they can opt in to a ‘new payment scheme’ allowing them to spread the liability over up to 11 equal instalments over 2021-22. Businesses will be able to opt in to the new scheme in early 2021, according to HMRC’s guidance.
- In June 2020 HMRC confirmed they will now be able to consider claims for repayment of corporation tax before the end of the accounting period in which losses available to carry back are anticipated to arise where there are ‘exceptional circumstances’. This means that companies which were profitable in their last financial year and accordingly paid corporation tax but expect to be heavily loss-making in the current year can potentially claim a repayment of the prior year corporation tax before the end of the current period. This is explained further in a previous article.
- A temporary VAT rate of five percent applies to certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. This includes food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. This is due to end on 31 March 2021. With the country back in lockdown again, only the takeaway hospitality businesses continue to benefit from this measure. The reduced rate for other hospitality measures for on premises consumption and admissions to certain attractions no longer provide their intended benefit. The hotel and accommodation measure also has very limited benefit given the strict limitations on provision of such services. With restrictions not expected to be lifted for some time it is likely these reduced rates will be extended further.
- Businesses in the retail, hospitality and leisure sectors in England have automatically been given a 100 percent business rate discount for the 2020 to 2021 tax year. The position for business rates post 31 March 2021 has not been confirmed so we are likely to see an update from the Government in advance of or included in March’s Budget.
Further details of the financial support available for businesses can be found on the Government website.
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