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Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 2 December, 2020

General Information

  • In light of a growing number of restrictions, including another national lockdown in England from 5 November to 2 December, a number of economic support measures that had been due to end have been extended into the new year.
  • Alongside managing the health and economic fallout from the COVID-19 pandemic, the UK government is also involved in negotiations with the EU regarding the end of the Brexit transition period, on 31 December.
  • For more information on the wider economic conditions in the UK, please refer to the latest UK Economic Outlook.

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Employment-related measures

(e.g. state compensation schemes, training…)

Available measures to support people employed by corporations

Job Retention Scheme (JRS) (applies in England, Northern Ireland, Scotland and Wales)

  • The JRS has been introduced to help employers who cannot maintain their current workforce because their operations are affected by the COVID-19 outbreak.
  • Eligible employers can apply to HMRC for a grant towards the employment costs of eligible individuals who are temporarily not working, or working reduced part time hours, due to the outbreak, and who agree to be ‘furloughed’.
  • The scheme had been scheduled to close on 31 October, but has now been extended for an additional five months, until 31 March 2021.
  • Claims in respect of periods ended on or before 31 October must be filed, or where relevant increased, by 30 November 2020 at the latest.
  • To be eligible for the scheme on and after 1 November, employees must have been on the payroll on 30 October 2020. Employees who were on the payroll on 23 September 2020 who have since been made redundant are also eligible to be re-employed and placed on the furlough scheme. However, from 1 November there is no requirement for either the employee or employer to have participated in the JRS previously
  • Until 31 January, for hours an employee does not work, employers will be required to pay only the National Insurance and Employer Pension Contributions.
  • 80% of a furloughed employee’s wages will then be paid by the government (subject to a cap of £2,500 per month, which reduces by reference to any hours actually worked during the claim period).
  • A government review in January may result in a decrease in the JRS grant and an increase in the employer contribution for February and March.

Kickstart Scheme (applies in England, Scotland and Wales only)

  • An employment support scheme targeted at those aged 16-24 who have been claiming Universal Credit and are at risk of long-term unemployment. The Department for Work and Pensions’ guidance on the scheme is available here.
  • For each “kickstarter” placement, the government will cover the cost of the first six months of employee’s wages, at 25 hours’ work a week, at the applicable minimum wage. The government will also cover the associated employer National Insurance contributions and minimum automatic enrolment pension contributions. 
  • The first placements began in November, and, as of 12 November, around 20,000 people have been employed on the scheme, which will run until December 2021.
  • Applications must be for a minimum of 30 placements, but organisations that are unable to offer this number on their own can partner with each other to reach the minimum number.

Apprentice Scheme (applies in England only)

  • From August 2020 to January 2021, any firm that hires a new apprentice aged 16-24 will receive £2,000, while any firm that hires a new apprentice aged 25 or over will receive £1,500.
  • This payment will be in addition to the existing £1,000 incentive the government already provides for new 16-18 year-old apprentices.

Traineeship Scheme (applies in England only)

  • Firms will receive £1,000 for each new traineeship placement that they create, with the government providing enough funding for around 30,000 new places. 

Statutory Sick Pay (SSP) refunds for smaller businesses

  • Businesses with fewer than 250 employees in their group on 28 February 2020 can obtain a refund from the Government for SSP paid for up to 2 weeks’ absence due to COVID-19.
  • This also covers absence due to self-isolating in line with public health advice (i.e. where an employee may not be sick or have symptoms of COVID-19 but has been advised to self-isolate and cannot work as a result) and, from 26 August 2020, where the employee has been notified by the NHS to self-isolate prior to surgery.
  • Workers can claim SSP from the first day of absence due to COVID-19 (rather than from day four, which would otherwise be the case)
  • Employers can claim repayment of relevant SSP through HMRC’s online service.
  • HMRC have published guidance here.  Some of the key points covered are:
    • Companies that claim reimbursement must have a PAYE payroll scheme that was created and started on or before 28 February 2020.
    • The scheme covers individuals on all types of employment contracts (including full-time employees, part-time employees, employees on agency contracts, and employees on flexible or zero-hour contracts).
    • The 250 employees test is based on the total combined number of PAYE employees for connected companies. 
    • Employers will need to keep a record of the following information until the third anniversary of the date on which they receive the relevant SSP reimbursement (i) the dates the employee was absent from work due to COVID-19; (ii) which of those dates were usual working days; (iii) whether they had COVID-19 symptoms, a member of their household had symptoms, or they were shielding; and (iv) their National Insurance Number.
  • An isolation note will be satisfactory evidence of inability to work, where an employee is self-isolating, rather than requiring a fit note from a doctor.
  • The notes can be obtained through the NHS website, NHS 111 online or the NHS App.
  • The amount an employer can claim under this scheme must not, when combined with any other state aid claimed under the EU Commission State Aid Temporary Framework, cause it to breach the relevant limit (i.e. €800,000, or the applicable lower limit for agriculture or aquaculture and fisheries).

Available measures to support people employed by corporations

Relaxation of annual leave rules

  • Employees who have not taken all of their statutory annual leave entitlement due to coronavirus will be able to carry it over into the next 2 leave years.  This change is aimed at allowing staff to continue to work in the national effort against COVID-19 without losing out on annual leave entitlement.
  • The regulations will allow up to 4 weeks of unused leave to be carried over for two years.  The measure is not currently binding on all businesses and is primarily aimed at ‘key workers’.
  • The rules are introduced by amending the Working Time Regulations, which apply to almost all workers, including agency workers, those who work irregular hours, and workers on zero hours contracts.

[Currently, almost all workers are entitled to 28 days holiday including bank holidays each year. However, most of this entitlement cannot be carried between leave years, meaning workers lose their holiday if they do not take it. There is also an obligation on employers to ensure their workers take their statutory entitlement in any one year – failure to do so could result in a financial penalty.]

Start-ups:

  • Job Retention Scheme: Employers can claim for a percentage of furloughed employees’ usual monthly wage costs, subject to a reducing monthly cap.
  • Support for businesses who are paying sick pay to employees: allow SMEs and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
  • Self-Employment Income Support Scheme (SEISS).

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

Coronavirus Business Interruption Loan Scheme for smaller businesses (for Businesses with turnover of up to £45m)

  • Under the Coronavirus Business Interruption Loan Scheme (CBILS) UK businesses with annual turnover of no more than £45m can borrow up to £5m interest-free for 12 months under a British Business Bank (BBB) scheme where the Government provides the lender with a guarantee for 80% of each loan (subject to a per-lender cap on claims) and covers the cost of the first 12 months of interest.
  • Financing can be provided under CBILS for up to 6 years through term loans, overdrafts, invoice finance and asset finance.
  • The £45m turnover threshold applies to group turnover, rather than at individual company turnover level.
  • Access to CBILS is available through over 100 BBB accredited lenders.
  • The deadline for applying for this loan was originally set at 30 September 2020, before being initially extended to 30 November 2020 and subsequently extended to the 31 January 2021.

Coronavirus Large Business Interruption Loan Scheme (for Businesses with turnover of more than £45m)

  • On 3 April 2020, the Chancellor announced that new scheme – the Coronavirus Large Business Interruption Loan Scheme (CLBILS). Similar to the SME CBILS scheme this involves a government guarantee of 80% to enable banks to make loans of up to £25 million (CBILS was capped at £5 million) to businesses with an annual turnover of between £45 million and £250 million.  Firms with a turnover of more than £250 million can borrow up to £50 million from lenders.
  • This is intended to give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS.  This Scheme is for businesses that were viable pre COVID-19, experiencing cashflow shortfalls and who would be able to trade out of difficulty with the additional funding. CLBILS loans will be through commercial banks and commercial rates of interest will be charged.
  • The deadline for applying for this loan was originally set at 20 October 2020, before being initially extended to 30 November 2020 and subsequently extended to the 31 January 2021.

COVID-19 Corporate Finance Facility (CCFF)

  • The CCFF has been created to provide funding to large businesses through the purchase of short-term corporate debt in the form of commercial paper. The Bank of England have published guidance on the facility including details of eligibility and how to apply.
  • Funding is open to companies (1) making “a material contribution to the UK economy”; (2) able to demonstrate they were in sound financial health prior to the pandemic; and (3) with a short term or long term investment grade credit rating or otherwise able to demonstrate financial strength equivalent to investment grade.
  • The CCFF launched on 23 March 2020 and Bank of England data released on 2 April 2020 showed that £1.9 billion of commercial paper has been purchased under this facility already and according to a HM Treasury release on 3 April 2020 a further £1.6 billion has been committed. 
  • On 22 September 2020, the Bank of England and HM Treasury confirmed that the CCFF will close on 23 March 2021, with new applications to participate in the CCFF accepted up until 31 December 2020.

£750m coronavirus fund for frontline charities

  • The UK government has announced £750m of funding for frontline charities across the UK – including hospices and those supporting domestic abuse victims.  £60m of this will be provided to Scotland, Wales and Northern Ireland. 
  • £360 million will be directly allocated by government departments to charities providing key services and supporting vulnerable people during the crisis – including hospices and domestic abuse victims. £370m will go to small and medium-sized charities, including through a grant to the National Lottery Community Fund for those in England.

Support for SMEs focused on research and development

  • On 20 April, as part of its wider package of support for innovative firms hit by the COVID-19 outbreak, the government announced £750m of targeted support for small and medium sized businesses focusing on research and development.
  • Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis.
  • An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding.

Future Fund for high-growth companies

  • On 20 April, the government announced the Future Fund, a £500m loan scheme aimed at ensuring that high-growth companies in the UK receive the investment they need to continue during the crisis. Delivered in partnership with the British Business Bank, it launched in May.
  • The fund was comprised initially of £250 million from government combined with equal match funding from private investors, though in June, the government confirmed that given the high number of applications it would be expanding its financial commitment to the fund.
  • The scheme, It provides UK-based companies with between £125,000 and £5m from government, with private investors then matching the government’s commitment.
  • Loans issued will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
  • 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.
  • Further detail on eligibility criteria and fund operation will be published in due course.  The government’s announcement can be found here.
  • The deadline for applying for this loan was originally set at 30 September 2020, before being initially extended to 30 November 2020 and subsequently extended to the 31 January 2021.

Bounce Back loan scheme for small businesses

  • On 27 April, the government announced a fast-track finance scheme for small businesses, allowing firms to apply for Bounce Back loans worth up to 25% of turnover, with a maximum payment of £50,000, and access the cash within days.
  • The government will provide lenders with a 100% 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% a year.
  • The government has said that for most firms, loans should arrive within 24 hours of approval. Loans can be applied through a short, standardised online application.
  • The deadline for applying for this loan was originally set at 04 November 2020, before being initially extended to 30 November 2020 and subsequently extended to the 31 January 2021.

Other changes have also been introduced since the scheme was launched allowing businesses to “top-up” their existing loans, if they originally borrowed less than the maximum amount and additional flexibility granted in repaying loans under the “Pay as you grow” scheme.

Pay as you Grow

  • Announced in September, The Pay as you Grow scheme allows businesses that borrowed a Bounce Back Loan the option to repay their loan over a period of up to 10 years, as opposed to 6 years, thereby reducing monthly payments.
  • Businesses will also have the option to move to interest-only payments for periods of up to 6 months (an option they can use up to 3 times), or to pause their repayments entirely for up to 6 months (an option they can use once and only after having made 6 payments).

Start-ups

UK has loans but venture backed startups can't get them - Support for businesses through the Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

  • Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
  • Lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.

A £1.25 billion plan to support start-ups was put in place on 20 April. It is divided into two funds:

  • The Future Fund for high-growth companies affected by the crisis, made up of public and private financing (see opposite).
  • A £750 million fund of grants and loans for R&D-oriented SMEs. (previously detailed)

Green Stimulus

  • The government announced a £3bn package for environmental initiatives.
  • It includes a £1bn commitment to decarbonising public sector buildings such as schools, hospitals and social housing through retrofitting
  • It also includes a £2bn scheme to launch in September which will provide homeowners with two-thirds of the cost of retrofitting their homes on work up to a value of £5,000. Those on lower incomes can receive 100% of the cost returned to them up to a value of £10,000. It is thought this will enable to retrofitting of around 400,000 homes.

Customs Measures

Self-Employment Income Support Scheme

  • Two rounds of grants have been issued to those in self-employment.
  • The first round of grants provided self-employed people who had been adversely affected by COVID-19 a taxable grant worth 80% of their average monthly profits over the last three years, in total worth up to £7,500, covering three months.
  • The eligibility criteria for both grants required that individuals had trading profits of no more than £50,000, making up at least half of their total income.
  • Anyone whose self-employed business has been adversely affected by COVID-19 since 14 July is eligible for the scheme, and records should be kept to show how the business has been impacted.
  • There was no need to have applied for the first grant in order to be eligible for the second.
  • On 24 September 2020, as part of the government’s Winter Economic Plan, it was announced that the SEISS will be extended for an additional 6 months, from November 2020 to April 2021, see Slide 11 for details.

Measures to ease the lockdown

  • The government published a ‘recovery strategy’ on 11 May, which detailed three stages of exiting lockdown.  From 13 May, people who cannot work from home have been actively encouraged to return to work, provided social distancing in the workplace can be maintained.
  • From 1 June at the earliest, outdoor retail has been able to reopen, and primary schools have also begun to reopen.
  • From 15 June, other non-essential retail will be able to reopen if they can meet Covid-secure guidelines.
  • From 4 July at the earliest, some of the remaining businesses and premises that have been required to close could be reopened, if social distancing can be in place.

Recovery Plan Overview

  • The UK Government is yet to announce a full recovery plan.
  • It is expected that a full budget, containing policies to address the COVID-19 recovery, will come in Spring 2021.
  • As an interim measure, the Chancellor announced a Winter Economic Plan on 24 September 2020, which had the effect of extending many of the existing emergency schemes / deadlines for application etc., as well as the introduction of a Job Support Scheme (to in effect replace the Job Retention Scheme).
  • Due to the increase in COVID-19 cases and subsequent restrictions, the Chancellor announced revisions to the schemes on 22 October 2020.

Winter Economic Plan

Employment Support

Self-Employed Income Support Scheme

  • The government will be extending the SEISS for an additional 6 months, from November 2020 to April 2021.
  • The extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total. The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.
  • The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.

SME Support

Pay as you Grow

  • The government are providing businesses that borrowed under the Bounce Back Loan Scheme (See Slide 8 for details) the option to repay their loan over a period of up to 10 years, thereby reducing monthly payments.
  • Businesses will also have the option to move to interest-only payments for periods of up to 6 months (an option they can use up to 3 times), or to pause their repayments entirely for up to 6 months (an option they can use once and only after having made 6 payments).

Local Restrictions Support Grant (Tier 3)

  • Businesses in Tier 3 areas which are legally required to close will be able to apply for grants of up to £3,000 per month.
  • Funding will also be provided to local authorities to operate a discretionary scheme for businesses that can remain open, but whose finances may be affected due to Tier 3 restrictions.

Local Restrictions Support Grant (Tier 2)

  • The government will also provide further support for local authorities in England facing Tier 2, with funding to provide direct cash grants to businesses which are not forced to close but are facing reductions in demand.
  • Hospitality, leisure and accommodation businesses in Tier 2 areas will be able to apply for grants worth up to £2,100 a month, 70% of the Tier 3 support .
  • Though announced on 22 October, these grants will be retrospective from the beginning of August, and as such will benefit businesses in areas which have been facing additional restrictions for a number of months.

Other measures and sources

Culture and Arts

In the first significant sector specific support package, the government has pledged £1.57bn to support the UK’s culture and arts industries. The package is comprised of:

  • £880m of direct grants for English cultural organisations;
  • £270m of loans to English cultural organisations;
  • £120m of capital investment to restart construction on cultural infrastructure in England;
  • £100m of targeted support for England’s national cultural institutions and English Heritage;
  • £189m of funding for devolved administrations (Scotland: £97m, Wales: £59m, Northern Ireland: £33m).

Self-Employment Income Support Scheme

  • Two rounds of grants to self employed individuals have been paid, with a further two rounds announced. Each round has covered a period of three months.
  • The first round of grants provided self-employed people who had been adversely affected by COVID-19 a taxable grant worth 80% of their average monthly profits over the last three years, in total worth up to £7,500. The second round reduced this to 70% of average monthly profits, worth up to £6,570.
  • The third round of grants provides 80% support, again capped at £7,500 in total. The fourth grant will cover the period from the start of February until the end of April. With the government saying that they will review the level of this grant in due course.
  • The eligibility criteria for both grants required that individuals had trading profits of no more than £50,000, making up at least half of their total income.
  • Anyone whose self-employed business has been adversely affected by COVID-19 since 14 July is eligible for the scheme, and records should be kept to show how the business has been impacted.
  • There was no need to have applied for earlier grants to be eligible for later ones.

Local Restrictions Support Grant

  • Businesses in Tier 3 areas or those affected by the national restrictions in affect from 5 November to 2 December, which are legally required to close will be able to apply for grants of up to £3,000 per month, depending on their business premises rateable value.
  • Funding will also be provided to local authorities to operate a discretionary scheme for businesses that can remain open, or for businesses which do not have a fixed premises, but whose finances may be affected due to Tier 3 restrictions.
  • The government will also provide further support for local authorities in England facing Tier 2 restrictions, with funding to provide direct cash grants to businesses which are not forced to close but are facing reductions in demand.
  • Hospitality, leisure and accommodation businesses in Tier 2 areas will be able to apply for grants worth up to £2,100 a month, 70% of the Tier 3 support .
  • Though announced on 22 October, Tier 2 grants are retrospective from the beginning of August, and as such will benefit businesses in areas which have been facing additional localised restrictions for a number of months.

Main sources of information:

Contact us

Tax: David Woodward - david.woodward@kpmg.co.uk
Restructuring: Blair Nimmo – blair.nimmo@kpmg.co.uk
Legal: Isabel Ost isabel.ost@kpmg.co.uk