Coronavirus: What loans, grants and other government support are available for UK businesses?

The government will pay up to 80 per cent of wages for employees without work during the crisis, among a range of other measures to help firms cope. Here is what's available and how to claim.

The UK government has announced a raft of loans, grants, tax relief and wage support to help businesses through the Covid-19 pandemic.

There's £330bn of government-backed loans under two programmes including the Coronavirus Business Interruption Loan Scheme, as well as £20bn of tax breaks. Added to that there Coronavirus Job Retention Scheme to cover some wage costs and thereby, hopefully, prevent firms laying people off.

With three separate announcements from chancellor Rishi Sunak in a matter of days it can be difficult to know exactly what's available to who. Here is a run-down of the government help that's been announced so far.

Wages - 'the coronavirus job retention scheme'

The government will reimburse employers for 80 per cent of the wages of any employees that they pay through the pay as you earn (PAYE) system if those employees are temporarily not working - what the government calls 'furloughed'.

The maximum payment from the government will be £2,500 per month. This will be paid for an initial three months and will be extended if necessary.

Payments will be backdated to begin on 1 March, opening up the possibility that employers could bring back staff they have recently laid off and put them on furlough. Employers do not have to pay back the money and they can choose to top up wage payments above the government-funded 80 per cent.

Payments will be calculated based on tte amount each furloughed employee earned in February. That is simple for people who have a regular salary but for those whose hours change it could mean they get more or less than their average monthly pay.

Are zero-hours contract workers covered?

The coronavirus job retention scheme is available for any worker who is on the PAYE system so this will include many on zero-hours contracts.

Rishi Sunak promised last week that detailed guidance would be published soon.

He said: “Zero hours covers a variety of situations, but it may well be you are on a PAYE scheme and have a set of regular earnings and it will be covered depending on your particular circumstance.”

If you are on PAYE, the government's payment towards your wages should be 80 per cent of what you earned in February.

Self-employed workers are not covered. Details of new support for workers in this category is expected this week. This article will be updated if and when new support is announced.

How does a company apply for this money?

Companies must apply via a new portal on the HMRC website which is not yet up and running. Employers need to log in to designate employees who will temporarily not have work as “furloughed workers”. For more information, check with HMRC.

How long will it take?

Grants will be paid through HMRC “in the next few weeks”, the government has said. HMRC says it is working to urgently set up a system to allow it to reimburse employers.

That may leave companies struggling with cash flow in the meantime. Companies in this position can apply for a loan under a £330bn scheme announced by the government earlier last week (see below).

Potential problems

Employers can choose whether or not to take up the scheme. At present there is no requirement to retain staff and put them on furlough if an employer does not think they are needed. They may choose to offload people in any case.

At present an employer must make a binary choice between keeping somebody employed (and paying all of their wages) or putting them on furlough with the state covering 80 per cent of those costs.

Employers could find they need a staff member to work, say, half of their hours during the outbreak but can't afford to pay them for those hours. In that case they may have to choose between furloughing the worker (meaning they can't work), trying to find the money to pay all of their wages, or making them redundant.

The new system is being set up rapidly and demand will be high. HMRC has set up a dedicated helpline but there are reports of waits averaging around an hour. The government has said it will hire an additional 2,000 staff to help with the changes.

Loans

Businesses with a turnover up to £45m can borrow up to £5m for a maximum term of six years under the Coronavirus Business Interruption Loan Scheme.

The loan scheme opens on 23 March via 40 participating lenders. Businesses requiring shorter-term finance through the Covid-19 outbreak can access overdrafts and invoice finance for a maximum of three years through the scheme.

They can apply via any participating lender and the government will cover up to 80 per cent of the bank's losses on the loans. The loans are interest-free for the first twelve months. Businesses are advised to apply online where possible as demand for loans is likely to be high.

Large firms can apply for what the chancellor called “low cost, easily accessible commercial paper”, or corporate bonds. These are provided by a lending facility with the Bank of England.

Some businesses may find they are too large for the SME loan scheme, but not eligible for the large company scheme either because they do not have a credit rating from a ratings agency that allows them to issue publicly-traded debt. The government will be under pressure to adjust the rules to help those stuck in the middle.

Statutory Sick Pay during the coronavirus pandemic

For businesses with fewer than 250 employees on 28 February, the government will refund the cost of providing 14 days of Statutory Sick Pay per employee. SSP is £94.25 per week.

Employees will not need to provide a doctors' note if they are off work because they may have coronavirus. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website. This system will be up and running once the relevant legislation has been passed.

VAT deferral

Valued Added Tax (VAT) payments for all businesses can be deferred for three months from 20 March 2020 until 30 June 2020. If you’re self-employed, income tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

This is an automatic offer with no applications 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.

Business rates

Retail, hospitality, leisure and nursery businesses in England will not have to pay business rates for a year starting from April 2020. That includes all shops, restaurants, cafes, pubs, bars, cinemas and live music venues, hotels and guesthouses (among other businesses).

Retail, hospitality and leisure businesses will also be able to apply for a cash grant of up to £25,000 per property. Businesses in these sectors with a property that has a rateable value of £15,000 and under will receive a grant of £10,000. Those with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

Firms in any sector that are in receipt of small business rate relief or rural rate relief will receive a grant of £10,000.

How do I find out more information?

A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke “Time to Pay” arrangement.

If you are concerned about being able to pay your tax due to Covid-19, call HMRC’s helpline on 0800 0159 559.