Coronavirus: UK Business Support Mechanisms

Out-Law Guide | 27 Mar 2020 | 3:44 pm | 5 min. read

In recent days the UK government and devolved administrations have been developing and announcing a range of measures aimed at supporting the economy, businesses and workers through the COVID-19 crisis.

COVID-19 Corporate Financing Facility (CCFF)

Policy

To support larger firms, the Bank of England will operate a new lending facility to provide a quick and cost effective way to raise working capital via the purchase of short-term debt.

The CCFF will be a credit easing scheme targeted at addressing the disruption to cash flows of companies resulting from Covid-19. The scheme will focus on purchasing newly-issued Commercial Paper from eligible companies. The CCFF is unlimited in size.

The scheme went live on Monday 23 March.

Jurisdiction

UK-wide

Eligibility Criteria

Eligibility for the facility will be based on firms’ credit ratings prior to the Covid-19 shock.

Businesses will also be judged, in part, on whether or not they:

  • make a material contribution to economic activity in the United Kingdom
  • have significant employment in the UK or with their headquarters in the UK
  • generate significant revenues, serves a large number of customers or has a number of operating sites in the UK
  • are UK incorporated companies including those with foreign-incorporated parents and with a genuine business in the UK

How to apply

Applications can now be made through the Bank of England's website.

Further information

Further details of the scheme can be found at the Bank of England

More information on the eligibility criteria can be found at the Bank of England

Further details of the scheme can be found at the Treasury

Business Rates

Policy

All businesses in the retail, hospitality and leisure sectors will pay no business rates in England for the 2020/2021 tax year.

There will be no rateable value threshold on this relief – businesses large and small will benefit.

Jurisdiction

UK-wide

Eligibility Criteria

Full criteria for businesses in England

How to apply

The government has said that this will apply to the next council tax bills issued in April 2020.

The government advises businesses to direct enquiries on eligibility for, or provision of, the reliefs to the relevant local authority.

Further information

Further details of the scheme can be found at the Ministry of Housing, Communities and Local Government and at the Department of Business, Energy and Industrial Strategy

Corresponding commitments have been made by the Scottish government

Support for small businesses

Policy

The UK government will provide additional funding for local authorities to support small businesses that pay little or no business rates.

Key provisions include:

  • A one-off grant of £10,000 to businesses currently eligible for small business rate relief (SBBR) or rural rate relief
  • A £25,000 grant to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000 or between £18,001 and £50,999 for Scottish businesses.

Jurisdiction

UK-wide

Eligibility Criteria

Businesses eligible for SBRR or rural rate relief will receive this support.

How to apply

Businesses will be contacted by the relevant local authority.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

Corresponding commitments from the Scottish government

Business Interruption Loan Scheme

Policy

A scheme aimed at supporting small and medium sized businesses to access bank lending and overdrafts, which will be delivered through the British Business Bank.

Key provisions include:

  • The government will provide lenders with a guarantee of 80% on each loan to give lenders confidence in continuing to provide finance to SMEs
  • The government will not charge businesses or banks for this guarantee
  • The provision of support loans of up to £5 million in value. The government will cover the first 12 months of interest payments for businesses.

Jurisdiction

UK-wide

Eligibility Criteria

Applicants must:

  • Apply for business related purposes only
  • Use the scheme to support primarily trading in the UK
  • Be a UK-based SME with annual turnover of up to £45m
  • Be seeking to borrow up to a maximum of £5m
  • Generate more than 50% of its turnover from trading
  • Have a borrowing proposal which would be considered viable by the lender

Further criteria can be found here.

How to apply

Any small business interested in applying should approach their lender in the first instance or one of the 40+ accredited lenders with their borrowing proposal.

The British Business Bank states that applications should take no longer than a standard application.

The scheme is now open.

Further information

Further details of the scheme can be found at the British Business Bank

Statutory Sick Pay

Policy

The government has introduced legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.

Jurisdiction

UK-wide

Eligibility Criteria

This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19. 

Employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020.

Eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to those staying at home comes into force.

How to apply

Further detail is expected but the government has committed to working with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

General Taxation - Time to Pay

Policy

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.

Jurisdiction

UK-wide

Eligibility Criteria

All businesses and self-employed people with outstanding tax liabilities.

How to apply

To access the scheme, businesses should contact HMRC.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy

Insurance

Policy

The government has said that businesses that have cover for pandemics and government-ordered closure should be covered by the announcements that the government has made on the subject of social distancing.

However it advised that insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Jurisdiction

UK-wide

Eligibility Criteria

N/A

How to apply

N/A

Further information

Further details of the scheme can be found at the Association of British Insurers

Companies House

Policy

Companies House has issued guidance that allows businesses to apply for an extension to the deadline for submitting their accounts, should a company be affected by COVID-19.

Jurisdiction

UK-wide

Eligibility Criteria

Appeals are treated on a case-by-case basis. Appeals based upon COVID-19 will be considered under these policies, and will be considered under policies already in place to deal with appeals based upon unforeseen poor health.

How to apply

To apply, businesses need to provide the following information:

  • company number;.
  • email address;
  • any relevant supporting documents

Further information

Further details of the scheme can be found at Companies House

Mortgage Holidays

Policy

The chancellor has announced an agreement with mortgage lenders that they will offer a three month mortgage holiday for borrowers in financial difficulty due to coronavirus.

Jurisdiction

UK-wide

Eligibility Criteria

A payment holiday will be available to all customers who are up to date on their mortgage payments.

A payment holiday will also be available to all Buy-to-Let landlords whose tenants have lost income because of the impact of COVID-19. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time.

Customers will still owe the money where a payment holiday has been granted and interest will still accrue.

How to apply

Customers should contact their mortgage lender for more information.

Further information

Further details of the scheme can be found at the Treasury

Further details of the scheme can also be found at UK Finance

Coronavirus job retention scheme

Policy

Under this scheme all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during the crisis.

The government will pay up to 80% of a worker’s wages, up to a total of £2,500 per worker each month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

These payments will be backdated to 1 March and will be initially open for three months, to be extended if necessary.

HMRC are working to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

Jurisdiction

UK-wide

Eligibility Criteria

All UK businesses.

How to apply

Business must designate affected employees as ‘furloughed workers,’ and notify its employees of this change.

Business should be aware that changing the status of employees' remains subject to existing employment law.

Businesses should submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

Further information

Further details of the scheme can be found at the Department of Business, Energy and Industrial Strategy and at the Business Support website

Deferred VAT payments

Policy

Businesses will have their VAT payments deferred for three months, and self-employed Income Tax payments will be deferred from July 2020 to January 2021.

Jurisdiction

UK-wide

Eligibility Criteria

All UK businesses.

How to apply

No application necessary, this is an automatic scheme.

Further information

Further details of the scheme can be found at the Department for Business, Energy and Industrial Strategy

Term Funding Scheme with additional incentives for SMEs (TFSME)

Policy

The TFSME will offer four-year funding of at least 10% of participants’ stock of real economy lending at interest rates at, or very close to, Bank Rate.

The Scheme is intended to:

  • help ensure that businesses and households benefit from the MPC’s actions;
  • provide participants with a cost-effective source of funding to support additional lending to the real economy;
  • incentivise banks to provide credit to businesses and households to bridge through a period of economic disruption;
  • provide additional incentives for banks to support lending to SMEs.

Jurisdiction

UK-wide

Eligibility Criteria

Banks and building societies that are participants in the Bank of England’s Sterling Monetary Framework (SMF) and that are signed up to access the Discount Window Facility (DWF).

SMF participants that are not already signed up to the DWF can apply for access alongside applying to use the TFSME.

Institutions that are not currently SMF participants can apply to join, subject to the Bank of England's usual eligibility criteria.

How to apply

Applications can be made from mid-March 2020 when further documentation will be made available.

Further information

Further details of the scheme can be found at the Bank of England

Self Employed Income Support Scheme

Policy

The scheme provides those eligible with a cash grant worth 80% of their average monthly trading profit over the last three years.

The income support scheme is being designed by HMRC from scratch, will cover the three months to May.

Grants will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.

To qualify, more than half of their income in these periods must come from self-employment.

Jurisdiction

UK-wide

Eligibility Criteria

To qualify workers must:

Be self-employed or a member of partnership;

  • Have lost trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed and those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so:
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021

How to apply

HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.

This will include eligible workers with:

  • A trading profit of less than £50,000 in 2018-19
  • An average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.

Further information

Further details of the scheme can be found at HMRC and at the Business Support website