Small business financial support from the Government

Last updated: 27.3.20 pm

HBXL have been helping building firms across the UK for 20 years and it’s never been more important to lend our support in these difficult times. So we hope you find this summary of small business financial support from the Government useful.

The Chancellor’s package of measures

Below you will find the detail on the following:

  • New Self-Employed Income Support Scheme Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years
  • Coronavirus Job Retention Scheme (allows you to temporarily lay off staff at 80% of their normal salary up to £2500/month per employee)
  • deferring of VAT payments
  • Statutory Sick Pay relief package for small and medium sized businesses
  • Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • the HMRC Time To Pay Scheme for PAYE/VAT etc.
  • Deferment of Income Tax Self-Assessment payment until 31.1.21.

New Self-Employed Income Support Scheme

Those eligible will receive a cash grant worth 80% of their average monthly trading profit over the last three years. The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.

To qualify, more than half of their income in these periods must come from self-employment. Only those who are already in self-employment and meet the above conditions will be eligible to apply.

The income support scheme applies to those not working and those who would otherwise have been laid off. The grant will cover three months; March, April and May, and will be paid in a single lump sum instalment covering all 3 months, and will start to be paid at the beginning of June.

Individuals should not contact HMRC now. HMRC will use existing information to identify eligible taxpayers and contact them directly, once the scheme is operational, with an invitation to complete the application. 

Job Retention Scheme

Essentially, the government will subsidise 80% of the cost of so-called “furloughed employees” for the duration of the crisis up to a maximum of £2,500/month per employee – gross.

Furlough is an expression more common in the US than the UK and means laying-off staff because of a shortage of work.

VAT Deferment

The other welcome announcement on Friday was the deferment of VAT liabilities falling due up to 30 June until the end of the financial year i.e. 5 April 2021. It’s worth noting that it is a deferment not a writing-off but again it could be a useful improvement to the working capital of many businesses. Unfortunately, it doesn’t assist businesses that pay little or no VAT due to the nature of their trade. Whilst the government hasn’t made any announcement it’s unlikely they will take a firm stance in relation to a delayed PAYE payment so this could be an area to explore bearing in mind possible penalties.

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility – All UK businesses are eligible.

How to access the scheme – 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 (April 2021) to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Statutory Sick Pay

We have mentioned previously the government meeting the cost of Statutory Sick Pay (SSP) for 2 weeks and the extension of Time to Pay arrangements. Whether these provisions are enough remains to be seen but it is clearly the government’s intention that businesses should not fail as a result of the Corona Virus Outbreak alone.

  • this refund will cover up to 2 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
  • 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. 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
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Small business rates relief

An increase from the proposed £3,000 cash grant to 700,000 small businesses (those eligible for Small Business Rate Relief) to a £10,000 cash grant. We think this will also apply for those eligible for rural rates relief.

You are eligible if:

  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies property

How to access the scheme – You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Guidance for local authorities on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Find your local authority. Find your local authority

Coronavirus Business Interruption Loan Scheme

The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

The government will also make a 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.

The government will provide 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. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

There are 40 accredited lenders able to offer the scheme, including all the major banks. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan.

Time to PAY scheme

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.

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

Income Tax Self-Assessment

Payments due on the 31 July 2020 may be deferred until 31 January 2021. You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment.

The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until January 2021.


Useful links

The government’s current publication on Covid-19 support

Advice from Federation of Small Businesses

Coronavirus Business Interruption Loan Scheme lenders

Our own advice on making the most of your time at a computer is here