Coronavirus

COVID-19: What support is available to businesses from the government?

The Coronavirus (COVID-19) pandemic has had an enormous impact on everybody in the UK. Whether you’re self-employed, a business owner, employee, contractor, or freelancer, you’ll be facing a whole range of personal and business challenges.

The government has announced unprecedented support to protect the UK economy as well as everyone’s health. We’ve put together this COVID-19 Hub to try to make it easier to navigate the constantly changing support available.

The situation is evolving rapidly and it can be hard to keep on top of everything, so we’ve arranged the support available into three main areas. The government have also published an online Coronavirus Business Support Finder tool.

Support for self-employed people

The Chancellor announced a range of measures to support the self-employed. We’ve published our Crunch guide to making a claim on the Self-Employed Income Support Scheme - SEISS, which explains the taxable grants available for many sole traders and partnerships.

Applications for the first three grants are now closed but if you’re eligible you can apply for the fourth grant, covering the period 1st February to 30th April 2021, of up to £7,500 or 80% of average monthly trading profits.

A fifth grant will then cover the period from May to September. The fourth grant will be the first opportunity for over 600,000 recent self-starters to make a claim, as 2019/20 tax returns will be included in the grant calculation.

Other, previously announced support includes deferral of Income Tax payments on account and VAT, grants for businesses that have business premises, changes in the eligibility criteria for Universal Credit and Employment Support Allowance, Coronavirus Recovery Loan Schemes as well as support for renters and delays to mortgage payments. See our article:

How is the government supporting the UK’s self-employed through COVID-19?

Support for businesses

There are a range of measures intended to support businesses, including the Coronavirus Job Retention Scheme also known as the furlough scheme.

The CJRS has changed a number of times. The latest version of the scheme is currently open for claim periods from 1st November 2020, it will remain open for claims until at least 30th September 2021. Employees can be furloughed full-time or part-time with employers paying for any hours worked.

Employers are able to make claims under the new rules if they furlough eligible employees after 1st November, whether they were previously furloughed or not. This is a major change to the CJRS.

If employees were on an employer’s payroll on 23rd September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for them afterwards, they can also qualify for the extended CJRS scheme from 1st November 2020 if they are re-employed. Neither the employer nor the employee needs to have previously used the CJRS.

The scheme is also available for limited company directors who pay themselves a regular salary through payroll. We’ve written a CJRS guide for employers and step-by-step walkthrough of the HMRC CJRS portal that explains how to make a claim.

The government has also introduced other measures including: Deferring VAT payments due between 20th March and 30th June 2020, a new round of grants based on Business Rates relief, a three-month extension on filing Company Accounts, Coronavirus Recovery Loan Schemes, as well as grant funding for many smaller businesses. We explain these further in our article:

COVID-19 business support.

Support for employees

Enhanced Statutory Sick Pay has been announced for those who are ill or self-isolating. It’s hoped that the recently extended Coronavirus Job Retention Scheme - CJRS will mean that job losses are minimised as the government will cover a percentage of employees wages to preserve jobs.

The CJRS scheme is also available to limited company directors who are paid a PAYE salary through their limited company, though it does not cover any income from dividends. There has also been support announced for homeowners and renters.

Read more about support if you’re an employee.

Your COVID-19 Questions answered

What support is available for limited company directors?

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There are three main government schemes: the Coronavirus Job Retention Scheme (CJRS), the new Job Support Scheme and the Self-employment Income Support Scheme (SEISS). The SEISS is not available to directors of limited companies.

Your business may be able to access a loan through either the Coronavirus Bounce Back Loan Scheme or the Coronavirus Business Interruption Loan Scheme.

HMRC has said owner-managed businesses can make a claim from the Coronavirus Job Retention Scheme (CJRS), effectively they will be furloughing themselves. The employee (director) cannot undertake any income-generating work for their business but can continue to run the business from a statutory perspective, for example preparing its accounts and returns.

The original CJRS scheme covered 70% of the PAYE salary of a limited company director in September up to a maximum of £2,187.50, or 60% of wages up to a maximum of £1,875 in October, but does not cover any dividends that may usually be taken.

The original scheme covered claims for wages (salary) from 1st March 2020 until 31st October 2020. From August onwards some furloughed employees were able to go back to work part-time, the government expected employers to share an increasing percentage of the costs of the scheme from August onwards. Full details are in our guide for employers to help you submit a CJRS claim along with a step-by-step walkthrough of the HMRC CJRS portal. Coronavirus Job Retention Scheme - Guide for employers.

HMRC’s online portal to accept claims opened on Monday 20th April 2020. HMRC has also published an online calculator to help you with your claim.

The new scheme for the second lockdown period in England will again provide grants to cover up to 80% of employees’ wages for hours not worked due to the business being required to close. Businesses will only need to cover any salary payments for hours worked and the Employer’s National Insurance Contributions and Pension Auto-Enrolment Contributions based on an employee’s normal wage. Flexible and part-time furlough are also available. Full details are in our CJRS guide.

The government have also published an online Coronavirus Business Support Finder tool.

How does the Self Employed Income Support Scheme (SEISS) work?

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The SEISS is aimed at self-employed workers such as sole traders. There was an initial grant of up to £7,500 or 80% of average monthly trading profits, capped at £7,500 which closed on 13th July 2020. The second grant of 70% of average monthly trading profits up to £6,750 closed to claims on 19th October.

There will be a third grant covering November 2020 to January 2021 of up to £5,160 or 55% of average monthly trading profits and a fourth and final grant covering February 2021 to April 2021 with the amount yet to be announced by the government.

Claims are made using an online system

There’s an online checker now available which lets taxpayers check their eligibility, as well as make a claim. You will need your unique taxpayer reference (UTR) and National Insurance number and should ensure these details are up-to-date in your government gateway account.

Please note, tax agents or advisors such as Crunch cannot make a claim on your behalf. We have prepared this guide to the SEISS to help you understand whether you may be eligible for a payment from the scheme and to help you through the application process based on guidance published by HMRC.

How does the Coronavirus Bounce Back Loan Scheme work?

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We have information available in our Crunch Guide to the Coronavirus Bounce Back Loan Scheme article.

On 27th April the Chancellor announced a new Coronavirus Bounce Back Loan Scheme. The scheme is targeted at small and medium-sized UK Businesses who have been negatively affected by the coronavirus pandemic. The scheme should make it easier for smaller businesses to access a loan of between £2,000 and £50,000 to be paid back over up to 10 years.

The scheme is open to Sole Traders and Limited Companies who will need to apply for the loan themselves. Crunch cannot apply for a loan on a business’s behalf.

The Government will guarantee 100% of the loans and there will be no fees or interest in the first 12 months and have an interest rate of just 2.5% for the remaining period of the loan. The loans should be easier to access for many smaller businesses who were struggling to get a loan under the Coronavirus Business Interruption Loan Scheme (CBILS).

Businesses cannot apply if they are already claiming under CBILS, but up to 4th November 2020, they can transfer CBILS loans of up to £50,000 to this new scheme if they would prefer. If a business was classed as an “undertaking in difficulty” as of 31st December 2019 then they will not be eligible for a Bounce Back Loan.

How can I make a claim on CJRS for myself as a director or my employees?

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HMRC launched its online claim service and portal for the Coronavirus Job Retention Scheme on 20th April 2020. At launch, it was planned to run for four months from 1st March to 30th June 2020. On 12th May the Chancellor Rishi Sunak announced a four-month extension to the 31st October 2020.

The original scheme was closed to new entrants on 31st July 2020, though employees who were previously furloughed can still be furloughed again.

On 31st October, the government announced a second lockdown for England and reopened the CJRS scheme for new claims for any eligible employee or company directors. The new scheme will cover up to 80% of employees’ wages for hours not worked if the business is required to close. Part-time and flexible furloughs are available. Businesses must pay for any hours worked, and also cover National Insurance Contributions and Pension Auto-Enrolment contributions based on the employee’s normal salary.

We’ve published a CJRS Guide for employers that explains the scheme and how to make a claim.

Please note, the only way to make a claim is online using HMRC’s portal. To avoid delays we strongly recommend you submit claims yourself.

We recommend you refer to HMRC’s guidance on how to work out the correct percentage of your employees' wages to claim and its online calculator to help calculate your claim amount.

We recommend you make a claim every month the scheme is operational. The minimum furlough period is three weeks and you can only make one claim every three weeks.

HMRC has published a step by step guide which we have used as part of our Coronavirus Job Retention Scheme - Guide for employers. We also have a step-by-step walkthrough of the HMRC CJRS portal in our article.

The service is simple to use and any support you need is available on GOV.UK - this includes help with calculating the amount you can claim (see above links).

The service is designed to be 'self-serve’ and HMRC has said claims will be paid within six working days. If you need Crunch to submit your claim, we won’t be able to submit a claim as quickly as you can yourself.

If you would like to Crunch to make a submission on your behalf, we are able to do this. While you will need to pay for the service, we can assure you our fees are among the lowest across UK accountancy Practices. Contact your client managers for more information about the service.

To avoid delays, we strongly recommend you submit your claims yourself.

HMRC cannot answer any queries from your employees – they will need to raise these with you, as their employer, directly.

Our CJRS guide for employers provides all the information you will need and instructions on how to make a claim. Please note, the guide will be updated as more information is published by HMRC.

I have been taking PAYE salary as a director and want to know if my business can place me on furlough?

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HMRC have confirmed that the Coronavirus Job Retention Scheme (CJRS) does cover ‘office holders’ including salaried limited company directors and salaried individuals who are directors of their own personal service company. It covers up to 60% of wages up to a maximum of £1,875 per month in October there is no cover for any income from dividends. This will increase to up to 80% of non-worked hours capped at £2,500 in November under the new CJRS rules.

We have produced a Coronavirus Job Retention Scheme Guide For Employers with detailed information on how to access the scheme, calculate and submit a claim, this includes a screen-by-screen walkthrough of the steps involved in using the HMRC CJRS system.

I only pay myself a tax-efficient director salary and the rest of my income is in dividends, what am I entitled to?

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Please see our answer to the questions above. Neither the Coronavirus Job Retention Scheme, the Job Support Scheme nor the Self-employment Income Support Scheme (SEISS), cover income from dividends.

The government have also published an online Coronavirus Business Support Finder tool to help you easily see all the grants, loans and other support available.

What grants and protection do I have as a Director and Employee?

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Businesses may be entitled to access the Business Interruption Loan Scheme or the Coronavirus Bounce Back Loans Scheme which may be easier to access for smaller businesses.

Limited company directors who are paid a PAYE salary are able to access the Coronavirus Job Retention Scheme. We've written a guide for employers making a claim on the CJRS scheme. They will also be eligible for the new Job Support scheme once it is launched.

There are also new grants available for business with business premises from November 2020.

We have a table with details of the other support available in our Coronavirus Support Knowledge article and you can also use the government’s online Coronavirus Business Support Finder tool.

What should I do if I have employees?

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If you are not able to keep paying them you should be able to get support from the government through the Coronavirus Job Retention Scheme (CJRS), which will mean that if you make them a ‘furloughed employee’ the government will cover up to 80% of their salary up to a maximum of £2,500 per month.

The extended Coronavirus Job Retention Scheme (CJRS) service launched on 5th November 2020. We've written a CJRS guide for employers that explains how to get the information you need to make a claim.

The Job Support Scheme will open to offer support for wages once the CJRS closes.

What should I do about my VAT bill?

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The government has announced that VAT Bills are being deferred. You should continue to file your VAT return, but you do not need to make a payment. If you’re a Crunch client we have further information on how to manage the new VAT process in your Crunch account.

Is there a deferral period for Income Tax payments?

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Yes, the government delayed Payment on Account Income Tax payments (due on the 31st July 2020 for most people who complete a Self Assessment) until 31st January 2021. On 24th September the Chancellor announced that businesses could pay any outstanding tax bill in interest-free monthly instalments in the 12 month period after 31st January 2021 see our article on Self Assessment deadlines for more information on the ‘Time to Pay’ arrangements.

Can we defer Corporation Tax payments?

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There’s been no specific announcement from the government relating to the deferral of Corporation Tax payments. However, you may be able to enter into a ‘Time to Pay’ agreement with HMRC. You can find out more about this service on the government website.

What support is there for sole traders?

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The government announced a Self-employment Income Support Scheme (SEISS), which means that sole traders who have submitted at least their Self Assessment for the tax year 2018/19, should receive support from the government. The support is in the form of taxable grants based on their trading profits where these profits are less than £50,000 in 2018/19 or less than £50,000 averaged over the last three tax years.

Applications for the first grant closed on 13th July 2020. The second grant covering 70% of your average monthly trading profits, capped at £6,750 closed to claims until 19th October 2020.

There will be a third grant covering November 2020 to January 2021 of up to £5,160 or 55% of average monthly trading profits and a fourth and final grant covering February to April with the amount yet to be confirmed by the government.

We've published our Crunch guide to making a claim on the Self-Employed Income Support Scheme, this includes information on how to check if you're eligible.

You may also be entitled to access the Business Interruption Loan Scheme or the Coronavirus Bounce Back Loan Scheme which may be easier to access for smaller businesses.

Is there any support for new sole traders?

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The government has said that the Self-employment Income Support Scheme (SEISS) will not cover people who have not yet submitted their first Self Assessment. If you’re not eligible for support under SEISS, there may still be other support available to you such as Universal Credit and other benefits. You may also be eligible for help with rent or mortgage payments, and possibly support for your Council Tax.

You may be able to apply for the Coronavirus Bounce Back Loan Scheme – you can use the government’s Business Support Finder to check what support is available to you.

If I have a contract postponed or cancelled, what support is there?

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If you’re a limited company director, you can access the Coronavirus Job Retention Scheme (CJRS), or from December the Job Support Scheme however, the support is restricted to just the PAYE salary of directors of limited companies and not any dividends they have taken.

We’ve written a guide to making a claim on the Coronavirus Job Retention Scheme.

If possible, it would be best to try to find a new contract.

Your Business may also be entitled to access the Business Interruption Loan Scheme if you believe your business meets the government’s criteria. The Coronavirus Bounce Back Loans Scheme may be easier to access for smaller businesses or sole traders.

You can use the government’s Business Support Finder to check what support is available to you.

If you’re an agency worker or work through an umbrella company you can be furloughed - these workers should contact the agency (or umbrella company) who should be able to help.

What business expenses can I claim whilst working from home? Are items like food and additional equipment still ok?

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The government has not announced any changes to allowable expenses.

It’s unlikely that food will be allowable while you are working from home.

There are a number of items you are able to claim - we have a Knowledge article on “What you can claim when working from home?”.

Is there any compensation scheme for employees that cannot come to work because of travel restrictions, flight cancellations, or not being able to travel?

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There’s nothing specifically mentioned about overseas flight cancellations.

If an employee cannot travel to work because they are ill or self-isolating then the government will cover Statutory Sick Pay for employees for up to two weeks, starting on the first day of sickness.

If you have employees who are unable to work due to the COVID-19 crisis, you may be able to put them ‘on furlough’ and have part of their wages covered by the government through the Coronavirus Job Retention Scheme.

We’ve written a guide to making a claim on the Coronavirus Job Retention Scheme.

Can someone currently under private or public IR35 be furloughed? Who would be doing the furloughing, and what would the payment be based on?

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There is an important distinction between public sector and private sector IR35.

For public sector IR35, the word ‘furlough’ is not used. If contractors are working in the public sector on an assignment which is inside IR35, the end-client is responsible for employment taxes and the following applies:

  • If contractors cannot attend work because they need to arrange childcare while schools are closed, they are entitled to be paid up to 7 working days whilst they make arrangements for childcare.
  • For private sector IR35, different rules apply. It is the Personal Service Company (PSC) which remains responsible for assessing the IR35 status of an assignment and employment taxes. It will be for the PSC to furlough their own director/worker on the basis as agreed for sole directors at up to 80% of the salary taken from their PSC.

Is there any support for agency workers or contractors working through an Umbrella Company?

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The government has confirmed that if you’re an agency worker or work through an umbrella company you are also able to be furloughed on the Coronavirus Job Retention Scheme - these workers should contact the agency (or umbrella company) who should be able to help.

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