The contents of the Budget 2021, announced by the Chancellor earlier this month, will have brought positives and negatives for everyone. One strong theme, though, was the continuation of emergency support measures for businesses during the pandemic, with some extended, others tweaked, and further new ones added.
In light of all these changes, we thought we would produce a short guide to the support currently available to help businesses through the pandemic and into the recovery.
Furlough (Coronavirus Job Retention Scheme)
The CJRS has been extended until 30 September 2021. Currently under this scheme the government will pay 80% of furloughed employees’ wages (up to a maximum of £2500 per month per employee) whilst employers must pay the employees’ National Insurance and pension contributions.
In July 2021, employers will need to pay 10% of the wages, and in August and September that will rise to 20%.
Self-Employed Income Support (SEIS)
As with the CJRS, it was announced in the Budget that the SEIS scheme has been extended until September 2021. Under this scheme, the self-employed whose trading profits have been significantly impacted by the pandemic can claim grants worth up to 80% of 3 months of their average trading profits, capped at £7,500 per grant.
The fourth of these grants, announced in the budget, covers the period February to April 2021, with applications open from late April. The fifth grant will cover May to September 2021 and take into account the actual reduction in turnover, with both the standard 80% of 3 months’ average trading profits grant & a smaller 30% grant available depending on the level of turnover reduction.
The fourth grant marks the first time the newly self-employed can be eligible, with the loans available to self-employed individuals or members of a partnership who traded in both the tax years 2019-2020 (and submitted a tax return by 2 March 2021) and 2020-2021, and either:
- are currently trading but are impacted by reduced demand due to coronavirus
or
- have been trading but are temporarily unable to do so due to coronavirus.
Trading profits must also be no greater than £50,000 and at least equal to non-trading income to be eligible.
Business Rates Holiday
During the 2020-2021 tax year, rateable businesses in the retail, hospitality and leisure sectors will not have to pay any business rates. Local councils will apply the discount automatically and businesses are eligible if their property is a:
- shop
- restaurant, café, bar or pub
- cinema or live music venue
- assembly or leisure property
- hospitality property
These businesses may also be eligible for a business rates retail discount in the tax year 2021-2022. With this discount, eligible businesses could get a 100% rates reduction for the first 3 months (1 April to 30 June 2021) and up to a 66% reduction for the remaining 9 months (1 July 2021 to 31 March 2022).
Coronavirus Statutory Sick Pay Rebate Scheme
This scheme allows employers who had fewer than 250 PAYE employees on 28 February 2020 to claim back up to 2 weeks of Statutory Sick Pay (SSP) paid out to an employee who was unable to work due to coronavirus. The claim can be made online either by the business or an agent who is authorised to do PAYE online for them.
Reduced VAT Rate
The reduced rate of 5% VAT introduced last year has been extended until 30 September 2021. It will then rise to 12.5% until it returns to the standard rate of 20% in April 2022. This reduced VAT rate applies to certain supplies relating to hospitality, hotel & holiday accommodation, and admissions to certain attractions.
Deferred VAT Payments
Businesses with outstanding VAT payments deferred from 20 March – 30 June 2020 can now pay these in full or join the VAT deferral new payments scheme, which allows them to pay the deferred VAT in equal instalments interest free, and choose the number of instalments (ranging from 2 to 11 depending on the date of joining the scheme).
Increased Employer Apprentice Incentive
In light of the pandemic, the government has temporarily added additional financial incentives for hiring a new apprentice. Businesses will receive:
- £2,000 for new apprentices aged 16-24 hired between 1 August 2020 and 31 March 2021 (apply before 31 May 2021)
- £1,500 for new apprentices aged 25+ hired between 1 August 2020 and 31 March 2021 (apply before 31 May 2021)
- £3,000 for new apprentices of any age hired between 1 April and 30 September 2021 (applications open from 1 June 2021)
Restart Grant
A new fund announced in the Budget, these are one-off grants available from 1 April 2021 to help businesses in the non-essential retail, hospitality, leisure, personal care and accommodation sectors to reopen safely as we emerge from lockdown. Eligible businesses can receive a grant up to £6,000 from their local council if they are in the non-essential retail sector, or up to £18,000 in the hospitality, accommodation, leisure, personal care and gym sectors (calculated on the rateable value of the business).
This grant will replace the various Local Restrictions Support Grants.
Local Restrictions Support Grants
Cash grants from local councils for businesses either severely impacted or forced to close due to Tier 2, 3 or 4 local restrictions, or forced to close due to national lockdowns. Eligible businesses could receive a cash grant of up to £1,050 for each 14 day period under the local restrictions depending on their property’s rateable value.
For the national lockdown from 5 November to 2 December 2020, cash grants of up to £3,000 are available for eligible businesses, again dependent on rateable value, with the grant covering the full 28-day period of the lockdown.
There are two payment cycles for the current national lockdown (from 5 January 2021 onwards). The first covers a 42-day period from 5 January to 15 February 2021, with cash grants of up to £4,500 available, and the second a 44-day period from 16 February to 31 March 2021, with cash grants of up to £4,714.
The application deadline for these grants is 31 March 2021, except for the second payment cycle of the national lockdown LRSG, which has an application deadline of 31 May 2021.
Closed Businesses Lockdown Payment (CBLP)
The CBLP is a cash grant of up to £9,000 (calculated based on the property’s rateable value on 5 January 2021). available from local councils to support businesses required to close during the national lockdown beginning on 5 January 2021. Businesses eligible for the Local Restrictions Support Grant (Closed) for the national lockdown beginning on 5 January 2021 will also be eligible for the CBLP.
Eligible businesses can get one grant for each non-domestic property and the application deadline is 31 March 2021.
Additional Restrictions Grant (ARG)
The ARG is a fund available to support businesses that are severely impacted by coronavirus restrictions, but that aren’t covered by other grant schemes or where additional funding is needed. It is at local councils’ discretion which businesses they support with this fund and how much they award, but the businesses awarded the grant could include those that don’t pay business rates and those that haven’t received wider grant support.
Bounce Back Loan Scheme (BBLS)
The BBLS allows small- and medium-sized businesses to borrow between £2,000 and £50,000 (up to 25% of their annual turnover). Loans are 100% government-backed, with no fees or interest to pay for the first 12 months.
The BBL is a 6 year loan, but the Pay As You Grow scheme allows businesses to extend the term to 10 years, pause repayments for 6 months, or make interest only repayments for 6 months.
New applications can be made and businesses with existing Bounce Back Loans lower than their maximum amount can request to top up their loan until 31 March 2021.
Coronavirus Business Interruption Loan Scheme (CBILS)
Under this scheme, small- and medium-sized businesses can apply for various finance options up to £5 million. 80% of the finance is government-guaranteed, and the government pays the interest and any fees for the first 12 months. Types of finance available include loans, overdrafts and invoice or asset finance facilities, with some types allowing up to 3 years for repayment and others allowing up to 6 years. The application deadline is 31 March 2021.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
Larger businesses, with annual turnovers exceeding £45 million, can instead take advantage of the CLBIL scheme, allowing them to apply for 80% government-backed finance options up to £200 million (or 25% of annual turnover, whichever is lower). Finance options include loans, revolving credit facilities (including overdrafts), invoice finance, and asset finance, and are available from 3 months to 3 years. The application deadline is 31 March 2021.
COVID-19 Corporate Financing Facility (CCFF)
CCFF is a scheme backed by the Bank of England allowing large companies that make a material contribution to the UK economy and are affected by coronavirus to sell some of their short-term debt. The scheme will run for at least 12 months. Businesses participating in this scheme are ineligible for the CLBILS.
Recovery Loan Scheme
The Recovery Loan Scheme will be brought in to replace the BBLS and CBILS. Under this scheme, businesses of any size can apply for loans and other finance worth up to £10 million, supporting business as we emerge from the pandemic and begin to recover. The finance is 80% government-guaranteed, and the terms are up to either 6 or 3 years, depending on the kind of finance.
The scheme launches on 6 April 2021, and will remain open until 31 December 2021, subject to review. Participation in previous COVID-19 government-guaranteed loan schemes does not preclude businesses from participating in the Recovery Loan Scheme.
Beyond the financial support available, also announced in the Budget 2021 was a new Help to Grow campaign, offering subsidised training, free advice, and software discounts to businesses to help them grow and boost profits. This programme will be available later in the year, with parts available in June and others in the autumn, but businesses can register their interest online now.
The Partners at Elwell Watchorn & Saxton (EWS) are available to provide free initial consultations; whether that is in person, via video conference or by telephone. Please complete our enquiry form and we will be in touch, alternatively, you can find your nearest office here.
EWS is an independent business recovery firm with a collaborative approach and a commitment to finding the right solutions for businesses and individuals with financial challenges. Our reputation and focus on the best quality of service and project delivery means that we are constantly recommended by professionals to work with businesses and individuals that face financial difficulties.