Since the Chancellor’s budget on 11 March, a broad range of measures have been announced to help businesses survive Covid-19, the most notable of which relate to the Covid Job Retention Scheme and the recently expanded Business Interruption Loan Schemes. Some of the measures which are of particular interest to SMEs are highlighted below. The full list of measures can be found on the Government’s business support website.

Covid Job Retention Scheme

The Covid Job Retention Scheme entitles businesses which have furloughed staff (i.e. staff put on temporary leave for at least three weeks instead of making staff redundant) to reclaim 80% of monthly salaries up to £2,500 from HMRC through the HMRC Portal. Our article provides an outline about the scheme. The scheme guidance was most recently updated on 23 April. This confirms that the scheme will also now apply to shielded staff that have been furloughed (i.e. those vulnerable staff who have been told self-isolate for 12 weeks).

Covid Business Interruption Loan Schemes

There are three Business Interruption Loan Schemes: CBILS, CLBILS and the Bounce Back Loan Scheme (BBLS).

CBILS and CLBILS are intended to provide debt funding of up to£5m for SMEs with a group turnover of up to £45m and of up to £25m for businesses with a group turnover of up to £250m. Firms with a turnover of more than £250m can apply for debt funding for up to £50m. Bounce Back Loans are available for up to £50k.

Critically, in CBILS and CLBILS, the business must have been financially viable in the absence of Covid-19, whereas in BBLS business self-certify that they were not ‘businesses in distress’ on 31 December. The loans will have no capital repayments or interest payments in the first 12 months. Loans of up to £250k are available without personal guarantees and for larger loans, where a personal guarantee security is taken, the guarantee must exclude the guarantor’s main residence and will be capped at 20% of the loan balance of the defaulting business.  See our separate articles on CBILS, CLBILS and BBLS.

Business Rates Relief 

Most businesses that are eligible for Small Business Rates Relief, Rural Rates Relief or taper business rates relief with a property of a rateable value of up to £15k will be eligible for a £10k grant. There is no need to apply for the grant.

Most retail, hospitality and leisure businesses occupying properties with rateable values of up to £15k will be eligible for a £10k grant and for those occupying properties with rateable values of £15k - £51k will be eligible for a grant of £25k. In addition such retail, hospitality and leisure businesses will benefit from 100% business rates relief for the 2020/2021 financial year.

Most OFSTED registered early years nurseries and childcare providers in England will be eligible for 100% business rates relief in the 2020/2021 financial year. There is no need to apply.

All these schemes will be administered by the local authority to which your business rates are paid. See the guidance for local authorities for further information about how the schemes will operate.

Subsidising Statutory Sick Pay

SMEs with fewer than 250 employees within the SME’s group on 28 February will be able to claim a rebate of up to 2 weeks of statutory sick pay from HMRC for employees who have been off work because of Covid-19 or who are either self-isolating or shielded employees who cannot work. Details of the online reclaim process are expected to be published around the end of April.

Commercial Property – Protection from eviction and cessation of repossession proceedings

Pursuant to the Coronavirus Act, commercial tenants that are unable to pay rent that falls due between 25 March and at least 30 June are protected from eviction. Landlords cannot exercise rights of re-entry to repossess leased commercial premises during this period, albeit landlord’s rights to enforce breaches are preserved. In addition no enforcement proceedings (including those to evict squatters) can be commenced or continued until at least 25 June. This is intended to provide businesses who lease premises with a financial breathing space and some security regarding their occupation, when it is likely that a large number of them will be unable to meet their rent obligations due to the economic slowdown. See our article for further detail.

VAT Deferral Scheme

Businesses can defer VAT payments due between 20 March and 30 June to help manage cashflow. Interest will not be charged on the deferred amounts but VAT returns still need to be submitted on time. The deferred VAT must be paid by 31 March 2021. VAT payments falling due after 30 June must be paid on time unless a time to pay arrangement is agreed with HMRC (see below). The deferral scheme does not apply to payments due in respect of import VAT and under the VAT MOSS scheme.

HMRC Time to Pay Arrangements

This scheme has existed for a number of years but has been extended to include financial difficulties caused by Covid-19. Businesses in financial distress that have missed a tax payment or which might their next tax payment due to Covid-19 can apply to HMRC (by calling 0800 024 1222) to settle their tax liabilities in instalments. Where HMRC agrees to provide time to pay, the arrangements are tailored to the tax liabilities and circumstances of the business.

For further support and advice relating to the impact of COVID-19 please:

  • contact Richard Hiscoke (Legal Director – Corporate) for general business advice; 
  • contact Kevin Dawson (Senior Associate - Commercial Property) – for commercial property enforcement queries;
  • contact your usual tax advisers for advice on the tax schemes. Alternatively, we can put you in touch with our tax consultant, Anne Fairpo; and
  • view our COVID-19 Advisory Service page.

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