Businesses and workers have faced considerable impacts since the start of the coronavirus pandemic, and the Welsh and UK governments have developed a range of measures to assist them.
This article outlines the support currently available for businesses from the Welsh and UK governments.
Welsh Government support
Business rate relief
The Welsh Government has announced that it will continue to provide 100% business rate relief for retail, leisure and hospitality businesses with rateable values up to £500,000 for the whole of 2021-22.It will also provide leisure and hospitality businesses with a rateable value of over £500,000 with 100% relief.
The Welsh Government has published guidance on how the relief operate, and this states that local authorities will operate the scheme and have discretion around how they maximise take-up and minimise the administrative burden for businesses.
Employer incentives for apprenticeships
The Welsh Government has launched a number of incentives to support employers to recruit apprentices. These apply from 1 August 2020 until 30 September 2021, and include:
- £3,000 for each new apprentice aged under 25 recruited, where the employment contract is for at least 30 hours per week;
- £1,500 for each new apprentice aged under 25 recruited, where the employment contract is for less than 30 hours per week;
- £2,000 for each new apprentice aged 25 and over recruited, where the employment contract is for at least 30 hours per week; and
- £1,000 for each new apprentice aged 25 and over recruited, where the employment contract is for less than 30 hours per week
These incentives apply to apprenticeships delivered at levels 2-5, and payments will be limited to a maximum of 10 apprentices per employer.
For apprentices of all ages who are made redundant between 23 March 2020 and 30 September 2021, the following incentives apply to employers who re-employ the apprentice to allow them to complete their training:
- £2,600 where the employment contract is for at least 30 hours per week; and
- £1,300 where the employment contract is for less than 30 hours per week
The apprentice must continue to follow the same Apprenticeship Framework Pathway, and the incentives apply to apprenticeships delivered at levels 2-5.
In addition to these payments, businesses who employ a disabled person as an apprentice can claim an extra £1,500 for each new apprentice recruited. These payments apply to apprentices of all ages, and are in addition to all of the incentives for apprentices aged 16-24, 25+ and those who have been made redundant. The incentives apply to apprenticeships delivered at Levels 2-5.
The Welsh Government has also launched an Apprenticeship Vacancy Service, where employers can advertise any future apprenticeship opportunities.
Town Centre Entrepreneurship Fund
The Welsh Government is piloting the Town Centre Entrepreneurship Fund in Bangor, Colwyn Bay, Rhyl and Wrexham to support entrepreneurs and businesses who are looking to start and grow a business. New businesses and micro-businesses who have been trading for less than two years may be eligible for this funding.
There are two elements of support available, grants and loans:
- Grants of between £2,500 and £10,000 are available through Business Wales to support entrepreneurs and businesses with revenue costs associated with starting up or relocating to a town centre. Businesses need to submit an expression of interest form by 20 June 2022. Business Wales has published details of eligibility criteria and guidance notes on the fund.
- The Development Bank of Wales is providing start-up loans of between £1,000 and £50,000. These can be used as match funding for the grant outlined above. Repayment terms are between one and ten years, and if a grant is required then a business must apply to Business Wales before getting in touch with the Development Bank of Wales.
UK Government support
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (furlough) allows employers to ‘furlough’ (i.e. put on a leave of absence) employees that cannot work for a number of reasons including because the business has been forced to close, or because there is no work to do, as a result of coronavirus. It has been extended across the UK until 30 September 2021.
The scheme supports workers who were on the payroll on or before 2 March 2021, and allows firms to furlough workers for at least 7 consecutive calendar days. Flexible furloughing, where the employee works some of their hours, is permitted, as is full-time furloughing.
- In September 2021, the UK Government will pay 60% of wages up to a maximum of £1,875 per month, the employer will pay 20% of wages up to £625, and will continue to pay pension contributions and employer National Insurance Contributions.
Claims can be made online. Claims should be made by day 14 of the following month.
Self-Employment Income Support Scheme
The UK Government’s Self-Employment Income Support Scheme allows self-employed people and members of partnerships whose income has been negatively affected by coronavirus to claim a taxable cash grant.
The fifth and final grant through the scheme covers May to September 2021, and is open for applications until 30 September 2021. It is targeted at self-employed people and members of partnerships whose turnover reduced during 2020-21 as a result of the pandemic.
The grant is calculated using trading profits from the 2019-20 Self-Assessment tax return, which must have been submitted by 2 March 2021. It is open to people whose annual trading profits were less than £50,000 in 2019-20, and who traded in both 2019-20 and 2020-21 and intend to continue trading in 2021-22. If people are not eligible for support based on their 2019-20 trading profits, then profits from 2016-17 to 2019-20 will be considered, and they will receive support if average annual trading profits over this period were less than £50,000 a year.
Eligible applicants who were trading before 2019-20 and have experienced a reduction in turnover of 30% or more during 2020-21 will be able to receive a grant of 80% of 3 months average trading profits, up to a maximum of £7,500. Eligible applicants who have experienced a reduction in turnover of less than 30% during 2020-21 will be able to receive a grant of 30% of 3 months average trading profits, up to a maximum of £2,850.
Eligible applicants who were not trading before 2019-20 will not need to provide any turnover figures. They will be able to receive a grant of 80% of 3 months average trading profits, up to a maximum of £7,500.
Guidance is available on the HMRC website.
Before making a claim, self-employed people should use HMRC’s eligibility checker to see if they are able to claim for this support.
The Kickstart Scheme provides funding to create new job placements for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment. Employers can apply for funding to cover:
- 100% of the National Minimum Wage or the National Living Wage, depending on the age of the participant, for 25 hours per week for a total of 6 months;
- associated employer National Insurance contributions; and
- employer minimum automatic enrolment workplace pension scheme contributions.
Additional funding of £1,500 per job placement is provided to support young people to build their experience and help them move into sustained employment after they have completed their Kickstart funded job, along with £360 per job placement to cover admin costs.
Employers can spread the start date of the job placements up until the end of December 2021, and funding will run until 30 June 2022.
The Department of Work and Pensions will refer suitable candidates to job placements, and then the employer will interview and recruit to the roles.
A Kickstart Scheme application must be for a minimum of 30 job placements. If a single employer cannot provide this many job placements, they can find an existing Kickstart gateway, such as a local authority, charity or trade body who will apply on behalf of the employer.
The scheme opened for employer applications on 2 September 2020. There is guidance available for employers who want to create 30+ jobs; employers who want to create up to 29 jobs; for gateways who help smaller employers apply for the scheme; and for young people.
Recovery Loan Scheme
That the Recovery Loan Scheme was introduced from 6 April 2021, and will run until the end of 2021. It replaced Bounce Back Loans, the Coronavirus Business Interruption Loans Scheme, and the Coronavirus Large Business Interruption Loans Scheme.
The Recovery Loan Scheme provides loans of up to £10 million for businesses of all sizes, and will guarantee 80% of the finance to the lender. Two types of finance are available:
- Term loans and overdrafts of between £25,001 and £10 million per business are available. Overdrafts are available for up to 3 years, while term loans are available for up to 6 years.
- Invoice finance and asset finance of between £1,000 and £10 million per business are available. Invoice finance is available for up to 3 years, while asset finance is available for up to 6 years.
No personal guarantees are taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
UK-based businesses that have received support under the existing COVID-19 guaranteed loan schemes are eligible to access finance under this scheme, if they meet all other eligibility criteria. Firms need to show that their business has been impacted by the pandemic, is viable or would be viable were it not for the pandemic, and is not in collective insolvency proceedings.
The Welsh and UK governments have also set out details of a number of other measures to support businesses through this period. These include:
- SMEs can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to coronavirus via an online service. This refund covers up to 2 weeks’ SSP per eligible employee who has been off work because of coronavirus, and will be open to businesses who employed less than 250 people as at 28 February 2020. Employers can claim from the first qualifying day their employee is off work, and must have paid the employee’s sick pay before they claim it back.
- The Welsh Government has announced that commercial tenants who cannot pay their rent will be protected from eviction until 25 March 2022. While commercial tenants will still be liable for the rent, the measures introduced will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 25 March 2022. The Welsh Government is also considering what measures will need to be put in place once this moratorium ends.
- The Corporate Insolvency and Governance Act 2020 temporarily suspends parts of insolvency law through introducing a moratorium of 20 business days for business directors to consider rescue options through filing for or applying to court for a moratorium. The moratorium can be extended for a further 20 business days without creditor consent, or for a longer period with creditor consent, by filing relevant statements with the court. The UK Government’s guidance sets out more details.
- The Chancellor announced that the UK Government would extend the temporary 5% rate of VAT for hospitality and tourism until 30 September 2021. A 12.5% rate of VAT will then apply for a further six months, until 31 March 2022. The UK Government has published general guidance on how the temporary reduction will operate, as well as more detailed documents covering hospitality, holiday accommodation and attractions.
- The Chancellor gave businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022.
- The UK Government has given the self-employed and other taxpayers with income tax liabilities of up to £30,000 the option of using HM Revenue and Customs’ Time to Pay facility to agree a plan to pay taxes due in January 2021 over an additional 12 months. This service can be used within 60 days of the payment deadline.
- Businesses who are concerned they may not be able to pay their next tax bill may be eligible to receive support via HM Revenue and Customs’ Time to Pay helpline 0800 024 1222. Arrangements are agreed on a case-by-case basis depending on individual circumstances.
Article by Gareth Thomas, Senedd Research, Welsh Parliament