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. We’ve also updated our article on support available through the benefits system.
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 will 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.
Economic Resilience Fund
The Welsh Government has announced a number of schemes to support businesses in the hospitality, tourism, non-essential retail and leisure sectors that are affected by the pre and post-Christmas restrictions, as well as businesses in their supply chain.
ERF Restrictions Business Fund
The new grants announced from the ERF Restrictions Business Fund provide further support for businesses who pay business rates. The following support is available:
- Businesses in the hospitality, leisure, tourism and non-essential retail sectors that are in receipt of Small Business rate relief (SBRR) and have a rateable value of £12,000 or less are eligible for an additional £4,000 payment.
- Hospitality, leisure, tourism and non-essential retail businesses with a rateable value between £12,001 and £500,000 are eligible for a £5,000 payment if impacted by the restrictions.
Businesses that pay business rates and who have received a payment from their local authority since the ‘firebreak’ lockdown in October 2020 do not need to take any action, and payments into their bank accounts will start in March 2021.
Eligible businesses who have not registered can register and apply for the grant via their local authority website – links to all local authorities are provided on the Business Wales website.
Applications for the grant will close at 5pm on 31 March 2021.
ERF Restrictions Discretionary Grant
Local authorities will provide a further payment through the Lockdown Discretionary Grant to hospitality, tourism, leisure, non-essential retail and supply chain businesses that do not pay business rates, and have been materially impacted by the restrictions. This will provide support of up to £2,000 to sub VAT sole traders without a property who see a reduction of more than 40% reduction in turnover as a result of the restrictions such as cleaners providing services to the hospitality industry and taxi drivers. These grants are for businesses who do not pay business rates, have up to 50 employees, and where the business is the main source of the applicant’s income.
Applications will be dealt with by local authorities on a first-come-first-served basis, and eligible businesses should apply for this grant via their local authority website – links to all local authorities are provided on the Business Wales website. The grant will remain open until all funding has been allocated by the local authority, or will close on 30 March 2021.
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.
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 new scheme will support workers who were on the payroll on or before 30 October 2020, and will allow firms to furlough workers for at least 7 consecutive calendar days. Employers will be able to rehire and furlough workers who were employed and on the payroll as of 23 September 2020, but have since been made redundant. Flexible furloughing, where the employee works some of their hours, is permitted, as is full-time furloughing.
- The current arrangements where the UK Government pays 80% of the worker’s wages, up to a maximum of £2,500 per month, and the employer pays pension contributions and employer National Insurance Contributions will continue until 30 June 2021.
- In July 2021, the UK Government will pay 70% of wages up to a maximum of £2,187.50 per month, the employer will pay 10% of wages up to £312.50, and will continue to pay pension contributions and employer National Insurance Contributions.
- In August and 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 whose income has been negatively affected by coronavirus to claim a taxable cash grant.
It is now available to people whose annual trading profits were less than £50,000 in 2019-20 (or whose annual trading profits averaged less than £50,000 a year in the period 2016-17, 2017-18, 2018-19 and 2019-20), and where more than half of their income comes from self-employment. It is only available to people who traded in the 2019-20 and 2020-21 tax years, have submitted their 2019-20 tax return by 2 March 2021, and who are continuing to trade but are still being affected by the pandemic.
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 Chancellor announced that the scheme will be extended to September 2021, and that a fourth and fifth grant will be made available.
- The fourth grant will cover February to April 2021. It will provide 80% of 3 months average trading profits, up to a maximum of £7,500 paid out in a single instalment. Eligibility for this grant is different to the previous three grants, as the grant is now calculated using trading profits from the 2019-20 Self-Assessment tax return, which must have been submitted by 2 March 2021. If businesses are not eligible for support based on their 2019-20 trading profits, then their profits from 2016-17 to 2019-20 will be considered. The grant will be open for applications from late April 2021 to 31 May 2021.
- The fifth and final grant through the scheme will cover May to September 2021. This will be available from late July 2021, and will be determined by how much turnover has been reduced between April 2020 and April 2021. Where turnover has reduced over this period by more than 30%, eligible self-employed people will be able to claim a grant of 80% of average trading profits for 3 months, up to a maximum of £7,500. Where turnover has reduced by less than 30%, eligible self-employed people will be able to claim a grant of 30% of average trading profits for 3 months, up to a maximum of £2,850.
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.
Employers can spread the start date of the job placements up until the end of December 2021.
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. 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.
Bounce Back Loans
The closing date for applications for the Bounce Back Loans scheme is 31 March 2021. The Chancellor has also announced that businesses who have received a loan that is less than 25% of their annual turnover can ‘top-up’ their existing loan.
This scheme supports SMEs to borrow between £2,000 and £50,000. The UK Government guarantees 100% of the loan and there are no fees or interest to pay for the first 12 months. UK businesses negatively affected by coronavirus will be able to apply for the scheme, providing their business was not in difficulty on 31 December 2019. However, businesses who have received a loan through the Coronavirus Business Interruption Loan Scheme cannot apply, although if they have received a loan of below £50,000 under this scheme they will be able to transfer it into the Bounce Back Loans scheme by arranging this with their lender.
Under the Pay as You Grow option recently announced by the Chancellor, recipients of Bounce Back Loans are given the option to repay their loan over a period of up to ten years, which reduces monthly repayments by almost half. Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
Further information on the details of the scheme, and how to apply, is available on the British Business Bank’s website.The application process is online, with seven questions, and the UK Government intends that funding will be available for businesses within days of applying.
Coronavirus Business Interruption Loans Scheme
The UK Government launched the Coronavirus Business Interruption Loan Scheme to support primarily SMEs to access bank lending and overdrafts. It is delivered by the British Business Bank, and the closing date for applications is 31 March 2021.
The UK Government provides lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. It will not charge businesses or banks for this guarantee, and the Scheme supports loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as the UK Government covers the first 12 months of interest payments. The Chancellor has recently announced that lenders will be able to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.
Coronavirus Large Business Interruption Loans Scheme
The Coronavirus Large Business Interruption Loan Scheme launched on 20 April, and the closing date for applications is 31 March 2021. This scheme provides a government guarantee of 80% to enable banks to make loans to larger businesses. These loans are offered at commercial rates of interest.
The scheme provides loans of up to £25 million to UK-based firms with an annual turnover of between £45 million and £250 million.
From 26 May, large businesses with annual turnover of above £250 million have been able to borrow up to 25% of turnover, to a maximum of £200 million, through the scheme. However, if they wish to borrow more than £50 million then businesses are subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Businesses are unable to pay bonuses or award pay rises to senior management, unless they were already declared, are similar to payments made over the past 12 months, and do not materially affect the business’s ability to repay the loan.
Further information on eligibility criteria and how the scheme operates is available on the British Business Bank’s website, who have also published a guide for businesses on the scheme and a Frequently Asked Questions document, which include further information about the scheme and how to apply for it.
Recovery Loan Scheme
The Chancellor announced that the Recovery Loan Scheme will be introduced from 6 April 2021, and will run until the end of 2021. It will replace Bounce Back Loans, the Coronavirus Business Interruption Loans Scheme, and the Coronavirus Large Business Interruption Loans Scheme.
The Recovery Loan Scheme will provide 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 for up to six years will be available between £25,001 and £10 million per business.
- Invoice finance and asset finance for up to three years will be available between £1,000 and £10 million per business.
No personal guarantees will be 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 will be eligible to access finance under this scheme, if they meet all other eligibility criteria. Firms will 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.
Further details of accredited lenders and how to apply will be published by the UK Government ahead of the scheme starting.
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 30 June 2021. 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 the end of June 2021.
- 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 recently 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 recently announced that the UK Government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. All businesses which deferred VAT can opt-in to the New Payment Scheme until 21 June 2021, or contact HMRC on 0800 024 1222 by 30 June 2021 if they need extra help to pay.
- 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