Business insurance and coronavirus

Coronavirus and your business

Are you a business owner, self-employed worker or landlord trying to navigate the impact of coronavirus? Here’s what you need to know

Updated 25 September 2020

First published 21 April 2020

The Coronavirus Job Retention Scheme

If you own a business which is enrolled for PAYE Online and your staff are on a PAYE payroll scheme, you can apply for the Coronavirus Job Retention Scheme which runs until 31 October 2020.

It allows you to furlough staff and pay them 80% of their salary (gross) up to £2,500 a month via funding from a government grant.

During October – the final month of the current scheme – the government will fund 60% of your employee’s wages, and your business must top up the remaining 20%.

Since August, you will also be liable to pay your employees’ National Insurance and pensions contributions.

Job Support Scheme

From 1 November, the Coronavirus Job Retention Scheme will be replaced by a new Job Support Scheme which will run for six months.

Under the scheme, your firm must continue to pay its employees for their time worked. But the cost of hours not worked will be split between the government, your business and the employee – all paying (or losing) a third each.

Job Retention Bonus

Your company will receive a one-off Job Retention Bonus of £1,000 for each furloughed employee who has been continuously employed through to 31 January 2021. The bonus will still be possible to claim under the Job Support Scheme.

To qualify, employees must earn more than £520 per month on average.

Payments will be made from February 2021.

The Coronavirus Business Interruption Loan Scheme

If you have a small to medium-sized business (SME) with an annual turnover of no more than £45m, you can apply for the Coronavirus Business Interruption Loan Scheme. It allows you to access loans, overdrafts and business finance of up to £5m.

The government will cover the first 12 months’ interest payments and provide a government-backed guarantor to scheme participants (which includes all the major banks) of up to 80% on business loans. Find out more here.

The maximum repayment term is six years, but you can apply to extend it to 10 years, under the Pay as you Grow scheme, if you are struggling.

Future Fund Loans

The government has also launched a £1.25bn package to support fledging firms that would not qualify for the Coronavirus Business Loan Interruption Scheme.

The scheme provides start-ups with ‘Future Fund’ loans of between £125,000 and £5m. To be eligible, your business must have raised at least £250,000 from private investors in the last five years.

Money put in by the government must be matched by private investors – or the government will take an ownership stake in the company.

You can find out more about the scheme here.

Bounce Back Loan scheme

The government’s Bounce Back Loan scheme provides quicker-to-access loans to small- to medium-sized business of between £2,000 and £50,000.

You can take up to six years to pay the loan back – extended to 10 if you are struggling under the Pay as you Grow scheme – and you won’t have to make any repayments for the first 12 months. No interest or fees will be payable either for the first 12 months.

The government will guarantee 100% of the of the loan and will work with a network of lenders to ensure that interest rates remain low for the duration of the loan.

You can find out more and apply here. Bear in mind you will not be eligible if you’re already claiming under the Business Loan Interruption Scheme.

Coronavirus business grants

If your business is in the retail, hospitality or leisure sector with a rateable value between £15,001 and £51,000, coronavirus business grants are available of up to £25,000.

For smaller businesses (those with a rateable value of £15,000 or less) one-off grants of up to £10,000 are available. The government will write to you if you’re eligible.

Relief on business rates

The government has cut business rates to zero for all retail, leisure and hospitality businesses – and some nurseries.

The reduction applies in England for the tax year 2020-21 for properties with a rateable value of less than £51,000. You can use the government’s business rates calculator to find out what saving this could amount to.

Money back for staff statutory sick pay

SMEs with fewer than 250 employees can apply for a full refund from the government on 14 days of statutory sick pay per employee who has been off sick with coronavirus.

More time to pay your tax bills

Your business can now opt to pay VAT bills in 11 smaller interest-free payments during the 2021/2022 financial year under the New Payment Scheme, rather than in one lump sum at the end of March 2021.

HMRC’s Time to Pay service is available for all businesses that will struggle to pay outstanding tax bills. Call the hotline on 0800 0159 559 to see if you qualify for a payment extension..

Help for cafe, restaurant and pub owners

Hospitality and tourism firms will benefit from a cut in VAT from 20% to 5% which has been extended to 31 March 2021. It will cut costs for customers on food, accommodation and attractions.

Help for the self-employed

There is a package of support available for the self-employed, too. Here’s a round-up.

The Self-Employed Income Support Scheme

If you work for yourself and are affected by coronavirus, you can apply to the Self-Employed Income Support Scheme – a taxable but non-repayable grant.

The first grant closed on 13 July and the second and final grant is open for applications up to (and including) 19 October. It’s worth 70% of your average monthly profits and paid as a single instalment covering three months’ worth of profits, capped at £6,570.

From 1 November 2020 to 31 January 2021, this will be reduced to 20% of your average monthly profits, up to a total of £1,875. To qualify you will need to be currently eligible for the scheme and actively trading.

A second Self-employed Income Support Scheme grant will be made available from February until April 202 – but no details are available as yet.

To qualify, you’ll need to earn less than £50,000 (profit), with the majority of your income coming from self-employment. You’ll also need to have a tax return for 2018/2019.

HMRC will contact you directly if you’re eligible. You’ll then need to fill in a simple online form and the money will be paid directly into your bank account.

What if I’m self-employed and need cash now?

The government has introduced other flexibility to ease cash flow for the self-employed:

  • If you are due to make a ‘payment on account’ to HMRC in July 2020, you can defer payment until January 2021. This deferral will be automatically applied but, of course, you don’t have to take it
  • If your self-assessment tax bill is due by 31 January 2021, you can now opt to pay it over the following 12 months instead
  • If you’re VAT-registered, you can opt to defer VAT payments that are due between 20 March and 30 June 2020 until 31 March 2021.
  • If your business is registered with Companies House, you can apply for a three-month extension to the deadline for filing your accounts. If you are granted the extension, you won’t be charged the usual late payment penalty
  • If you are sick or self-isolating in line with government advice and do not qualify for Statutory Sick Pay because you are self-employed, you may be eligible for Universal Credit as the government has relaxed the minimum income floor. Find out more about claiming
  • Local authorities can access a £500 million Hardship Fund which they can allocate at their discretion
  • You can apply for payment help on your mortgages, credit cards and loans, until 31 October. Find out more about with our guide

Help for landlords – and their tenants

The government has put in place a further package of support to help tenants affected by coronavirus – and their landlords:

  • If your tenant is unable to pay their rent due to coronavirus, landlords should be eligible to apply for help on buy-to-let mortgages until 31 October
  • Landlords and tenants will be expected to work together to establish an affordable repayment plan which accounts for tenants’ individual circumstances thereafter
  • From 28 August, landlords in England must provide tenants with at least six months’ notice for eviction. In Scotland and Wales, tenants must already be given six months' notice and in Northern Ireland, it's 12 weeks
  • Private and social housing tenants in Northern Ireland and Scotland will be protected from eviction until 31 March 2021
  • The government has relaxed access to Universal Credit and Housing benefit and said that Local Housing Allowance would cover at least 30% of market-area rents

If you’re self-employed in Scotland, Wales and Northern Ireland

Some of the support measures available to help small businesses through the pandemic are administered by the devolved governments. You can find out more at the respective .Gov websites for ScotlandWales and Northern Ireland.

What impact will coronavirus have on business insurance?

Existing policies: If you already have business insurance in place with our partner Simply Business, which includes cover for business interruption, whether you are covered for coronavirus claims will depend on your insurer and the claim itself.

If you have further questions, give Simply Business a call on 0333 0164 504.

New policies: If you are looking to take out a new business insurance policy that includes business interruption, note that it will not cover claims relating to coronavirus.

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