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 9 July 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 still apply for the Coronavirus Job Retention Scheme, although it is being phased out to end in October.

It allows you to ‘furlough’ staff and pay them 80% of their salary (gross) up to £2,500 a month – funded by a government grant.

From 1 August 2020, you will be asked to start paying employees’ National Insurance and pensions contributions.

For 1 September, the government will reduce its support to pay 70% of staff wages (up to a cap of £2,187.50) and you will be required to top it up to at least 80% (up to £2,500 a month).

For 1 October – the final month of the scheme – the government will pay 60% of wages, and you will top up the remaining 20%.

From 1 July, employers have also been able to bring furloughed employees back to work, while still being able to claim a grant for the hours not worked.

On 8 July, the government announced employers in the UK will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

Employees must earn more than £520 per month on average and payments will be made from February 2021. Further detail will be announced at the end of July.

Online applications and more information are available at HMRC’s website.

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.

Future Fund Loans

On Monday 20 April, the government also announced 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 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.

The scheme is now open and you can 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 is temporarily cutting business rates to zero for all retail, leisure and hospitality businesses – and some nurseries. This 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 bee off sick with coronavirus.

More time to pay your tax bill

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

Leeway with rent on your business premises

If you miss a rent payment up until 30 September on your commercial premises, the landlord or company cannot force you out.

Help for cafe, restaurant and pub owners

Customers will be encouraged to eat out from Monday to Wednesday every week throughout August thanks to a government-backed discount scheme that provides a 50% reduction on the bill for up to £10 per head.

Any ‘eat-in’ restaurant, café or pub can apply for the new ‘Eat Out to Help Out’ scheme from 13 July, which can be used unlimited times by diners.

Firms will be able to claim back the money and it will reach their accounts in no more than five working days. More information on how to apply here.

Hospitality firms should also benefit from a reduction in VAT from 20% to 5% until 12 January, 2021 that should 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. Like PAYE workers, it pays 80% of your salary up to £2,500 a month (gross) – OR an average of your profits taken over the last three years, also up to £2,500 a month.

The scheme, which originally applied to earnings for the months of March, April and May, was extended on 29 May to cover the months of June, July and August. However, this 'second grant' only covers 70% of average profits (up to £2,190 gross).

You can still apply for the first grant (March, April and May) but you will need to do so by 13 July. You'll be able to make a claim for the second grant in August.

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 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. However, you’ll need to make payments due after 30 June as normal. The deferred VAT payment deadline will be applied automatically – but again, you don’t have to take it
  • 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 also have access to a new £500 million Hardship Fund which they can allocate at their discretion
  • The government is also implementing three-month payment freezes on mortgages, credit cards and loans, which you can 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 the same three-month payment freeze on buy-to-let mortgages that's available on residential mortgages. Applications for mortgage payment holiday – or partial payments – have now been extended until 31 October
  • At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan which accounts for tenants’ individual circumstances
  • Landlords in England and Wales will not be able to evict tenants until 23 August - even if they are behind on rental repayments. Tenants will remain protected by the three-month notice period on evictions which runs until the end of September. In Scotland, tenants must be given six months' notice and in Northern Ireland, it's 12 weeks
  • The government has also 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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