Government support for community businesses in response to COVID-19

Here's the most relevant government support for community business through this crisis

Tom Hamilton-Shaw

Policy Manager

The Government is releasing new measures to support businesses in response to COVID-19. Here’s what is most relevant for community businesses. We will be updating this blog as new packages of support are announced by Government. 

Coronavirus Job Retention Scheme

The Chancellor has announced an extensive group of measures designed to help businesses across the economy. The Governent has put up a website about all such Coronavirus measures here.

Amongst the most important for community businesses is the Coronavirus Job Retention Scheme. The government has detailed guidance on this here.

All UK employers with a PAYE scheme will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working due to the coronavirus outbreak.

Charities and non-profits are eligible for the scheme and it will apply to community businesses as its open to any employer in the country who meets the PAYE requirement.

The Government announced that grants will cover 80% of the salary of any workers retained by businesses but not able to work due to COVID-19.

This grant is capped at a total of £2,500 a month, per worker. Employers do not have to pay the extra 20% but can do if they choose.

Any businesses looking to use it must designate affected employees as ‘furloughed workers,’ and notify their employees of this change. The guidance on this is available here.

Any workers must not undertake work for their employer while they are furloughed whether as a paid employee or as a volunteer whilst furloughed. As the guidance states: ” A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.” Volunteering for other groups or community businesses would be acceptable.

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts

However, if an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.

But the scheme does cover employees who were made redundant since 28 February 2020, if they are rehired by their employer.

The scheme will be open before the end of April for at least 3 months. Any grants will be backdated to 1st March but only until the date that the workers are furloughed. It will be extended beyond 3 months if judged to be necessary.

It’s not up and running yet and some of the details will only be confirmed during the next few weeks as HMRC set up the system. As such, with the detail evolving very quickly, do keep an eye on reputable advisors on how the scheme might work, like the CIPD.

An online portal will be setup to deal with these claims but isn’t available yet.

Self Employed support

The Chancellor has also announced the Self-Employed Income Support Scheme (SEISS). Detail on the scheme is available here.

The government will pay self-employed people (or those in a partnership), who have been adversely affected by the coronavirus, a taxable grant worth 80% of their average monthly profits over the last 3 years. This will be capped up to £2500 per worker per month and is taxable.

To be eligible you must have trading profits of less than £50,000 and more than half of your total income comes from self-employment. Claimants must also already have been in self-employment and have filed a tax return for 2019.

If you’re a late filer for self-assessment  for 2019 you’ll have 4 weeks from today to submit and be eligible for the scheme.

The scheme remains open to those who continue to do business during this time.

People will able to make their first claim by early June but moneys will be backdated til March 1st.

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.

Self-employed people who are struggling now

The Government suggests such people may be able to access the Coronavirus business interruption loans administered by the British Business Bank.

They point out that the welfare system is now designed so that self-employed people can access Universal Credit in full.

Also income tax payments due in July can be deferred to the end of Jan 2021.

Further measures

There is also the Coronavirus Business Interruption Loan scheme. This scheme is now open. The loan scheme will now be interest free for 12 months. It is designed to ease cash flow and, although open for small businesses, is also offering larger loans to middle-sized enterprises. Any borrower from the scheme will still be 100% liable for the debt.

Further measures also include giving all retail, hospitality and leisure businesses in England 100% Small Business Rate Relief (SBRR). These types of businesses in England won’t need to pay business rates for the next 12 months.

Properties that will benefit from the relief will be “occupied hereditaments” that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest & boarding premises and self-catering accommodation

Retail, hospitality and leisure businesses businesses who are eligible for SBBR with a rateable value of under £15,000, will also get small business grant funding of £10,000.

Larger £25,000 grants will be available to retail, hospitality and leisure businesses with a rateable value of over £15,000 and below £51,000, operating from smaller premises.

Any business that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief will also get a £10,000 grant.

It is understood that those who don’t fall into the above descriptions will not currently be eligible for this particular grants scheme.

Moreover, the government is set to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Also the government are deferring Valued Added Tax (VAT) payments for 3 months. All UK businesses are eligible.

Finally, there government has announced its intention to temporarily suspend wrongful trading provisions. The Business Secretary has announced he will make changes to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency. This hasn’t been done so yet but will be applied retrospectively from 1 March 2020 for three months.

Community Energy 

One specifically for community energy projects, BEIS has passed The Feed-in Tariffs (Amendment) (Coronavirus) Order 2020.  It gives community FiT projects with an Ofgem eligibility date that falls between 1 March and 31 March 2020 at least an extra six months to complete and register. This must still happen by the final deadline of 30 September 2020.

Wider Civil Society support

We are supportive of Baroness Barran’s representations, as minister for Civil Society and DCMS, for a substantial social sector response from government to help those in community businesses and civil society.

We look forward to working with government on measures specifically focused on supporting civil society as they bring them forward in the near future.

We’re also working hard on our own response to help community businesses in this difficult climate, especially with the closure of cafes, pubs, indoor leisure facilities, gyms and restaurants.

Read more about the support available to community businesses from Power to Change in response to COVID-19.