Here's the most relevant government support for community business through this crisis
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.
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.
Another useful resource: the government has brought together a summary of the major financial support available for voluntary, community and social enterprise (VCSE) organisations to respond to coronavirus (COVID-19). This is largely what is discussed in more detail below but it may be helpful for you to use it as a checklist.
So here are the measures in more detail.
Business Rate Relief and Grants scheme
These measures 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.
This scheme has been added to recently with the issuing of Guidance to local authorities for the so-called, new discretionary top up funding scheme,which was published on 14/5/20. The details confirm that:
- Although its discretionary, grants will be an option for businesses with fixed premises who were not able to claim the original £10k and £25k.
- Priorities are charities, small businesses in shared offices or other flexible workspaces (including those who do not have their own business rates assessment ).
- This will also prioritise:“Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.”
Moreover, the government allows small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
This is forthcoming and will be live soon so keep an eye on your council websites (who will now have to setup an application process).
Coronavirus Job Retention Scheme
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 voluntary sector also has specific guidance from the Government here for those mobilising currently.)
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 have since stopped working for an employer for whatever reason since 28 February 2020, if they are rehired by their employer (as long as the employer can argue that they need to now furlough the employee because of coronavirus).
However, the decision to re-employ, or to allow an employee to retract their resignation, lies solely with an employer, and there is no obligation for an employer to agree to this.
Also, employees who are unable to work because they have caring responsibilities (such as looking after children) can be furloughed although there is no ‘right’ to be furloughed for this reason.
Employees can get another job with a new employer whilst on furlough. Employees can only take on another job, however, if their contract / existing employer permits them to do so, and provided the employee is able to return to their original job should their employer end their period of furlough.
Employees on fixed term contracts can be furloughed, and it has now been confirmed that their contracts can be renewed or extended during that period without affecting eligibility.
HMRC have now launched the claims process, which will be open for 4 months. The guidance for any claim is available here. It is essential to review the specific guidance set out by the government as to whether you are able to claim the 80% grant. In short this is about avoiding a double funding situation as the public sector is generally continuing to fund many of these services at their current level anyway.
Employers must have enrolled for PAYE online. Since it can take up to 10 days for this to be processed, employers are advised to do this now if they haven’t already.
Access is through the Government Gateway and existing employer login details will be needed.
Any grants can be backdated to 1st March but only until the date that the workers are furloughed. The government has confirmed recently the scheme will now be extended til October but there will be a taper to the amount government will provide (see here).
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.
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.
The scheme remains open to those who continue to do business during this time.
People can now make an application if they’ve been notified of their eligibility.
Everyone eligible for the SEISS, will be able to receive the government grant by 25 May, or within six days of a completed claim.
The Government also 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 any income tax payments due in July can be deferred to the end of Jan 2021.
The Coronavirus Bounce Back Loan scheme is set to help small and medium-sized businesses to borrow between £2,000 and £50,000. The scheme is designed specifically for SMEs. It will be interest free for 12 months and designed to be on favourable terms. The scheme will likely be administered through banks.
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.
• be UK-based
• have a turnover of less than £45m
• have minimum 50% of income (this condition does notapply to charities)
• self-certify you have been adversely affected by COVID-19
• demonstrate you have a viable business, if it weren’t for the pandemic
As a part of the CBILs scheme for only charities and social enterprises, the Resilience & Recovery Loan Fund (RRLF) is a new fund for social enterprises and charities who are experiencing disruption to their normal business model as a result of COVID-19. It has been established to make the Coronavirus Business Interruption Loan Scheme (CBILS – see above) more easily accessible to charities and social enterprises its designed to make:
•the loans starting at between £100k and £500k
•the interest rate being towards the lower end of what is being charged by mainstream banks & other CBILS providers
•These loans will be interest-free and fee-free to the customer for the first 12 months (this is paid for by government).
It is administered by SIB and details are available here.
Dissolution and Insolvency measures
The 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 yet but will be applied retrospectively from 1 March 2020 for three months. The announcement about the reforms is available here.
Finally, new guidance has been issued by the Office of the Regulator of Community Interest Companies (CICs) on operations for CICs during this period.
The CIC Regulator has announced that their approach to registration and regulation will be as flexible and pragmatic as possible during this period. The CIC regulator is still contactable through its website and by email. CIC’s are also now able to file accounts and the community benefit report online and this is strongly advised as paper documents may not be processed as quickly as previously.
That guidance can be viewed here.
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.
Food distribution grants
A recent small increase in funding for surplus food delivery has been announced by the Department for Environment, Food and Rural Affairs . The scheme is set to open to new applicants on Thursday 9 April. It will provide funding opportunities for small surplus food redistributors, although details are yet to be confirmed on eligibility.
We’ve also worked 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. See our Trading Income Support Scheme especially for more details.