There has been a lot of confusion in the media around what support is likely to be available for businesses suffering due to the Coronavirus pandemic. In particular, the insurance industry is seeing some backlash with regard to Business Interruption.
British Insurance Brokers’ Association (BIBA) said that the Chancellor of the Exchequer, Rishi Sunak’s, announcement on 18th March, that Business Interruption cover would pay out following the government’s recommendation (rather than order) for businesses to close, caused some confusion and uncertainty for business owners.
Sunak was not stating that all Business Interruption pay outs would be paid, he was explaining that those businesses with the specific pandemic cover in place, would see their policies react to claims.
Whilst the insurance industry is still looking at how it can respond in this unusual situation, it is likely that the vast majority of insurance policies will not be able to provide cover. However, for those impacted by the pandemic, there are a number of government initiatives that have been launched to assist businesses – small and large and those across a range of sectors.
The two primary schemes are outlined below, with links to further, more specific information for a host of situations and business set-ups, as well as information on how to apply for these schemes.
The Coronavirus Business Interruption Loan Scheme
The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years.
The government will pay to cover the first 12 months of interest payments and any lender-levied fees; this means smaller businesses will not face any upfront costs and will benefit from lower initial repayments. The government will provide 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.
This scheme is being delivered through commercial lenders, backed by the British Business Bank.
Are you eligible?
Your business is eligible for the scheme if:
- It is UK based, with turnover of no more than £45 million per year
- You are putting forward a borrowing proposal which, were it not for the COVID-19 pandemic, would ordinarily be considered viable by the lender.
More information on eligibility can be found here.
How to apply
The scheme is now open for applications. To apply, it is advised you should first talk to your bank, preferably through their website. Alternatively, you can contact one of the other 40 accredited finance providers (not the British Business Bank), and should do so as soon as possible.
All major banks are offering this scheme. If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.
Additional Assistance
Please look at the Government website for a more comprehensive guide to what is available. Click here for the main page or use the links below to be directed to specific areas.
- Support for businesses through the Coronavirus Job Retention Scheme
- Support for businesses through deferring VAT and Income Tax payments
- Support for businesses who are paying sick pay to employees
- Support for retail, hospitality and leisure businesses that pay business rates
- Support for nursery businesses that pay business rates
- Support for businesses that pay little or no business rates
- Support for larger firms through the COVID-19 Corporate Financing Facility
- Support for businesses paying tax: Time to Pay service
- Increased amounts of Universal Credit – if you are employed but your income will be reduced as a result of being furloughed, or for any other reason, you can also apply for Universal Credit (if your income drops low enough to make you eligible). There are, however, a few eligibility criteria for claiming Universal Credit, which are as follows:
- Being on a low income / out of work
- Being 18 or over (some exceptions for 16/17 year olds)
- Being under state pension age (or your partner is)
- Having less than £16K in savings
- Living in the UK
Additional information on eligibility for Universal Credit can be found here.
Self-Employment Income Support Scheme
This scheme for self-employed will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Are you eligible?
You can apply if you’re a self-employed individual or a member of a partnership and you:
- Have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
- Traded in the tax year 2019-20
- Are trading when you apply, or would be except for COVID-19
- Intend to continue to trade in the tax year 2020-21
- Have lost trading/partnership trading profits due to COVID-19
- Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment.
This is determined by at least one of the following conditions being true:
- Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period.
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
How much will you get?
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable): 2016 to 2017, 2017 to 2018, 2018 to 2019.
To work out the average, HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount.
- It will be up to a maximum of £2,500 per month for 3 months
- The grant will be paid directly into your bank account, in one instalment
- The grant will be paid as a lump sum at the beginning of June and will be back dated to 1st March 2020
How to apply
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
Additional Assistance
The government is also providing the following additional help for the self-employed:
- Deferral of Self-Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- Grants for businesses that pay little or no business rates
- Increased amounts of Universal Credit – you are able to claim both Universal Credit and then still receive the self-employed support on offer. There are, however, a few eligibility criteria for claiming Universal Credit, which are as follows:
- Being on a low income / out of work
- Being 18 or over (some exceptions for 16/17 year olds)
- Being under state pension age (or your partner is)
- Having less than £16K in savings
- Living in the UK
Additional information on eligibility for Universal Credit can be found here.
If you’re a director of your own company and paid through PAYE, you may be able to get support using the Job Retention Scheme.
The Care Sector
As a broker that also specialises in the Care & Social Welfare sector, a sector that at this moment in time is under tremendous pressure, we also provide some more specific links and guidance below.
The latest information issued by CQC in relation to COVID-19 can be found here. Further, more specific guidance and information can be found below – as communicated by CQC.
- Guidance from Skills for Care on training staff during the COVID-19 pandemic
- Investigation and initial clinical management of possible cases
- NICE has updated its rapid COVID-19 guideline on critical care following concerns raised by patient groups
- Ethical framework for adult social care
- Guidance for residential care, supported living and home care
- Guidance on the supply and use of personal protective equipment
- Guidance for health professionals
- Guidance for health professionals who have diagnosed a case within their facility
- Infection prevention and control
- Rapid tests for use in community pharmacies or at home
- Guidance for sampling and for diagnostic laboratories
- Department of Health and Social Care’s coronavirus action plan
- NHS England has published measures for people who might be at greatest risk from coronavirus. Guidance (including an easy read version) is available on its website. People who are classed as extremely vulnerable are being asked to register for support.
If we can be of assistance through this time, in relation to your insurance, please contact your Account Executive directly or email enquiries@networkportfolio.co.uk/mcclarroninsurance.com.
