How to make sure your business doesn't lose out in lockdown

Money is still available via government schemes to help small companies cope with the latest Covid restrictions. David Prosser outlines what you can get, and how to get it.

Rishi Sunak
Rishi Sunak’s new programme is aimed at retail, hospitality and leisure businesses
(Image credit: © STEFAN ROUSSEAU/Getty Images)

For small businesses struggling to cope with the latest lockdown, new financial assistance from the government is limited. But help is still available from the schemes set up the first time around. Chancellor Rishi Sunak’s headline announcement last week was a new lockdown grant scheme aimed at retail, hospitality and leisure businesses. In England, this scheme, administered through local authorities, pays grants of up to £9,000 to companies in the sectors forced to close, with the exact amount depending on the rateable value of your business premises. There will be similar payments in Scotland, Wales and Northern Ireland.

Start with your local council

To check whether you are eligible, contact your local authority, though it should be making payments automatically rather than requiring applications. Firms outside the retail, hospitality and leisure industries may also receive help, with £594m available for a discretionary fund that councils can use to support firms beyond the main scheme.

These new grants are in addition to the Local Restrictions Support Grants scheme launched before Christmas. That pays up to £1,500 for each 14-day period that your business is forced to close because of lockdown measures, or up to £2,100 for each 28-day period it remains open but severely affected by the restrictions. Again, the size of the grant you will receive depends on the rateable value of your business premises. Local authorities are also administering this scheme.

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On top of this new support many of the programmes launched last year have been extended, including the Coronavirus Job Retention Scheme (CJRS), which will remain open until April 2021. The CJRS is the scheme through which firms can furlough their staff – lay them off for a temporary period – and have their wages paid by the state. The state will pay at least 80% of staff wages up to £2,500 a month. Employers must pay national insurance and pension contributions for each employee. Two flagship loan schemes have also been extended, with applications accepted for both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan programme until 31 March. The former offers finance of up to £5m; the latter provides advances of up to £50,000. If you have previously used the schemes, but not borrowed the full amount, you can apply for more funding.

Finally, don’t overlook the option of deferring tax payments. Businesses were given the option of deferring VAT due during the second quarter of last year and this can now be paid back in monthly instalments over the period to March 2022.

And if you are covered by the self-assessment system, the bill you would normally pay at the end of this month does not have to be settled until January 2022. This is also the deadline for any income tax due in July 2020 that you chose to defer.

More money for the self-employed

Self-employed workers hit financially by the Covid-19 crisis have until 29 January to apply for the latest iteration of the Self-Employment Income Support Scheme (SEISS). But hundreds of thousands will miss out on the SEISS unless the government extends it. This round offers grants worth 80% of your average monthly trading profits, paid in a single instalment to cover three months’ worth, but capped at £7,500.

Crucially, to make a claim, you must have been eligible for previous rounds of the SEISS (even if you didn’t claim). That means you must have earned the majority of your income from self-employment in the 2018-2019 tax year; recorded a profit of less than £50,000; and drawn down this profit as income rather than company dividends.

Excluded UK, a group that represents people struggling to secure help from the government, says more than three million people are missing out on schemes such as the SEISS because of the eligibility criteria.

The Federation of Small Businesses this week unveiled proposals for a version of the SEISS offering similar levels of redress to self-employed workers set up as small companies, rather than sole traders, and paid via dividends. This could help more than one million people. But so far the government has consistently refused to extend the SEISS or to launch a similar scheme for those missing out.

David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.