Group 40 Created with Sketch.

Coronavirus business FAQs – your key questions answered

With the range of coronavirus support changing on a daily basis it's hard to know what you can and can't take advantage of. Our coronavirus business FAQs is constantly being updated to provide you with the latest information you need to make important decisions. Included is extensive detail about the Coronavirus Job Retention Scheme (furloughing workers) and Coronavirus Business Interruption Loan Scheme (government-backed loans). Use our drop-down question and answer format below to get support for your query.

Got a question?

If you have a question that we haven't covered then please let us know and we'll do our best to have it answered.

Submit your question

Get targeted help

In partnership with Facebook, Be the Business will be hosting a series of webinars – starting with one looking at pivoting your business offeerings.

Sign up to find out more

Financing FAQs

What support is available for my business?

The government has announced a raft of measures to support businesses impacted by the coronavirus crisis. These include:

  • The ability to apply for a loan of up to £5m with the first 12 months of finance interest free
  • Business rates holidays for the 2020-21 tax year for companies in the retail, hospitality and leisure sectors
  • Grants to businesses with a rateable value of £15,000-£51,000
  • £10,000 cash grants to smaller businesses across all sectors
  • Fast-track loans of up to £50,000 under the Bounce Back scheme
  • Refunds by the government to cover the cost of providing 14 days of Statutory Sick Pay for businesses with fewer than 250 employees
  • Funding to cover 80 per cent of an employee’s wages up to £2,500 if they are “furloughed”
  •  The Job Support Scheme designed to protect jobs in businesses that are facing lower demand over the winter months due to Covid-19
  • £500m co-investment “Future Fund” for high growth companies hit by coronavirus. This fund provides government loans to UK-based companies ranging from £125,000 to £5m, subject to at least equal match funding from private investors.
  • Measures for self-employed people have also been announced and details can be found on the government’s website. If you are self-employed you can now make a claim to receive a taxable grant worth 80 per cent of your trading profits up to a maximum of £2,500 per months for the next three months. This may be extended if needed
  • In the chancellor’s Winter Economy Plan, an extension to the Self Employment Income Support Scheme Grant (SEISS) was announced through to the end of April 2021
  • The full list can be found by visiting the government’s website. You can also use the Government’s business support finder, available to view here
What are the terms and conditions on the loans and grants available?
  • The Coronavirus Business Interruption Loan Scheme, offering amounts up to £5m, will be available for 12 months interest free, with the government covering interest payments. However, the base rate of the loan is fully repayable
  • The government has published updated terms so that all viable small businesses are eligible, not just those unable to access commercial loans
  • For loans under £250,000 personal guarantees will not be required. For loans over £250,000 personal guarantees can required but any recovery is capped at 20 per cent of the outstanding balance on the loan after proceeds from the business’ assets have been applied
  • For larger businesses they have announced the Coronavirus Large Business Interruption Loan Scheme (CLBILS), which is making loans of up to £25m available to businesses with an annual turnover between £45m and £500m. This new scheme is designed to bridge the gap between CBILS and the corporate scheme
  • The £10,000 cash grant offered by local authorities to support local businesses is a grant and therefore does not have to be repaid
  • The £25,000 grant provided by local authorities to businesses in the retail, leisure or hospitality sectors is similarly non-repayable
  • The terms of the government’s Future Fund loan, which include the option of the government converting unpaid loans into discounted equity stakes, can be viewed here
  • The “Bounce Back Loan” scheme, which went live on 4 May 2020, offers interest-free loans for the first 12 months, and is 100 per cent backed by the government.
  • Bounce Back Loans offer terms of up to six years, with no repayments due during the first 12 months. The first year is interest-free, with this standing at 2.5% from one year onwards
What do I do if I need advice or support on tax liabilities?
What support is available from banks?
  • A number of private lenders are making funds available to small businesses impacted by coronavirus, including £7bn from Barclays, £2bn from Lloyds Banking Group and £5bn from NatWest
  • Check with your bank to find out what support you might qualify for as announcements are being made on a regular basis

CBILS template application to bank

Use an example of how one business, Playdale Playgrounds, successfully applied for a government loan to improve your application.

Download template letter

Employees FAQs

How do I find out if my business is a key service/contains key workers?
  • The government has stated that employees in industries classed as providing key services will be eligible to send children to school still
  • The eight sectors include: health and social care; education and childcare; key public services; local and national government; food and necessary goods; public safety and national security; transport; and utilities, communication and financial services
Are all my workers deemed key workers if my business is deemed a key service?
  • Whilst your business may be in a key sector and prioritised by the government, not all workers in this sector are deemed key workers
  • More guidelines are available on the government business support website. If you are not clear which of your employees are covered under the key workers remit, contact your local authority who will be able to advise further
What is the Coronavirus Job Retention Scheme, and are my employees eligible?
  • The Coronavirus Job Retention Scheme is a government scheme to allow UK employers to access support to continue paying part of their employee’s salary throughout the crisis
  • The scheme has been extended to run until the end of October, with furloughed workers able to return to work part-time from August
  • All UK-wide employers with a PAYE scheme that was created and started on or before 19 March 2020 will be eligible. This includes part-time staff, apprentices and employees on zero-hours or flexible contracts.
  • This allows you to claim up to 80 per cent of any furloughed workers’ wages from the government, up to a cap of £2,500 per month. This is dependent on an employees’ salary and will vary, with the grant therefore maxing out for employees who earn more than £37,500 base salary per annum
  • The scheme will also cover employer National Insurance and pension contributions of furloughed workers, on top of the 80 per cent of salary, up to the 1 August. Furloughed workers can also volunteer for the NHS without risking their pay, and work for other employers
  • From 1 August,  employers will be required to cover the employee’s national insurance and pension contributions. The government will continue to cover 80% of all wages for furloughed workers, up to the existing cap of £2,500/month. From 1 September, employers will be asked to contribute 10% of furloughed employee’s wages, rising to 20% in October
  • The scheme will close to new entrants from 30 June. From this point, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June, meaning employers must designate employees as furloughed by 10 June at the latest
  • Following government guidance published on 9 June, parents on statutory maternity or paternity leave who return to work in the coming months will be eligible for the furlough scheme, even after the 10 June cut-off date for new applicants
  • A new Job Support Scheme will be introduced from 1 November, replacing the furlough scheme which ends on 31 October. Under the Job Support Scheme, which will run for six months, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand
  • Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. To be eligible, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month
  • The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme. Further guidance is available from the government here

 

How do I designate workers as furloughed?
  • Furloughed means that employees must remain on the business’ payroll, rather than being made redundant. The standard furlough period is currently three weeks, and employees must also not be engaged in work for you during this time
  • Whilst you are allowed to cover the difference between this payment and the workers’ usual salary, this is not mandatory
  • You can only claim for employees that were on your PAYE payroll on or before 19 March 2020. Employees that were employed as of 28 February 2020 and on payroll but were then made redundant or stopped working for the employer after that, but before 19 March 2020, are eligible if they are re-employed and placed on furlough instead
  • The scheme will also close to new applicants on 30 June, so businesses must designate workers as furloughed and apply to HMRC by 10 June to allow them to complete the three week furlough period before the end of the month. From this date onward, employers can only furlough employees who have already been furloughed for three weeks prior to 30 June
  • This cut-off point does not apply to workers returning from parental leave
  • Employers are not required to rescind notices of termination issued to employees
  • However, following current guidance issued on 26 March 2020, employees with whom reduced hours or salaries have already been agreed will not be eligible for the Coronavirus Job Retention Scheme
  • There is no mandatory process for deciding which employees will be furloughed. Employers will wish to ensure there is a clear business rationale for decisions about who to furlough in order to avoid allegations of discrimination and further arguments around the unfairness of any subsequent redundancies. This is especially important where there are a number of employees carrying out a similar role and only some of those employees are to be furloughed
  • Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to furlough, equality and discrimination laws apply in the usual way
  • HMRC has now launched its application system. Once claims are submitted, firms can expect payments within six working days
  • Following the payout, HMRC may run checks to employers issued the fund to ensure the claim is legitimate and guidelines are being adhered to
Do my employees apply directly, or is this the business’ responsibility?
  • It is the employer’s responsibility to facilitate this grant for employees. All businesses are deemed eligible for the scheme, regardless of status or size
  • To access the scheme, you must designate workers as “furloughed” and officially notify them in writing of this. In most cases you will need their agreement unless their contracts give the employer the right to alter salary and hours
  • You then must submit this information to HMRC, specifying the workers who have been furloughed and their wages through HMRC’s online portal. This must be done before 10 June to allow furloughed employees to complete the required 3 week furlough period. The scheme closes for new applicants on 30 June in order to allow employees to return to work on a full- or part-time basis from 1 July
  • Once claims are submitted through HMRC’s online portal, firms can expect payments within six working days. Whilst reimbursement will be backdated once the scheme is live, employers must decide how or whether to fund employees’ salaries in the meantime
Does this scheme apply to agency workers, part time workers and those on zero hours contracts?
  • Agency workers paid through PAYE are eligible for the scheme. The recruitment agency that pays them should apply
  • Those on zero hours contracts, or whose pay varies per month are also eligible
  • For employees who have been employed for a full 12 months prior to the date of the claim, their wages should be considered as either average monthly earnings from the 2019-20 tax year, or the same month’s earnings from the previous year, whichever is higher
  • If the employee has been employed for less than 12 months, you can claim for an average of their monthly earning since they started work
Are directors eligible?
  • As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006
  • Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned
  • Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company
  • This also applies to salaried individuals who are directors of their own personal service company (PSC)
What can furloughed workers do while they are furloughed?
  • Furloughed workers cannot do any work for your business that “provides a service or generates revenue”. It’s important that furloughed workers don’t do any work for you because it could stop you being able to claim the grant, and employees asked to undertake work for their employer whilst furloughed are encouraged to report this to HMRC
  • They are able to volunteer for other organisations, such as the NHS, and undertake voluntary training, provided it doesn’t generate any revenue for the employer
  • The government has also confirmed that furloughed employees are allowed to work for other employers
  • Following guidance published on 29 May, furloughed employees may return to part-time work from 1 June, although the requirements, hours and shift patterns are to be decided by the employer. The employer will also be responsible for paying employee’s wages for all work undertaken
  • If employees have to undertake mandatory training while furloughed the guidance is that you must pay them at least the National Living Wage/National Minimum wage for the time spent training, even if this more than the 80 per cent wage subsidy
  • HMRC reserves the right to recover money from businesses and take criminal action against employers who have intentions to defraud the scheme via asking employees to undertake work whilst receiving furlough payments
  • Further guidance on this issue is available to view on the government’s website

 

Can I furlough only some of my workers?
  • Yes. There may be workers who cannot do their job from home if their workplace is closed, while others can
  • If furlough involves more than 20 people you will likely need to follow the collective consultation process, as with redundancy, to get their agreement
  • You can rotate groups of your employees in and out of furlough if you need to. The minimum period of furlough is three weeks and currently the maximum is three months. So as long as they are furloughed for at least three weeks you can bring them back to work and put another group on furlough if you want to. However, note this scheme closes for new applications on 30 June, so all furlough applications must be made before this date
How does furlough work with sick pay?
  • The guidance says that employees on sick leave or self-isolating should receive Statutory Sick Pay (SSP) or any higher contractual sick pay entitlement but can be furloughed after this. This suggests that they can only be furloughed after the sick leave or self-isolation has finished
  • If employees become sick while on furlough, they keep their entitlement to SSP. This is likely to be lower than their furlough pay, so this unlikely to be a common choice.
  • Employees who are on sick leave or self-isolating cannot be furloughed and should get statutory sick pay (£94.25 per week) or any higher contractual sick pay entitlement. However, once they are able to return to work, they are eligible for furlough. Vulnerable individuals who are being shielded at home can be placed on furlough
Who pays statutory sick pay?
  • Employees are still eligible for up to £94.25 Statutory Sick Pay (SSP), which the employer must pay for up to 28 weeks. The provision of SSP has now been extended to those staying at home to care for those in their household
  • SSP is now available from day one of the workers’ absence, rather than day four, available retrospectively from 13 March
  • For businesses with fewer than 250 employees, the cost of providing 14 days of Statutory Sick Pay per employee will be refunded by the government in full
  • Further guidance on this issue is available to view on the government’s website
What about tax and National Insurance?
  • Payments made by the employer will be subject to the usual deductions for income tax and national insurance. However, the Coronavirus Job Retention Scheme also covers employer National Insurance contributions, up to 1 August. From this date, employers will be required to cover national insurance and pension contribution costs for furloughed employees, although the government will continue to cover 80% of furloughed employee’s wages up to the £2,500/month cap
  • Further guidance on this issue is available to view on the government’s website
What about pension payments?
  • The government will pay only the auto-enrolment minimum employer pension contribution. However, this is capped at the standard three per cent contribution of the £2,500/month grant available through the Coronavirus Job Retention Scheme
  • If your employees work under a pension salary sacrifice scheme, the 80 per cent pay is based on the employee’s reduced salary. The government’s scheme will therefore only cover three per cent of the salary sacrificed amount. If the employer pays more than the standard three per cent rate, this will not be covered by the government
  • From 1 August, employers will be required to cover furloughed employee’s pension contributions, as well as national insurance costs. The government will continue to cover 80% of the furloughed employee’s wages, up to the £2,500/month cap
  • Further guidance and insight on this issue is available from Irwin Mitchell

Sample furlough letter for staff

If you're considering furloughing staff through the Coronavirus Job Retention Scheme then have a look at our template letter.

Download template letter

Tax and fixed expenses FAQs

Am I eligible for a Business Rates Holiday if my business isn’t in the retail, leisure or hospitality sectors?
  • Only businesses within the retail, hospitality and leisure industries will be eligible for a business rates holiday as things currently stand
  • However, there is other financial support that you can access and the full list is available by visiting the government’s business support website
  • Check back regularly as policies continue to be updated
How do I apply for a grant to pay wages?
  • Employers will need to designate affected employees as “furloughed” and notify them of this change. This means they continue to be employed by you, but cease to perform work for the business for now
  • Changing the status of employees is still subject to employment law and may be subject to negotiation
  • Employers must then submit this information to HMRC through an online portal, which is not yet available
  • HMRC is currently setting up this system and applications can start to be made once they have completed this work
Is my business automatically eligible for deferred VAT and income tax payments?
  • No businesses will pay VAT until the end of June and companies will not need to pay what VAT is owed until the end of the year. This is an automatic scheme and no application is required
  • For income tax self-assessment, payments due on 31 July 2020 will be deferred until 31 January 2021
  • HMRC has also scaled up its Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of coronavirus and have outstanding tax liabilities
Are taxes repayable after a set period, and do I have to pay interest?
  • You will have to pay the VAT owed by the end of the 2020-21 tax year. Interest will not be accrued during this time
Do I still have to pay rent on my premises?
  • The government has announced that no business will be forced out of its premises if it misses a rent payment in the next three months. This is effective until 30 June with the potential for it to be extended
  • Some landlords and local authorities have adjusted rent conditions to commercial tenants to provide relief during the coronavirus outbreak. However, this is ad hoc and will not apply for all businesses
  • The government introduced temporary measures on 23 April to safeguard property owners against aggressive debt recovery via a ban on statutory demands from 27 April through to 30 June. This is further detailed in the government’s announcement on 23 April
  • We have a helpful summary of resources and updates to help you with rates, rents for your business property
What is the Time to Pay scheme, and how does this differ from other schemes?
  • The Time to Pay (TTP) scheme provides companies additional breathing space during which to settle their existing HMRC liabilities. It has been in place since before coronavirus but has been extended to support businesses who have been impacted because of coronavirus
  • A TTP arrangement allows for your debt to HMRC to be paid back in monthly instalments, typically over a period of up to 12 months. If you are concerned about being able to pay your tax due to coronavirus, call HMRC’s dedicated helpline on 0800 0159 559

Use our coronavirus cash conservation checklist

With so much uncertainty around how long the impact of coronavirus will last, cash conservation will decide how your business gets through the outbreak.

Access checklist

Closures FAQs

My business has been ordered to close by the government. Am I eligible to claim insurance for loss of income?
  • The insurance industry believes that unfortunately most businesses are unlikely to be covered
  • The key part of your policy to check is “business interruption”. This doesn’t typically tend to cover pandemics or infectious disease outbreaks, but it is worth speaking to your insurance company or broker to find out
Do I have to close my business?
  • The government has published a comprehensive list of businesses that now need to close
  • This includes bars, clubs, restaurants, theatres, cinemas, leisure venues, non-essential shops, hairdressers, barbers, beauty salons, hotels, holiday rentals and caravan parks
  • It also includes some public services such as libraries, community and youth centres, and places of worship (except for funerals)
  • Food takeaway and delivery services remain optional to close or stay open but are important in providing food for vulnerable people, key workers and those self-isolating

Back to work

Can I reopen my business?
  • From Wednesday 13 May, certain restrictions will be lifted to allow those who cannot work from home to return to work if it is safe to do so
  • The government has said that sectors of the economy that are allowed to be open should be open. This includes production, construction, manufacturing, logistics, distribution and scientific research in laboratories
  • Non-essential retail, restaurants, pubs, bars, gyms and leisure centres will remain closed
Can my employees come back to work?
  • Employers should make every effort to support working from home. Where work can only be done in the workplace, employees can return to work if it is safe to do so and they work in the following sectors: production, construction, manufacturing, logistics, distribution, scientific research in laboratories
  • Social distancing must be maintained
  • Employees can report employers to their local authority or the Health and Safety Executive if they are concerned their employer is not taking all practical steps to promote social distancing
How can I ensure my employees are safe at work?
  • The government is due to publish tailored guidelines for employers to help protect the workforce and customers from coronavirus while still continuing to trade or getting the business back up and running
Do people need to wear face coverings at work?
  • Face coverings are not compulsory. However, if you can, people are advised to wear face covering in enclosed public spaces where social distancing is not possible, for example on public transport

On a scale of 1-5, how useful have you found our content?

Not so useful
Very useful