Advice & Best PracticeCoronavirus

Financial support amid Covid-19 chaos

People across the UK have been forced to spend time away from work due to the coronavirus pandemic, with many left without their usual income to pay the bills. 

In March, the Government stepped in with several new schemes to support those affected and, although the situation is evolving and advice continues to change, the onus is ultimately on individuals to understand what help is available to suit their circumstances.

Here, James Foster, technical commercial manager at SJD Accountancy, explains the different options available to those unable to work. 

Coronavirus Job Retention Scheme 

The Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, has been the most utilised form of Government support with almost nine million workers reported to be on furlough.

The scheme has seen workers temporarily laid off, yet they remain on the payroll of their employer while receiving 80% of their monthly wage through Government contributions claimed by employers. 

To help with economic recovery post-pandemic, CJRS has been extended until October, albeit with some significant changes. Chancellor Rishi Sunak recently announced that, from 1 July, employers will be able to return furloughed workers on a part-time basis, while still claiming for the hours that employees do not work. 

This is known as flexible furlough and will replace the current system, which ends on 30 June. Claims past this date can only be made for employees already on furlough, and as such employers effectively had until 10 June to furlough staff so they can complete the three weeks of furlough required by the current scheme before it ends. 

Although the scheme will be renewed on 1 July, there is no change for new starter employees, who must have been on the payroll by 19th March to be eligible. Requests have been made on behalf of the estimated 2 million new starters who have missed out on being furloughed, but the Government has remained committed to the cut-off date – which had already been extended from the original date of 28th February – citing the need to reduce fraudulent claims. 

From August, the Government will continue to contribute 80% of employees’ wages, but will ask businesses to pay national insurance and pension contributions, which amounts to around 5% of total employment costs should the employee have been working. 

Employers will be expected to contribute 10% of wages in September, increasing to 20% in October. 

Self-Employed Income Support Scheme 

For the self-employed, who saw so much of their work wiped out in March, the Self-Employed Income Support Scheme (SEISS) is continuing for a second round of grants. This scheme has so far seen 2.3 million claims worth £6.8 billion. 

The first window to apply for the SEISS remains open until 13 July. The scheme offers a grant worth 80% of a self-employed worker’s average monthly profits, at a maximum of £2,500. To qualify, at least half of their income must have come from self-employment as registered on a 2018/19 tax return filed in January. 

Following calls for more support, a second and final grant will open for applications in August, allowing self-employed workers to access 70% of their earnings up to a maximum of £6,570. 

The scheme is open to those earn under £50,000 a year, with payments made in a single lump sum, directly to applicants via their bank accounts. 

Statutory Sick Pay  

The coronavirus Statutory Sick Pay (SSP) Rebate Scheme opened for applications in May and allows employers with fewer than 250 staff to recover the costs of SSP from the government. 

This will cover up to two weeks of SSP, which is currently set as £95.85 per week, from 13 March if an employee has coronavirus, displays symptoms, or is self-isolating because they live with somebody experiencing symptoms. Those shielding due to public health advice will be covered from 16 April. 

If you are a PAYE employee or an umbrella worker, you can claim Statutory Sick Pay (SSP) from day one of a coronavirus-related illness providing your weekly income exceeds £113.

If you meet these requirements, you could receive £94.85 per week, for up to a maximum of 28 weeks. You can also claim SSP if you’ve chosen to self-isolate, providing you obtain a sick note from the NHS’ 111 service.

If you work through a Personal Service Company (PSC) and are an employee of the company, you are also entitled to SSP and can claim back the costs of up to two weeks’ SSP per employee. This is unlike standard SSP, which you are not eligible for if you work through a PSC.

Employment and Support Allowance 

For self-employed workers and sole directors of personal service companies (PSCs) who are ineligible for the support schemes mentioned, the Government has directed them towards Employment and Support Allowance (ESA). 

ESA can be claimed by those who have a disability or health condition that affects how much they can work. The Government has clarified this includes those who are sick with COVID-19. ESA can now be claimed from the first day of sickness, whereas previously it wasn’t allowed until the eighth. 

You can apply for ESA if you are employed or self-employed based on National Insurance contributions, or income for the unemployed. When applying for ESA for the first time, you’ll be required to fill in an ESA 1 form and need to secure a sick note from NHS 111.

Most new claims will be for ‘new style’ ESA, a fortnightly payment that can be claimed by those who have worked as an employee or were self-employed. It is a contributory benefit, meaning eligibility depends on your National Insurance contributions for the previous two full tax years. 

Universal Credit is also available by applying through the HMRC website and will provide a monthly payment to help with living costs if you’re out of work or on a low income. 

Payment can take up to five weeks to come through if your application is successful, but an advance on this can be requested if funds are urgently needed. You won’t be eligible if you or your partner have savings of £16,000 or more, or if your partner is in full-time work. 

Business Loan Interruption and Bounce Back Loan Scheme 

Since its introduction in March, the Business Loan Interruption Scheme has approved almost £9 billion worth of claims. It allows UK SMEs with an annual turnover of £45 million or less to apply for an interest-free loan of up to £5 million to help with struggles caused by the coronavirus. 

As part of the scheme, the Government guarantees 80% of the loan and pays interest and any fees for the first 12 months.  

The self-employed will also be able to apply providing they operate through a business bank account and generate more than 50% of their turnover from trading activity. Those operating as sole traders, freelancers, and limited partnerships are also eligible. 

The Bounce Back Loan has also been introduced to help smaller businesses borrow between £2,000 and up to 25% of their turnover, capped at a maximum of £50,000. 

In this scheme, the government guarantees 100%  of the loan and there won’t be any fees or interest to pay for the first 12 months. After this period, interest will stand at 2.5% per year. 

It’s essential to remember these loans will need to be repaid in full, as the Government’s guarantee is for lenders rather than the borrowers. 

£500m pledged for local authorities 

It’s also important to note that the government has pledged £500m for local authorities nationwide to help provide Council Tax relief through existing Local Council Tax support schemes or other measures. 

The Government is yet to reveal details on this funding and how it will be allocated. However, The Ministry for Housing, Communities and Local Government has encouraged people to contact their local authority if they have questions about it. 

Businesses can also contact their local councils for business advice, with many councils providing bespoke support during the pandemic. 

There is little doubt that difficult times are inevitable on the road to economic recovery, but support is available for employees and businesses, so it’s imperative to know where and what to look for. The best place to start is the official government website,

By James Foster, senior commercial manager at SJD Accountancy

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