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Surviving the second UK lockdown: a guide

By Ross Archer, Lead Manager — Public Policy, Association of International Certified Professional Accountants

We in the UK live in uncertain times.

Just when many businesses were getting back on their feet and recovering from the first lockdown, a second wave of the COVID-19 virus swept across England, Wales, Scotland and Northern Ireland. Governments in all four nations have imposed new restrictions to fight against the virus.

According to the Prime Minister, even if a vaccine were to be successfully developed, COVID-19 won’t be going away anytime soon. Hence, restrictions that hamper business activities would have to remain in place for the foreseeable future.

For businesses to not only survive this crisis but recover once restrictions are lifted, they need support. The UK government has initiated several financial support measures that businesses can use — here are some of the key ones:

  1. Coronavirus Job Retention Scheme

    This scheme, which originally ended in October 2020, has now been extended to the end of March 2021 to help support businesses who have had to close again due to the latest lockdowns. Under this scheme, businesses can furlough their staff and receive 80% of their salaries up to a maximum amount of £2,500 a month. You will have to continue to pay the cost of Employer NIC and pension contributions of any furloughed staff. The scheme also offers flexible furlough plans to allow staff to work some of their hours and receive furlough for the hours that they are unable to work.  

  2. Self-Employed Income Support Scheme 

    This scheme has been extended until April 2021 and offers two further grants in three-month periods: November 2020 to January 2021 and February 2021 to April 2021. To be able to claim under this scheme, you will need to be:

      • self-employed;
      • eligible for either of the first two grants of this scheme, and 
      • provide proof that your trade is negatively impacted due to the COVID-19 pandemic, or that you have had to temporarily stop your business activity. 

    The new scheme grants have increased from 55% of average monthly trading profits to 80% and is capped at £7,500 for three months. This change brings it in line with the Coronavirus Job Retention Scheme and aligns with CIMA advocacy team recommendations to the UK government. The grants are taxable and are also subject to National Insurance contributions. 

  3. COVID-19 loans

    The application deadlines for the Coronavirus Business Interruption Loan Scheme and the Coronavirus Bounce Back Loan Scheme have both been extended until January 31, 2021. You can apply for a top-up to a Bounce Back Loan if you have not already applied for the full amount. The maximum loan available under the Bounce Back Scheme is £50,000 and the maximum loan available under the Coronavirus Business Interruption Loan scheme is £5 million. There are eligibility criteria for both loan schemes that you will need to check before applying.

    The CIMA advocacy team is currently pushing for the ability for businesses to be able to top up their Business Interruption Loans and for both loan schemes to be extended beyond the end of January.  

  4. The Future Fund  

    This scheme has been extended until January 31, 2021 — and offers innovative companies which are facing financing difficulties due to the COVID-19 outbreak convertible loans between £125,000 to £5 million. Any loans awarded are subject to, at minimum, equal-match funding from private investors.  

  5. Cash grants   

    The Chancellor, Rishi Sunak, has announced cash grants for businesses forced to close and unable to operate due to current lockdown restrictions of up to £3,000. At the moment, only businesses in England are eligible for this grant. For businesses in Wales, Scotland and Northern Ireland, region-specific COVID-19 support measures are also available.  

    If your business is in an area which previously faced higher-level restrictions under the England tiered system, you may be able to claim financial support for that period under the Local Restrictions Support Grant.  

  6. Tax deferrals  

    Some of the existing tax deferral measures that were announced in the first lockdown have since been extended. You can check your eligibility for these measures at the official UK Government website

Beyond government support, businesses can also prepare for future challenges and opportunities by reimagining their business model. We’ve produced a free business model toolkit that you can use to help manage this current crisis.