COVID-19

COVID-19: Government legislation and local authority support measures

Key considerations for businesses looking for cashflow support

Given the existential threat posed to many small businesses – particularly those facing a prolonged collapse in consumer demand as a result of the pandemic and lockdowns – businesses will be looking for all possible cashflow support to ensure they have enough liquidity to survive the current crisis.

A number of measures have been introduced by the Government over the course of the pandemic to support businesses. However, some of these have now been withdrawn.

Local Authority grant funding schemes

Businesses required to close in England due to local or national restrictions were eligible for the following:

First payment cycle, 5 January to 15 February 2021

The first payment cycle covered 5 January to 15 February 2021:

  • if your business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £2,001 for this 42-day qualifying restrictions period
  • if your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £3,000 for this 42-day qualifying restrictions period
  • if your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £4,500 for this 42-day qualifying restrictions period

You also would have been eligible for the one-off Closed Businesses Lockdown Payment, which your local council should have paid together with the grant from the first payment cycle of this scheme.

Second payment cycle, 16 February to 31 March 2021

The second payment cycle covered 16 February to 31 March 2021:

  • if your business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £2,096 for this 44-day qualifying restrictions period
  • if your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £3,143 for this 44-day qualifying restrictions period
  • if your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £4,714 for this 44-day qualifying restrictions period

National lockdown between 5 November and 2 December 2020

  • If your business has a property with a rateable value of £15,000 or less, you may have been eligible for a cash grant of £1,334 for the 28-day qualifying restrictions period.
  • If your business has a property with a rateable value over £15,000 and less than £51,000, you may have been eligible for a cash grant of £2,000 for the 28-day qualifying restrictions period.
  • If your business has a property with a rateable value of £51,000 or above, you may have been eligible for a cash grant of £3,000 for the 28-day qualifying restrictions period.
Business rates relief

Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020 to 2021 tax year.

You’re eligible if your property is a:

  • shop
  • restaurant, café, bar or pub
  • cinema or live music venue
  • assembly or leisure property – for example, a sports club, a gym or a spa
  • hospitality property – for example, a hotel, a guest house or self-catering accommodation

You do not need to take any action. Your local council will apply the discount automatically.

Landlord changes

The government announced that commercial tenants who are unable to pay rent as a result of the impact of COVID-19 will have protection from forfeiture of their leases until the 25 March 2022.

The government proposes to legislate to ringfence COVID-related rent arrears and introduce a system of binding arbitration for landlords and tenants who cannot come to a negotiated settlement.

Suspension of statutory demands and winding up petitions

A temporary suspension of statutory demands and winding up petitions remained in place up to 30 September 2021.

There will be a threshold imposed during the “relevant period” (up until 31 March 2022), so that a creditor cannot seek to issue a winding up petition against a debtor unless the outstanding debt is at least £10,000. Creditors holding debts of less than this amount will continue to be unable to issue a winding up petition during the relevant period.

Creditors with debts of at least £10,000 will first be required to seek proposals from the debtor company for repayment prior to issuing a winding up petition, providing the debtor with 21 days in which to respond.

The partial lifting of the restrictions will not apply to commercial rent arrears which are categorised as “excluded debts” under the regulations – and therefore commercial landlords will continue to be prevented from issuing winding up petitions against tenants for unpaid rent, or any other payments due from a tenant under a lease.

Changes in wrongful trading legislation

The temporary suspension of wrongful trading laws expired on 30 June 2021.

Account filing

Since 27 June 2020, businesses were given a three-month extension for filing their accounts to allow them to prioritise managing the impact of Coronavirus. The filing deadline was automatically extended if it fell between 27 June 2020 and 5 April 2021. An extension will need to be applied for beyond that date.

We are on hand to support businesses through the ongoing challenges of COVID-19. If you have any questions about local authority funding support or other potential options for managing short-term liquidity challenges, please do not hesitate to contact us.

Related team

Tony Wright

Tony Wright

  • Partner
  • Restructuring Advisory
  • London