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Coronavirus: financial support measures

All the latest information on government and charity provisions for salons and barbershops impacted by the COVID-19 outbreak

This page will be updated with information as it becomes available. Last updated: March 26.

Self-Employed Income Support Scheme

The government has unveiled a support package for self-employed workers that will be available for three months. However, much like other business support measures that have already been announced, this will remain under review.

What you need to know if you’re self-employed:

  • You’ll receive a taxable grant of 80% of your average monthly profits over the last three years, based on tax returns filed.  You must have filed a tax return for 2018-19.  The maximum payable will be £2,500 per month, the same maximum as for ‘furloughed’ employees.
  • If you don’t have three years of tax returns, the grant will be paid based on whatever tax returns you have submitted.  If tax returns for 2019 have not yet been filed (they were due by 31 January 2020), you now have four weeks to get them submitted.
  • Self-employed businesses that have a trading profit of £50,000 or less and who make most of their income from self-employment will be eligible to claim the grant.
  • Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.
  • There will be a delay while HMRC sets up new systems to process the grants, which are not expected to be ready until early June.  HMRC will contact those who have filed returns to ask you to complete an online form.  The grant will then be paid as a single payment covering three months straight into your bank account.
  • In the meantime, you can access business interruption loans, available interest-free for 12 months.
  • You can access Universal Credit at the same rate as Statutory Sick Pay is paid for employees.  The minimum income floor for Universal Credit has been suspended for everyone affected by the Coronavirus so a self-employed person with no income should be able to claim Universal Credit at a similar rate to someone who is unemployed.  In his announcement, the Chancellor also said that advance payments can be made ‘within days’ after a claim is submitted, rather than the usual wait of five weeks.

UPDATE – 23 March 2020

As of 23 March 2020, all non-essential shops and services have been ordered to close for a minimum of three weeks.

HMRC

HMRC have created a phone helpline to support and advise freelancers and the self-employed affected by Coronavirus uncertainty. It’s bound to be a busy line, but there are 2,000 experienced call handlers on hand to offer advice and practical support.

Call on 0800 0159 559, open 8am-8pm (Mon-Fri) and 8am-4pm (Saturday).

If you are set up as a limited company you may benefit from the £330bn package of help offered by the Government. Don’t forget this is an offer of a loan and will have to be repaid, but it could be the best option to inject cash into your business.

Coronavirus Job Retention Scheme – If you as a business owner cannot cover staff costs due to the impact of COVID-19, there is the option to access support to continue paying part of your employees’ wages, and avoid making redundancies.

Accessing the Coronavirus Job Retention Scheme means that your staff will remain on payroll, but will be reclassified as ‘furloughed workers’. You will need to choose which employees will be affected by this status change,  and notify each of them . Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. You will then need to submit information to HMRC about the employees that have been furloughed, along with details of their earnings, through a new online portal that is expected to be added to the gov.uk website in the coming days.

Once your application has been approved, HMRC will reimburse 80% of the furloughed workers’ wage costs, up to a cap of £2,500 per month. At the moment, HMRC are working urgently to set up a system for this reimbursement scheme.

If your employer informs you that you have been furloughed, you must not undertake any work for them until this status has been reversed, or you will risk invalidating your resulting ‘wage’ grant. You will remain employed while furloughed, and your employer can choose whether to fund the difference between the 80% payment and your contracted salary, but does not have to.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit (see below). The Coronavirus Job Retention Scheme is expected to run for at least three months from 1 March 2020, but the government has stated that it will extend the measure if necessary.

Insurance – All Insurers, including Just Hair Scheme Insurer (Covea) and notable household names Aviva (formerly Norwich Union)/Allianz, AXA, NIG, RSA & Zurich have confirmed that cover does not apply and will not change policy nor offer cover retrospectively.

Business Interruption coverage is triggered by damage (e.g. Fire, Flood) to the premises, thus preventing or restricted access. The basis of cover would either be written under Gross Profit or Revenue. The Business Interruption section of cover incorporates a number of policy extensions albeit these will note inner limits and restricted periods following the disruption. Sums insured vary but usually limited to £25,000 rising to £50,000 per loss/claim, with most Insurers applying a maximum indemnity period of 3 months.

Two of these extensions are:

Denial of Access

  • Cover is restricted to ‘damage’ only and thus would not apply in the current situation.
  • The salons/ barbershops covered under a Commercial Combined policy may have ‘non-damage’ cover but would exclude Infectious Diseases.

Discovery of a Notifiable Human Infectious Disease at the Premises

  • 90 per cent of the insurer policies relate to the premises where some extend to include within one mile of the insured premises.
  • For cover to activate, there must be a Compulsory Closure by a Public Body (Government). As at the date/ time of writing (Monday 23 March 2020), the PM and his team had not issued any such order, although it seems only a matter of time.
  • Unfortunately insurance companies have a specified list of the diseases covered BUT Coronavirus/ COVID-19 is not included and cover does not extend to include pandemics. If not listed, it will not be covered.

In view of the last point, insurance protection is not available. Business Interruption extensions are provided to give specific cover, limited indemnity periods and nominal values. The majority of claims that fall under this relate to infestation, murder/suicide preventing business from operating allowing emergency services to gather evidence. To that end, pandemics were not legislated for.

There is no recourse under insurance for any business who have taken the decision to voluntarily close.

Turning to Session Stylists, Chair Renters, Rent a Room, Home and Mobile Individuals, cover is arranged under a Tradesman policy.

Cover is designed to cover their legal liability in respect of:

(a) accidental Bodily Injury to any person (your clients)

(b) accidental Damage to Third Party Property

Unfortunately, due to the nature of freelance work, there is no business interruption/income or cancellation cover.

All insurance policies will include an unoccupied premises condition; cover for the business is generally insured up to 30 days. Beyond that, insurers may insist on additional security measures to protect the salon/ barbershop from loss or damage.

The absence of cover for COVID-19 does not prevent loss or damage from other factors, so it is extremely important that insurance protection continues to ensure that the shop’s fit-out, contents and stock are insured against loss or damage caused by Fire, Lightning, Explosion, Aircraft, Malicious Persons, Theft, Storm, Flood (if insured), Escape of Water, Impact by road vehicle or animal and Damage to Shop Front.

Business rates relief – Between now and 2021, business rates (property tax) will not be charged on hair salons and barbershops. Instead, the government will provided local authorities with £2.2bn to cover the shortfall.  Salons and barbershops that already benefit from small business rates relief (those with a rateable value under £51,000) were promised a £3,000 cash grant in the Budget. This has since been extended to £10,000 per business.

Universal Credit – If you are not eligible for Statutory Sick Pay (SSP) – for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week, you can now more easily make a claim for Universal Credit or new style Employment and Support Allowance.

This applies if you have COVID-19 or have been advised to stay at home.

If you are eligible for new style Employment and Support Allowance, it will now be payable from day one of sickness, rather than day eight. This applies if you have COVID-19 or have been advised to stay at home.

To support you with the economic impact of the outbreak, and allow you to follow government guidance on self-isolation and social distancing, from 6 April the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak.

Whether you are currently in or out of work, if you are on a low income and affected by the economic impacts of COVID-19, you will be able to access the full range of the welfare system, including Universal Credit.

From 6 April the Government is increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for one year. Both will increase by £20 per week on top of planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.

Coronavirus Business Interruption Loan Scheme – Provided by the British Business Bank (in part, funded by grants from Barclays, RBS, HSBC and Lloyds), this scheme will enable up to £1.2bn in lending to smaller businesses otherwise deemed too risky to grant loans. The government will waive the 2 per cent it normally charges borrowers annually through the similar Enterprise Finance Guarantee Scheme (EFG), and will support individual loans of up to £5m. It has also promised to underwrite bank losses potentially generated by the scheme, covering the costs of up to 80 per cent of each loan. Interest on Coronavirus loans will be abolished for the first 6 months, and from then onwards will not be inflated, but will be similar to those applied to existing bank lending. Businesses will be able to apply as soon as they are able to demonstrate they have been severely impacted by the virus, with processes expected to start as soon as next week (w/c March 23).

Sick pay costs reclaim – Small and medium-sized businesses (with 250 employees or fewer) will now able to reclaim the cost of 14 days of sick pay per employee (amounting to just under £200 per individual). Statutory Sick Pay for employees will also start from day one (instead of day four). A reimbursement system for this measure has not yet been put in place, so be aware that claims may take a while to be repaid.

Mortgage ‘holidays’ – Those who find themselves in financial difficulty due to Coronavirus will be able to apply for three-month mortgage ‘holidays’ – a suspension of payments to allow return to financial liquidity that does not accrue any additional interest.

Tax payment suspension – Small and medium-sized businesses who – as a result of Coronavirus losses – cannot afford to pay their tax bills can approach HMRC and request a “time to pay” agreement, which would suspend debt collection. This request would need to be submitted well in advance of the deadline, and would be considered and negotiated on an individual salon or barbershop business basis. Previously used to help UK businesses affected by flooding and the 2008 financial crisis, the Coronavirus suspensions would also see the 3.5 per cent annual interest on deferred tax payments waived. To apply for suspension, business owners will need to ring a dedicated hotline:

0800 015 9559
(Calls taken Monday to Friday from 8am to 8pm,
and on Saturdays from 8am to 4pm)

The Hair & Beauty Charity – If you are experiencing extreme financial difficulties as a result of the Coronavirus outbreak, you can also apply for help from the Hair & Beauty Charity, who have ring-fenced funds to help those affected. The application process is the same as for those requesting assistance from the charity at any other time, and the form can be downloaded at hairandbeautycharity.org/application

Priority will be given to households where one adult (working within the industry) provides the sole household income (e.g. if you live with your partner who still receives an ‘employed wage’, priority will be given to single parent families whose only income is dependent on their hair/beauty industry wage). Applicants must also meet the following criteria:

  • Anyone currently working in the hair and beauty industries (for a minimum of 3 years) OR
  • Anyone who has previously worked in the hair and beauty industries (for a minimum of 5 years, no longer than 15 years ago).

Help will be prioritised to those who:

    • become ill or disabled
    • have a terminal illness
    • suffer mental health problems
    • are homeless
    • become carers for elderly relatives, children, spouses/partners or other dependents
    • have suffered a bereavement, often the main bread-winner
    • are without sufficient income to meet basic needs

The charity is unable to provide assistance if you have savings of £500 or more, or account balances that consistently do not fall below £500. They also cannot help those with an income significantly higher than their expenditure, nor provide assistance with business costs; debt (incl. rent arrears, bankruptcy fees etc.); major house repairs or renovations; or training and equipment costs.