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government financial support schemes

Among many other things, COVID-19 has had a significantly adverse effect on the self-catering holiday let industry, due to guests having to cancel existing bookings and not being able to travel for a considerable amount of time.

This, understandably, put feelings of worry and panic into the minds of holiday let owners and many other industries, who will be missing out on valuable income to keep their businesses running. The government have acknowledged this and have offered a helping hand. On 23rd March 2020,  a number of financial support schemes were introduced to help get the country back up and running.

Read on to discover which government financial support schemes could help holiday let owners…

Tax Deferral Scheme
Business Rates Relief
Coronavirus Business Interruption Loan Scheme
Coronavirus Bounce Back Loan Scheme
Period of Grace Elections
Small Business Grant Fund
Self-employed Income Support Scheme (SEISS)

Tax Deferral Schemedeferring tax payments

What is the Tax Deferral Scheme?

The Tax Deferral Scheme introduced by the government allows VAT-registered businesses to delay some of your VAT/income tax payments from the 2019/20 tax year.

Businesses that are VAT-registered are able to defer both VAT and income tax payments, should they require some cash flow relief as a result of the Coronavirus pandemic.

Income Tax Payment Deferral

Normally there are 2 payments for tax each year, both requiring you to pay half of your previous year’s tax bill.

The deadlines for these payments are usually the 31st of January and 31st of July each year, however the tax deferral scheme allows you to delay your second payment of the year until the 31st January 2021.

You do not need to apply to defer your tax payments, the process is automatic. However, deferring is optional, you may still carry on paying your income tax payments as normal.

VAT Payment Deferral

The government also offered the opportunity for VAT-registered businesses to delay any VAT payments originally scheduled to be paid in between 20th March and 20th June 2020. These VAT payments can now be deferred until 31st March 2021.

It has been confirmed by the HMRC that the VAT Deferral Scheme also includes annual accounting advanced payments and payments on account. These payments are usually required to be made on the last day of the last 2 months of each VAT quarter (ICAEW).

On account payments that were due on March 31st, April 30th, May 31st or June 30th can be deferred until June 20th 2021.

Here is what you need to do if you have deferred your VAT payments:

  • Cancel any VAT direct debits before the payment date
  • Continue to submit VAT returns as you normally would

Business Rates Relief (COVID-19)relief of business rates

What is Business Rates Relief?

A business rate holiday has been introduced for companies in the retail, hospitality and leisure industries in England to help them recover their financial situation following COVID-19. Businesses in these sectors that are based in England only are not required to pay business rates throughout 2020 and 2021.

Which properties are eligible for Business Rates Relief?

You can benefit from business rate holiday if your property falls into one of the following business industries:

  • Restaurant/café/bar/pub
  • Shop
  • Music venue/cinema
  • Leisure (sports club, gym, spa etc.)
  • Hospitality property (E.g. a hotel, a guest house or self-catering accommodation)

How do you apply for a Business Rate Holiday?

If you qualify for Business Rates Relief, this will be automatically processed by your local council.

Use the government website’s business rate calculator to work out how much money your Business Rate Holiday will save you.

When does the Business Rate Relief come into place?

The Business Rate Holiday applies to your business rate payments for the 2020-2021 tax year. If your bill has already been issued without relief, it will be re-issued in due course.

Coronavirus Business Interruption Loan Scheme coronavirus business interruption loan

What is the Coronavirus Business Interruption Loan Scheme?

CBILS for short, the Coronavirus Business Interruption Loan Scheme was introduced by the government in order to try and help smaller businesses suffering in light of the coronavirus pandemic by offering loans up to £5million.

80% of the financial support is guaranteed by the government to the lender, and they will also pay your interest and any others fees for the first year.

How long does the CBILS loan last?

There are multiple finance options that you can apply for within the Coronavirus Business Interruption Loan Scheme, whichever option that you take will determine how long the loan lasts for.

This depends on which support facility you are applying for. Finance for overdrafts and invoice can last up to 3 years, whereas loans and asset finance support has a maximum length of 6 years.

Which businesses are eligible for the Coronavirus Business Interruption Loan Scheme

You are eligible to apply for the CBILS if your business is within the UK and receives an annual turnover of up to £45million.

You must also provide proof that your business would have functioned normally if the pandemic didn’t happen.

If you are looking to lend £30,000 or more off the government as part of the Coronavirus Business Interruption Loan Scheme, then you will need to verify that your business was not labelled as a ‘business in difficulty‘ on December 31st 2019.

 Which businesses cannot apply for the CBILS?

You are not eligible for the Coronavirus Business Interruption Loan Scheme if your business is a:

  • Bank, insurer or re-insurer (Insurance brokers are eligible for CBILS)
  • Public-sector service
  • State primary or secondary school

How do you apply for the Coronavirus Business Interruption Loan Scheme?

More than 50 lenders are available to offer you financial support through the CBILS, including the UK’s major banks.

It is up to you to approach your chosen lender via their website. You must tell them why you are looking to lend money, how much money you wish to borrow and how long you would like to pay it back.

You must also supply your lender with documents that prove your ability to pay the money back. Each lender may request different documents, and the amount that you are looking to lend may determine the depth of this process. These documents can include a list of assets, a business plan, details of accounts and cash flow forecasts.

Lastly, your chosen lender will check that your requested loan is appropriate for your business purposes and whether you are able to afford it. They will also confirm that this is the most suitable method of financial support for your requirements, and will offer you an alternative if they believe otherwise.

Coronavirus Bounce Back Loan Scheme coronavirus bounce back loan

What is the CBBLS?

The Bounce Back Loan Scheme (BBLS) was introduced to try and offer businesses smaller in size a quick-fire recovery after being negatively impacted by the COVID-19 pandemic.

Should you be eligible for the Coronavirus Bounce Back Loan Scheme, you would be entitled to lend an amount from £2,000 up to the value of 25% of your turnover, with the maximum loan being £50,000.

When does the CBBL need to be repaid?

This loan lasts for up to 6 years, and you are not required to pay anything for the first year, including interest. However after 12 months, 2.5% per year in interest must be paid.

Who is eligible to apply for the Coronavirus Bounce Back Loan Scheme?

You are able to apply for the CBBL Scheme if your business matches the following criteria:

  • UK-based
  • Existed prior to March 1st 2020
  • Was affected negatively due to COVID-19

Who isn’t eligible to apply for the CBBLS

You are ineligible to apply for this government scheme if your business fits within one of the following sectors:

  • Bank, insurer or resinsurer (insurance brokers are eligible)
  • Public-sector body
  • State primary or secondary school

Can you apply for the Coronavirus Bounce Back Loan Scheme if you are already claiming funding?

There are some already existing government schemes which, if you are already claiming from, you will be ineligible to receive Coronavirus Bounce Back Loan funding. These schemes are:

  • COVID-19 Corporate Financing Facility
  • Coronavirus Business Interruption Loan Scheme (CBILS)
  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)

If you are already claiming from one of these 3 schemes and wish to switch to the CBBLS, you are able to transfer a loan of up to £50,000 via your chosen lender. This change is available until November 4th 2020.

How do you apply for the Coronavirus Bounce Back Loan Scheme?

You can choose to apply for the CBBLS with a range of different lending services by contacting them via their website. You can choose your lender on the British Business Bank website.

Your application for the Coronavirus Bounce Back Loan Scheme will require you to fill in some details and also declare that you are eligible for the loan. After your application is filled in, your chosen lender will then decide whether this method of financial support is suitable to you, or if there is a better alternative.

The lender will ask you to fill in a short online application form and self-declare that you are eligible.

Period of Grace Electionsperiod of grace election

What is a Period of Grace Election?

If your Furnished Holiday Let (FHL) does not reach a certain level of availability or occupancy throughout the year, then it can no longer be classed as a FHL.

However, if you were genuinely intending to meet the letting thresholds and the reasons for not doing so were out of your control, then a Period of Grace Election may be able to help your property continue to qualify as a FHL while you get back up and running.

If you are worried about your property still qualifying as a Furnished Holiday Let in the aftermath of COVID-19, a Period of Grace may be able to help you out.

How do Period of Grace Elections work?

You are eligible to make a Period of Grace Election as long as your property met the required occupation and availability levels in the previous year.

You must also prove that, despite not meeting the conditions, you were genuinely intent on doing so. This can be shown by your marketing levels being at least the same, if not greater than the years that you reached the occupancy and availability thresholds.

You may also be eligible to make a Period of Grace Election if your bookings have been cancelled due to unforeseen circumstances, such as COVID-19.

What happens if you don’t meet the letting conditions during your Period of Grace?

If your property does not reach the requested letting conditions while in a first Period of Grace, you are able to make another election. This option is only available if you made a Period of Grace Election in the year prior.

If your property was to fall short of the letting requirements for a 3rd year running, you are unable to make another election and your property will no longer qualify as being a Furnished Holiday Let.

Small Business Grant Fundsmall businesses grant

What is the Small Business Grant Fund

The Small Business Grant Fund (SBGF) was put into place in April 2020 to assist small and rural English businesses with their running costs throughout the pandemic.

The SBGF scheme offers a £10,000 grant to businesses that are based in England and don’t pay many business rates, if any at all.

Who is eligible for the SBGF?

The criteria for businesses that can receive the Small Business Grant Fund are:

  • England-base
  • Business includes property
  • Business was already eligible for the Small Business Rate Relief or Rural Rate Relief on 11th March 2020, or already receives tapered relief
  • If not applicable to the above, businesses can be eligible for the SBGF if their premises’ rateable value lies in between £12,000 and £15,000

Note that if your business occupies more than 1 building and is eligible for a Small Business Grant Fund, you may claim 1 grant per property.

Also note that if you are already claiming from the Retail, Hospitality and Leisure Grant, then you are not eligible for funding from the Small Business Grant Fund.

Who is not eligible for the Small Business Grant Fund?

You are not eligible for funding from the SBGF if:

  • If your occupied properties are being used for personal reasons
  • You are looking for funding for car parks/parking spaces
  • If your business dissolved or was in liquidation on or prior to March 11th 2020

How do you apply for the Small Business Grant Fund?

There is no application process for the SBGF. If your business is eligible for this method of funding, then your council will be in contact with information on how you go about claiming this government financial support.

Does the SBGF count towards state aid?

The Small Business Grant Fund does count as part of the state funds that you are eligible for across a 3-year period.

The maximum threshold for this ‘de minimis state aid’ is €200,000. You will be asked to fill in a de minimis declaration which will prove that you are not going to exceed the €200,000 limit.

If, however, you were to pass the state aid threshold, you may be able to receive further funding from the COVID-19 Temporary Framework. If you do apply for this, you will be asked to complete another declaration form, stating that you are not going to surpass this limit of €800,000 and confirming that your business was not undertaking in difficulty by 31st December 2019.

Can businesses in other UK countries qualify for the Small Business Grant Fund?

  •  Scottish businesses that already claim from the Business Growth Accelerator Relief, Rural Relief, Small Business Bonus Scheme Relief, Nursery Relief or Disabled Relief are able to apply for a one-time grant of £10,000 from their local council/authority. Note that self-catering properties are excluded from this funding
  • Businesses in Northern Ireland that have a Net Asset/Annual Value of up to £15,000. This grant will be automatically paid to eligible businesses that have previously supplied their bank details for the rates system. If not, you can apply for this one-off grant via the NI Business Info website
  • Welsh businesses that already qualify for Small Business Rates Relief and have a rateable value of up to £12,000 are able to qualify for a grant of £10,000. If your business contains multiple properties, you can claim this one-time payment for up to 2 separate premises in each council area

Self-employed Income Support Scheme (SEISS)self employed income support scheme

What is the Self-employed Income Support Scheme?

The SEISS is a grant scheme that was put in place to aid the self-employed businesses that have experienced a negative impact following the COVID-19 pandemic.

This scheme was initially offering a one-off grant, which is no longer available to apply for from 14th July 2020. However, the government have decided to extend the funding and allow self-employed businesses to apply for a second grant which is available to claim for from 17th August 2020 to 19th October 2020.

Although this grant does not require any repayments, you will need to pay the relevant Income Tax and self-employed National Insurance fees.

Grants that are issued under this scheme are not classed as ‘access to public funds’, you are also able to claim these funds on any work visa category.

How much can you get from a SEISS grant?

The second Self-employed Income Support Scheme allows you to claim a grant which equates to 70% of your average profits per month, and pays out 3 months’ worth of these profits in one payment. The most that you can claim from the SEISS grant is £6,570. When you are making your claim, you will be told how your grant amount was  calculated.

Note that even if you did not claim from the first grant, you are still able to claim from the second if you are eligible.

Who can claim from the SEISS?

Those who are either self-employed or are part of a partnership and have been impacted from the 14th July 2020 are eligible to claim a Self-employed Income Support Scheme, as long as you can prove that your business has been negatively affected.

To be eligible to claim the SEISS grant, your business must apply to all of the following:

  • Traded in the 2018/19 tax year and submitted your Self Assessment tax return by the 23rd April 2020 for this tax year
  • Traded in the 2019/20 tax year
  • You are intending to continue trading in the 2020/2021 tax year
  • You are continuing to trade in a business that has been impacted negatively by COVID-19
  • Your trading profits are £50,000 or below and at least equal to your non-trading income

If, for whatever reason, you are ineligible because of the 2018/19 Self Assessment tax return, your eligibility will be based on the 2016/17, 2017/18 and 2018/19 tax years.

There are many reasons why the COVID-19 pandemic may have impacted your business adversely, these include:

  • Not being able to work due to:
    • Self-isolation
    • Off sick for reasons connected to COVID-19
    • Caring for somebody due to reasons created by coronavirus
  • Your business having to stop or reduce activity or having additional costs due to:
    • Having no customers/customer levels being significantly reduced
    • Employees aren’t able to get to your place of work
    •  Having to purchase PPE to allow your business to continue under social distancing measures
    • At least one of your contracts being cancelled

Note that you are still able to claim from the SEISS if you receive Maternity Allowance funding.

Also note that funding from the SEISS is not classed as ‘access to public funds’. You are able to claim from the Self-employed Income Support Scheme no matter what type of work visa you are on.

Who isn’t eligible to claim from the Self-employed Income Support Scheme?

You cannot claim from the SEISS if:

  • Your business does not apply to one or more of the criteria stated above
  • Your business trades through a trust or a limited company

How to claim for SEISS

You will need to claim for the second grant from the SEISS by 19th October 2020, which can be done via the Government Gateway system. In order to do this you will require the following:

  • Government Gateway log-in details
  • Bank details (account name, sort code, account number and address)

* At the time of updating (27th August 2020), Sykes Cottages has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies. Generic information is contained within this article and each individual’s tax affairs are different, further advice should be sought from an accountant.

Let your property with Sykes and earn up to £125,000 per year*

  • Join over 15,000 holiday properties already working with Sykes Cottages
  • We welcome over 26 million web visitors a year
  • Many of our owners achieve more than 45 bookings a year
  • We specialise in turning your holiday property into a profitable year-round income for you

*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.

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