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COVID-19: government support for individuals and businesses

18 March 2021

At the spring Budget of 2021, the Chancellor announced a range of extensions to ongoing COVID support packages to support businesses, individuals and the economy as lockdown rules are eased.

In January 2021, following the announcement of the new national lockdown, HM Treasury has also announced a new one-off grant for retail, hospitality and leisure sector businesses

In December 2020, the Government made a number of announcements about further support for business as follows:

On 22 October, the Chancellor announced enhanced support for businesses, including extra grants funding for businesses in Tier 2 lock-downs areas, enhancing the Self-employed income support scheme and increasing local authority lockdown grants.

On 24 September 2020, the Chancellor announced a further range of business support measures in his Winter Economy plan.

Further insight following Chancellors update on support packages from the Summer Economic statement can be found below:

While the package of help for business will evolve over time, the key elements of the current proposals are summarised below:

Government-backed loans to businesses 

In the spring 2021 Budget, the Chancellor announced that the government will open a new scheme from 6 April 2021 to help businesses of all sizes fund the resumption of business after lockdown ends. As with the existing loan schemes (below), the Government will underwrite the new loans by with an 80% guarantee.

Businesses can borrow between £25,000 and £10m. Any business (apart from banks and insurers) can apply before 31 December 2021, including those already borrowing under existing COVID-19 loan schemes. 

The scheme will offer both overdrafts and invoice finance over a maximum of three years and term loans and asset finance over a maximum of six years. Personal guarantees will be required for loans over £250,000 and the business must be able to show it has been affected by the pandemic but remains viable (and not insolvent). 

In response to the funding difficulties of businesses during the pandemic, in 2020 the government launched four loan schemes to support businesses:

  • Bounce back loan scheme (BBLS)
  • Coronavirus Business Interruption Loan Scheme (CBILS)
  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)
  • COVID Corporate Financing Facility (CCFF)

Read more on the details of each scheme in our article on the current debt landscape.

On 24 September, the Chancellor announced that the terms of the schemes were to be extended – read more here.

On 17 December, it was announced that BBLS, CBILS and CLBILS would remain open until the end of March 2021 (the CCFF already runs until 31 March 2021). On 8 February 2021, the Treasury announced more options for BBLS borrowers: to pause all payments for a further six months, elect to make interest only payments for a six month period (up to three times during the loan) and extend the loan term to ten years. 

Business Rates reliefs

Qualifying businesses in the retail, leisure and hospitality sectors are already benefiting from 100% relief from business rates, and this relief will be extended from 1 April 2021 to 30 June 2021. Thereafter, qualifying businesses will benefit from a business rates reduction of 66% for the period from 1 July 2021 through to 31 March 2022. 

However, this relief will be capped at a value of £2m per business for properties that were forced to close due to COVID-19 on 5 January 2021. For qualifying businesses where the properties were not forced to close on 5 January 2021, the relief will be capped at a value of £105,000 per business. Subject to the application of the caps, therefore, this represents a discount of 75% of business rates when measured across the whole financial year to March 2022.

Relief for airports and ground operations from business rates is being renewed for six months from 1 April 2021 through to 30 September 2021. Eligible businesses in England will receive full relief from business rates for this six month period, capped at £4m per claimant. Subject to the application of the cap, therefore, this represents a discount of 50% of business rates when measured across the whole financial year to March 2022.

Some businesses have declined to take advantage of business rates relief, and have made payments to local authorities (notwithstanding entitlement to relief). The government is to legislate to put beyond doubt that such payments will be deductible for income tax and corporation tax purposes, so that businesses are no worse off than if they had paid an actual business rates liability.

Local authorities will be fully compensated for these business rates measures. It is assumed that the reliefs will be processed automatically by each Local Authority. Read more on eligibility for relief.

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Direct business grants

From 1 April 2021, Restart grants will replace both Local Restrictions Support Grants (Closed) and Local Restrictions Support Grant (Open) – see below. The Restart grants will provide non-essential retail businesses with up to £6,000 per premises: businesses required to stay shut for longer (such as gyms, leisure, personal care, accommodation and hospitality) will receive up to £18,000. As before, the exact grant depends on the rateable value of the premises: up to £8,000 if the rateable value is £15,000 or less, £12,000 if it’s between £15,000 and £51,000, and £18,000 for higher rateable values. As before, businesses that are not eligible can still apply to their Local Authority for support from the authority’s increased hardship fund. 

On 5 January 2021 the Government announced a new ‘one-off’ grant payment to retail, hospitality and leisure sector businesses on top of the local lockdown grant scheme for businesses in England. Businesses will receive grants of:

  • £4,000 if their business property has a rateable value of £15,000 or under
  • £6,000 where the rateable value is between £15,000 and £51,000
  • £9,000 where the rateable value is over £51,000.

Funds have also be extended to the Governments of Scotland Wales and Northern Ireland to enhance their grant schemes. To help businesses that fall outside the grant scheme, the Government has also released an additional £594m to the discretionary support fund administered by Local Authorities and Devolved Governments.

The first ‘lockdown’ grant scheme was announced on 9 September to provide businesses with an additional grant where they were legally required to close for three weeks or more as a result of a local COVID-19 lockdown. Local authorities were empowered to make payments for each qualifying lockdown period of £1,000 where the business property rateable value was under £51,000 (£1,500 for higher value properties). 

From 9 October, it was announced that the scheme would now pay the grants for every two weeks of closure (ie lockdown in a Tier 3 area), giving businesses monthly payments up to £1,334 for small businesses using properties with a rateable value of or below £15,000, £2,000 for medium sized businesses with a rateable value between £15,000 and £51,000, and £3,000 for larger businesses. Where a lockdown is for just two weeks in a month grants of half these amounts can be paid. These Tier 3 level grants will be paid to all relevant businesses during the National lockdown from 5 November to 2 December (or longer as appropriate). 

On 22 October, the Chancellor announced enhanced retrospective grants for businesses in Tier 2 areas where they have not been forced to close but are suffering an additional loss of business. The scheme will allow local authorities to give monthly payments of up to £934 to small businesses using properties with a rateable value of or below £15,000, £1,400 to medium sized businesses with a rateable value between £15,000 and £51,000, and £2,100 to larger businesses. Local authorities can adjust the wider eligibility criteria for their areas and flex the payments where certain businesses would lose out. 

Under the original COVID business grant scheme the government provided funding for local authorities in England, to provide the business grants of £10,000 to around 700,000 business currently eligible for SBRR or Rural Rate. Businesses in the retail, hospitality and leisure sector that use premises with a rateable value between £15,000 and £51,000, and will therefore pay no business rates for the current year, received grants of £25,000 from their Local Authority.

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Supporting the self employed

On 26 March 2020, the Chancellor announced initial details of a Self-Employed Income Support Scheme (SEISS). The scheme is intended to mirror the support given for furloughed employees and will pay qualifying self-employed individuals up to 80% of their average monthly income (as a taxable grant) up to a limit of £2,500 per month for April, May and June 2020. 

On 29 May, the Chancellor announced that the scheme would be extended for a further three months. The second phase of the scheme was set at 70% of average monthly income with the maximum lump sum payment for the second phase set at £6,570. 

On 24 September the Chancellor announced another two rounds of grants under the SEISS scheme from November 2020 to April 2021 and on 22 October he announced changes to the size of these grants. To qualify for these grants, individuals (including members of partnerships) must:

  • Currently be eligible for the SEISS (although they do not have to have claimed the previous grants)
  • Declare that they are currently actively trading and intend to continue to trade
  • Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period, which for the first grant is between 1 November 2020 and the date of claim.

The third round of grant will cover the three months from 1 November 2020 to 31 January 2021. For November to January 2021, the maximum lump sum payment will 80% of the individual’s average monthly trading profits for the period maximum lump sum payment £7,500. 

The fourth round grant will has been set at 80% of three months’ average trading profits, capped at £7,500 – it covers the period to the end of April 2021.  As for previous grants, the amount will be paid in a single instalment, and will be a taxable receipt of the self-employed business.

The fifth grant will cover the period to the end of September 2021. The rate of grant payment will depend on the amount the individual’s trading turnover was reduced by COVID-19 for the period April 2020 to April 2021: 

  • 80% of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more
  • 30% of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.

Eligible individuals will be able to submit claims for the fifth grant from late July 2021.

For each round of grants claimants are required to certify that their business is affected by Coronavirus restrictions in the relevant period. The full qualifying criteria for the original self-employed grants required individuals (including partnership members) to:

  • Have made at least one tax return showing a year’s worth of trading income
  • Their annual profits are no more than £50,000 in the relevant tax year (2019/20 for the fourth and fifth grants or an average trading profit of less than £50,000 in prior years.
  • They have submitted their self-assessment tax return for the relevant tax year
  • They earn more than 50% of their annual income from self-employment (eg it is expected that those with high levels of rental income in addition to self-employed profits would not qualify)
  • They were trading during 2019/20 and 2020/21 and will carry on (when the COVID-19 crisis is over) and have lost income as a result of the crisis.
  • For the fifth grant, individuals must state whether their reduction in turnover due to COVID-19 is more or less than 30% for the period April 2020 to April 2021 (this affects the level of the fifth grant). 

The government has now confirmed that the qualifying criteria is less stringent for individuals for whom having a new child either affected their trading profits or total income for 2018/19 or meant that a tax return was not submitted for that year - read more

Individuals who commenced self-employment after 5 April 2020 will not be able to apply for the scheme as they have no tax records on which payments can be calculated. Individuals trading through a personal service company will not be eligible but may be able to claim under the Coronavirus Job Retention Scheme.

You can check if you are eligible Self-employed income support scheme and find out when you can apply here

For those who can claim, in calculating the amount of grant payable, HMRC will average the individual’s profits over the past three tax years (or a shorter period, provided profits have been declared on at least one tax return).

Individuals must apply personally online and the three month grant will be paid as a lump sum. Individuals who are already registered as self-employed will be contacted by HMRC and asked to complete an online claim before payments are made. Where a taxpayer makes a mistake on a claim or makes a fraudulent claim, the overpayment identified will be clawed back by HMRC – read more

While HMRC may send individuals information about the SEISS) through emails or text, individuals should be very careful about potential fraud/scams: remember you can only apply for the SEISS personally (no agents can apply on your behalf) and it must be done through your personal Government Gateway account (which includes identity verification). A genuine email or text from HMRC will not include a link to the SEISS claim system, it will simply request you to log onto your Government Gateway account and start your application from there. If you are unable to use the online process, you can call HMRC’s COVID-19 hotline (0800 024 1222) to make an application over the phone. 

Self-employed individuals who were normally required to make a self-assessment tax payment on account on 31 July 2020 did not need to make that payment – it could be deferred until 31 January 2021. On 24 September 2020, the government announced that it will extend this 31 January 2021 deadline for taxpayers with up to £30,000 of Self-Assessment liabilities. Such taxpayers will be able to agree a plan to pay their tax liabilities over an additional 12 months, ie up to 31 January 2022, although interest will be charged from February 2021 onwards. This does not affect the ability of any Self-Assessment taxpayer who is unable to pay any tax bill on time to negotiate a Time to Pay agreement with HMRC.

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VAT Deferral 

On 20 March 2020, the Chancellor announced that UK VAT registered business will be able to delay the payment of VAT return liabilities falling due between 20 March and 30 June.

HMRC guidance confirmed that the deferral is automatic and covered all UK VAT registered businesses (presumably including taxable persons that are not established in the UK), but not businesses who pay UK VAT via MOSS (Mini One Stop Shop).

If businesses chose to delay their VAT payment then the VAT payments falling due in the period between 20 March and 30 June did not need to be paid immediately but instead should be paid on or before 31 March 2021 but an instalment plan is also now available. HMRC has also confirmed that there should be no interest or penalty charges. The deferral is automatic and does not need to be applied for, but any organisations that choose to pay their VAT liability as normal are able to do so in the normal way. The VAT returns due to be submitted during the deferral period must be submitted as usual. HMRC has recommended however, that businesses who normally pay their VAT by direct debit, cancel the direct debit with their bank– just in case HMRC’s systems attempt automatic collection on receipt of the VAT return.

End of the deferral period

The VAT deferral arrangements have now effectively come to an end and businesses will need to make VAT payments in the normal way from 1 July 2020.

It should also be noted that while HMRC are likely to be sympathetic, such arrangements are not automatic and it will want to see more evidence that the business is unable to raise the funds elsewhere. It will also be necessary to factor in the double VAT payment or schedule of instalments that will arise from March 2021. Read our Time to pay support guide.

It should also be noted that while HMRC are likely to be sympathetic, such arrangements are not automatic and it will want to see more evidence that the business is unable to raise the funds elsewhere. It will also be necessary to factor in the double VAT payment that will arise by the end of March next year. Read our Time to pay support guide.

Imported medical equipment

On 31 March 2020, HMRC announced that state organisations and other authorised non-state bodies could claim relief from import duty and import VAT on protective equipment, relevant medical devices or equipment brought into the UK from non-EU countries during the coronavirus (COVID-19) outbreak. The relief will be available until 31 July 2020 in respect of:

  • Imported goods for free circulation that are:
    • For distribution free of charge to those affected by, at risk from or involved in combating the coronavirus (COVID-19)
    • To be made available free of charge to those affected by, at risk from or involved in combating the coronavirus outbreak, while remaining the property of the organisations importing them
  • Imported goods for donation or onward sale to the NHS
  • Goods imported by a disaster-relief agency for free circulation to meet needs during the coronavirus outbreak.

Non-state bodies can request authorisation by contacting the National Import Relief Unit (NIRU) by emailing [email protected] for an application form.

General import duty and import VAT deferral

BDO has also been made aware that HMRC is, in some circumstances allowing for import VAT and duty to be deferred. Although there is as yet, no formal announcement that this is the case, we are aware that multiple sources have confirmed that this is a possibility.

Unlike the other VAT deferrals, this is a deferral that needs to be applied for in advance and you will need to provide an explanation as to why your business finances have been affected by COVID-19.

Duty deferment account holders

Businesses that operate a Duty deferment account and are experiencing severe financial difficulty as a result of COVID-19 and therefore find themselves unable to pay the deferred customs duties and import VAT (due to be taken by direct debit on Wednesday 15 April 2020) can contact HMRC for approval to defer the whole or part of the payment. HMRC has confirmed that where it approves a deferral, the guarantee will not be called upon and the deferment account will not be suspended.

HMRC have not yet confirmed whether the deferment payments due to be collected on the 15 of May and June will be treated in the same way, but we would expect some form of confirmation soon.

Businesses that wish to avail themselves of this should contact the Duty Deferment Office on 03000 594243, or by emailing [email protected] or using the COVID-19 helpline on 0800 024 1222.

Where Import VAT/Duty is not covered by your deferment account

The situation for no account holders is more complicated, but provided you are a Registered Importer and are paying the liability at the point of importation, and are having severe financial problems that arise directly from the impact of COVID-19, it may be possible to request an extension to the payment deadline. Once again, you are likely to need to explain how COVID-19 has adversely impacted you, and HMRC may (or may not) agree time to pay.

This is a more fluid arrangement and the conditions will depend on your businesses position. It may for example be necessary to provide a guarantee.

Naturally, businesses may need to consider the impact of any time to pay arrangement or deferral on current or future borrowing.

Making Tax Digital for VAT Deferral

HMRC have confirmed that they are giving business more time to implement digital links through their systems, in order to create the so called unbroken electronic chain of information from the accounting system to the VAT return. This will now be required or the first VAT accounting period starting on or after 1 April 2021.

Read about further VAT issues to consider.

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Tax - Improved Time To Pay arrangements

The government has announced extra resources to assist those struggling to pay their tax liabilities and in financial distress. HMRC will be committing 2,000 experienced call handlers to support taxpayers. 

This includes a dedicated COVID-19 helpline to help those in need. The helpline number is 0800 024 1222. Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm. 

Support will include agreeing a bespoke Time To Pay arrangement with HMRC. This will help those struggling with cash flow and allow those who enter into arrangements to spread liabilities owed over a pre-agreed period. In addition, HMRC will waive late payment penalties and interest where businesses experience administrative difficulties contacting HMRC or paying taxes due to COVID-19.

As always, it will be important to get upfront agreement from HMRC before a payment deadline. There is also a commitment to suspend debt collection proceedings.

For more information, read our Time to pay support guide.

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Paying Statutory Sick Pay (SSP)

A number of measures have been announced. All employees who self-isolate will be able to claim SSP and, as a temporary measure, SSP claims can be made from Day 1 rather than Day 4 of illness. Employees who are caring for someone who is self-isolating will also be able to claim SSP on this basis.

Businesses with fewer than 250 employees as at 28 February 2020 (including groups and charities with fewer than 250 PAYE employees in total at that date) will be able to reclaim SSP expenditure up to a maximum of two weeks per employee from the government. Employers can claim online here.

In addition, the 2020/21 income tax exemption and NIC disregards for Coronavirus antigen tests provided and reimbursed by the employer, have been extended to 2021/22. This extension also applies to employer reimbursed expenses linked to the cost of home office equipment. In addition, there has been a relaxation in the requirement that employer provided bikes and cycle safety equipment under the Cycle to Work scheme must be predominantly used for qualifying journeys.– read more on COVID-19 and reportable benefits.

These measures will continue into the 2020/21 tax year and the government has yet to set a date for them to end.

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Coronavirus Job Retention Scheme

Since March 2020, employers who find it necessary to lay employees off temporarily on furlough due to the pandemic can apply to HMRC for a grant to help retain those staff. To date, the scheme has gone through three phases with a further phase now announced to run from May to the end of September 2021:

  • March – June: the scheme covered up to 80% of the employee’ usual monthly wage costs up to a maximum of £2,500 per employee per calendar month, plus the associated employer’s NIC and minimum automatic enrolment employer pension contributions but no work could be carried out by the furloughed employee.
  • July – October: support under the scheme was phased down gradually with the employer paying more each month but it was made flexible to allow employees to work part of a month.
  • November - 30 April 2021: the grant returns to the original support level of 80% but employers must pay employer NICs and pension contributions, flexible working is allowed.
  • May – 30 September: employees will continue to receive 80% of normal wages through to 30 September but employers must fund 10% of wages during July and 20% in August and September.

For details of the CJRS rules, read our FAQs on the scheme.

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Potential tax issues arising from international travel restrictions

International staff

Managing international staff through the COVID-19 crisis will be increasingly demanding: in many cases physical assignments will not happen, be delayed or postponed and redundancies may increase. Here are some important issues to consider: 

If assignees need to stay in the UK or come back to the UK because of the virus, they will need to consider the impact on their UK residence days under the Statutory Residence Test – see below.

As well as tax residence issues where individuals remain in a country as a result of COVID-19, this could also affect their eligibility for expatriate tax concessions, social security and withholding taxes on earnings. It could trigger unexpected personal tax liabilities and potentially have an impact on the tax status of the employer – see below. 

Many staff with international roles will have returned home so are working from a single location: those with cross border ‘commuter’ jobs may now be working remotely from their home jurisdiction. We expect that a number of countries will introduce concessions to their usual rules – for example, we understand that France may not insist on French social security if employees have to remain there for an unexpected period of up to 60 days. However, without an official, multi-country relaxation of tax and social security rules there will be tax impacts for both the employee and employer to manage.    

Of course, all jurisdictions will still expect all relevant tax returns and filings to be made and, as yet, deadlines have not been moved. 

It is vital for employers to have a strategy for dealing with their international employees and to ensure that all issues are thought through before final action is taken, otherwise unintended consequences and costs will arise. For help and advice - contact us.

Directors, corporate residence and economic substance

Current travel restrictions may make it more complex for companies to manage their tax residence and economic substance positions if they are reliant on directors travelling to meetings in other territories. For example, if board meetings have to be held in the UK or remotely, or the company is effectively controlled by directors in the UK as a result of travel restrictions arising from the COVID-19 crisis, in theory, this may affect whether or not the company is liable to UK corporation tax. In addition, if there are not sufficient staff in a particular location or jurisdiction as a result of the crisis, the business may not be able to prove that it has a sufficient economic substance in the jurisdiction, and the anti-avoidance legislation of other tax jurisdictions may therefore apply.  

Different jurisdictions may well take different approaches during the COVID-19 crisis. For example, Jersey has announced that it is relaxing its economic substance and residence rules during the crisis. We would expect other jurisdictions to make short term concessions in time but, to date, the UK government has yet to make any comment on corporate residence issues or related tax rules. 

Any business that may be affected by residence or economic substance issues as a result of the COVID-19 crisis should seek expert advice on their specific circumstances. For help and advice - contact us.

Personal tax residence – days in the UK

The rules for establishing whether or not individuals are tax-resident in the UK (the statutory residence test) depend, amongst other factors, on the number of days spent in the UK in a tax year (6 April to April). Non-UK resident individuals who end up spending more time in the UK than planned as a result of the COVID-19 crisis may find that they exceed the permitted number of days in the UK relevant to their circumstances.

However, up to 60 days spent in the UK can be ignored if they result from ‘exceptional circumstances’ and HMRC has issued new guidance on how these rules apply during the COVID-19 crisis - read more.

UK tax residence is a complex issue and there may be many other issues to consider in determining your personal tax status. For help and advice on tax residence issues please contact us or see our online tool for an indicative view of your likely residence status. 

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Coronavirus package for innovative businesses: Future Fund and £750m R&D commitment

On 20 April 2020, the Chancellor announced the launch of a £1.25 billion coronavirus package to protect firms driving innovation in UK. There are two aspects:

  • A £500 million investment ‘Future Fund’ for high-growth companies impacted by the crisis, made up of funding from government and the private sector
  • A £750 million grants and loans fund for SMEs focusing on research and development.

Future Fund

In partnership with the British Business Bank, the £500 million fund will provide UK-based companies with between £125,000 and £5 million from the government, with private investors at least matching the government commitment. The application process is investor-led. This means an investor, or lead investor of a group of investors, applies in connection with an eligible company. Investors and the Future Fund both invest using a convertible loan agreement, which is predefined and cannot be negotiated.

To be eligible, a business must be an unlisted UK registered company, incorporated in the UK before 31 December 2019 that has previously raised at least £250,000 in equity investment from third party investors in the last five years (1 April 2015 to 19 April 2020, inclusive). The Company must have with a substantive economic presence in the UK, ie more than half its staff or half its sales in the UK. If the company is a member of a corporate group, only the ultimate parent company, if a UK registered company, is eligible to receive the loan. You can read the expected headline terms announced for more information.

Loans will be for a maximum period of 36 months, at a minimum interest rate of 8%. A higher interest rate can be agreed between the company and the matched investors. The loan cannot be repaid early by the company other than with the agreement of all of the investors. The loans will automatically convert into equity, at a minimum conversion discount of 20%, on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

The government will have limited corporate governance rights during the term of the loan and as a shareholder following conversion of the loan.

The company must provide:

  • Limited warranties, including in respect of title and ownership, capacity, its loan eligibility in accordance with the government eligibility criteria, compliance with law, the borrowing facilities of the company, litigation and insolvency events to the lenders on closing of the loan
  • Limited covenants to the government during the term of the loan and as a shareholder following conversion of the loan, including undertaking to treat the lenders and the holders of the conversion equity fairly and equally and to provide the government with the same information rights as other investors in the company, and compliance with law obligations.

The funding must be used solely for working capital purposes, and not to repay any borrowings, make any dividends or bonus payments to staff, management, shareholders or consultants or, in respect of the government loan, pay any advisory or placement fees or bonuses to external advisers.

The government is committing an initial £250 million in funding towards the scheme, which will opens on 26 May and will be available until at least the end of September. The scale of the fund will be kept under review.

This may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.

Read our FAQs on the Future Fund.

£750 million grants and loans fund for SMEs focusing on research and development

This fund will provide grants and loans to SMEs that focus on research and development, through Innovate UK’s grants and loan scheme.

Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May.

Mortgage payment holiday

On 17 March, the Chancellor also announced that mortgage lenders would offer an initial three-month mortgage payment holiday for those in financial need as a result of the COVID-19 crisis: this was later extended until the end of November.

For the second national lockdown is was announced that the scheme would be extended beyond November 2020. Under the new rules, anyone who is in financial difficulties due to COVID-19 and has already taken the original maximum six month payment holiday can apply to their lender for a further three month holiday (this applies whether the six month holiday is still running or the borrower has resumed payments).

Borrowers that have not yet requested a payment holiday can still request a six month holiday. All new payment holiday requests must be made by 31 March 2021.

The payment holiday can also be claimed by buy-to-let landlords but it should be remembered that, for all borrowers, interest will still accrue on the mortgage sum while the payment holiday is in place. Any borrowers that are in financial difficulties after the full payment holiday has expired should contact their lenders again for to agree tailored support.

Details of payment holidays in relation to other consumer credit and loans are available on the FCA website.

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