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COVID-19: Financial support for holiday let owners - Menai Holiday Cottages

UPDATED: January 2021

In this blog we outline some of financial support for holiday let owners due to the coronavirus pandemic.

The coronavirus pandemic has brought a huge amount of uncertainty and financial implications for holiday let owners.

The Government has introduced a number of financial support measures to help holiday let owners as part of their ERF (Economic Resilience Fund). The support that you can access will vary and come mainly in the form of tax breaks and grants. The support you can access will depend on the rental income, value and other factors. Therefore its important you consider which support package will apply to you.

The key support measures still available are as follows:

  • Welsh Government December 2020 Restrictions Business Funds
  • Business rates relief
  • Period of Grace Elections
  • Self-Employed Income Support Scheme (SEISS)
  • Support loans

 

Welsh Government December 2020 Restrictions Business Funds

The Welsh Government has launched the Restrictions Business Fund to support businesses that have been directly impacted by the additional restrictions put in place to control the spread of Covid-19 starting on Friday 4th December.

ERF Sector Specific Grant – The ERF Sector Specific Support (operating cost) package is targeted at Hospitality, Tourism and Leisure (HTL) businesses and associated supply chain businesses that will be materially impacted by a greater than 60% impact of turnover as a result of the restrictions introduced on 4 December 2020 until the 22 January 2021.  Applications open on the 11th January 2021.

 

ERF Restrictions Business Fund – To support businesses affected by these new restrictions the Welsh Government have announced a further £110m of financial support for businesses affected by the latest restrictions, which will start coming into force from the end of trading on Christmas Eve.

Hospitality, non-essential retail, tourism, leisure and supply chain businesses will be eligible for financial assistance.

Eligibility – Businesses must be on the non-domestic rates (NDR) rating list for their local authority on 1 September.

 

ERF Restrictions Discretionary Grant –    For those businesses not claiming business rates relief

Local authorities will continue delivering the Lockdown Discretionary Grant to businesses that are materially impacted.  As was the case for the Firebreak, this will continue to be targeted at businesses that are not on the non-domestic rates (NDR) system and therefore not eligible for the NDR linked grants. The grant level for this strand would be set at eligible costs of up to £2,000 per business.

Application forms for the ERF Restrictions Discretionary Grant can be accessed by visiting the relevant local authority websites (Linked at the bottom). Please check your relevant local authority website for details. If you are struggling to find any details, we suggest contacting your relevant local authority directly.


Business rates relief

Any FHL (furnished holiday let) with a rateable value of less than £500,000 will receive a years business rate holiday. This means no rates will be payable to your local authority in the 2020/21 financial year.

 

How do you apply for the relief?

Your local council authority will be in touch with you, if you have not heard from them, we would advise getting in touch directly with them.

If you are currently not registered as an FHL (Furnished Holiday Let), take a look at our guide to see if this is something you can qualify for.


Period of Grace Elections

This relates directly to business rates relief as mentioned before. With so many bookings being cancelled and moved this year, its very unlikely you will meet the availability or occupancy criteria to class an FHL and therefore you may lose your business rates relief. Therefore, you can submit a period of grace election.

This comes into play if you had the following:

  • You genuinely intended on meeting the critieria
  • You were unable to due to circumstances beyond your control (i.e COVID-19)

You must be able to show that you had genuinely intended on letting the property this year. We can help you provide evidence to show this.

According to gov.uk

“You can make an election where the property met the letting condition in the year before the first year you wish to make a period of grace election (either on its own or because of an averaging election). If your property again does not meet the letting condition in the following year, you can make a second period of grace election (as long as you made an election in the previous year).

If your property does not reach the threshold by the fourth year, after 2 consecutive period of grace elections, it will no longer qualify as a furnished holiday letting”.

 

How to apply

You can

  • include the election in their self-assessment property income tax return by ticking the box
  • make it separately, up to one year after 31 January following the end of the tax year – for example, if you’re filling in your tax return for 2019 to 2020 you must make your election by 31 January 2022

Self-Employed Income Support Scheme (SEISS)

The SEISS will be extended from the 01/11/2020. Your self-employed trading profits must be less than £50,000 and more than half of your taxable income.

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

 

Who is eligible?

To be eligible for the grant extension, you must be

  • currently be eligible for the the Self-Employment Income Support Scheme (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 coronavirus in the qualifying period (the qualifying period for the grant extension is between 1 November and the date of claim)

 

What support is available?

The extension will provide two grants and will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover a three-month period from the start of November until the end of January. HMRC will provide a taxable grant covering 20 per cent of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.

HMRC are providing broadly the same level of support for the self-employed as is being provided for employees through the Job Support scheme.

The second grant will cover a three-month period from the start of February until the end of April. HMRC will review the level of the second grant and set this in due course.

 

How to Claim

Further guidance will be available on the gov.uk wesbite


Support Loans

There are also two loans that you can also be eligible for. These will need repaying and do come with interest on the loan. They are however guaranteed by the Welsh Government. The two loan available are; Coronavius Bounce Back Loan (CBBL) and the Coronavirus Business Interruption Loan Scheme (CBILS).

 

Coronavirus Bounce Back Loan (CBBL)

The CBBL is available to all businesses affected by the pandemic

The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year.  You can’t apply for this loan if you have already applied for the CBILS.

The details of the loan are as follows

  • Interest rate: 2.5% p.a
  • Duration: Six year
  • Maximum borrowing: £50,000 /25% of turnover whichever is lower
  • Interest will be covered for the first 12 months so businesses benefit from no upfront costs

 

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS is available to help smaller businesses suffering from the 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

For more details on the loan and whether you are eligible, please click here

 


For information on support from your local authority, please click below

Anglesey

Gwynedd

Conwy

Denbighshire

Flintshire

Wrexham

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