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Coronavirus (COVID-19)


Debt, debt recovery and coronavirus

In this section you'll find information and updates related to coronavirus that are relevant to the law on debt and debt recovery.

The UK's response to coronavirus is changing regularly and often very quickly. While we'll continue to make every effort to keep this page up to date, there may be short periods where what you read here is not the latest information available. Where possible we've tried to provide links to official sources, so you can check the current situation.

Support for struggling businesses

More support is being provided by the UK government to business and self-employed individuals.

Local Lockdown Financial Help Scheme

Financial help is available to businesses that are required to close as a result of local lockdowns or targeted restrictions. The help is not available if your business is still closed due to existing national restrictions.

Grants are available for every 3 weeks of the lockdown. The amounts depend on the rateable value of, or the annual rent or mortgage payments for, the property occupied by your business:

  • If it's less than £51,000, the grant will be £1,000.
  • If it's £51,000 or more, the grant will be £1,500.

These grants will be distributed through local authorities, who will also have a discretion to give financial help to businesses who might not be eligible. Note that there are further eligibility criteria. More information is available here.

Job Support Scheme

This scheme will start on 1 November 2020, immediately after the end of the Coronavirus Job Retention Scheme. It will run for 6 months. It is designed to protect viable jobs in businesses that will be facing lower demand over the winter months due to COVID-19. See our Coronavirus (COVID-19) Employment section for more on this.

Help for tenants who can't pay rent

Temporary measures have been put in place to protect commercial and residential tenants who are unable to keep up with rent payments. See our Coronavirus (COVID-19) Property section for more on this.

Deferring tax and VAT

Income tax

If you were due to make a second self-assessment payment on account on 31 July 2020, you can instead make it at any point before 31 January 2021. However, if you owe £30,000 or less and you can't pay by 31 January 2021, you can benefit from an additional 12-month extension to pay this income tax off in smaller instalments until January 2022 (by when it must be paid in full). If you want to make use of this extension you need to set up a Time to Pay Arrangement online. No interest or penalties will be charged.

Note: no announcements have been made to date to defer corporation tax payments.

VAT holiday

UK VAT-registered business can defer VAT payments that were due between 20 March and 30 June 2020 (other than for VAT MOSS or import VAT).

You don't have to inform HMRC if you defer payment and no interest or penalties will be charged. If you defer, those payments will become due on or before 31 March 2021. However, if you can't pay in full by then, you can make 11 smaller, interest-free payments during the 2021-22 financial year. You will need to opt in to this scheme, which will then extend the time you have for full payment of the VAT until the end of March 2022. If you know or think you won't be able to pay your income tax or VAT even having deferred, contact HMRC as soon as possible as they do have support available through their Time To Pay (TTP) service.

Business rates support

This differs depending on where you are. Rate reductions should be automatically applied by the local authority covering your area.


Certain businesses can benefit from a business rates holiday for the 2020-2021 tax year. Currently, this means those in the retail, hospitality and leisure sectors, and nurseries on Ofsted's Early Years Register.

The rates relief available for 2020-2021 is run by local authorities with government financial backing. They will use their discretionary powers to grant relief in line with eligibility criteria set out in the Government guidance. You can check in this guidance to see if your business property is eligible for rates relief.

You can estimate the business rate charge using the business rates calculator.


Businesses in the retail, hospitality and leisure sectors will receive 100% business rates relief for the financial year 1 April 2020 to 31 March 2021, if their property has a rateable value of £500,000 or less. See their guide for more.


Businesses in the retail, hospitality and leisure sectors will receive 100% business rates relief for the financial year 1 April 2020 to 31 March 2021 (even if they have temporarily closed).

Rates relief is also available for businesses providing services to Scottish airports.

Other businesses will get a deduction of 1.6% from their business rates, which will be applied by their local council. See for more.

Northern Ireland

Businesses in the hospitality, tourism and leisure sectors will not have to pay rates for the financial year ending 31 March 2021. This will also apply to most of the retail sector, excluding certain supermarkets and off-licences.

For other businesses, a 4-month rates holiday applies for April, May, June and July (excludes public sector and utility companies). See for more.

Cash grants

The following cash grants are available from your local authority. They differ depending on where your business is.


The Retail, Hospitality and Leisure Grant Fund is available for business in the sector and will be eligible to receive:

  • £10,000 for those with a rateable value of up to £15,000.
  • £25,000 for business properties with a rateable value of over £15,000 and less than £51,000.

The Small Business Grant Fund will give £10,000 for all other businesses receiving small business rates relief or rural rates relief as of 11 March 2020.

There is also a Discretionary Grants Fund, designed to help small and micro businesses who aren't eligible for the other grant schemes.

See GOV.UK for more information on financial support for businesses.


Applications for both Business Grants and the Economic Resilience Fund closed on 30 June and 10 July respectively. See Business Wales for more information. See also the Welsh government's Development Bank of Wales for any other support that may be available.


Applications for both Business Support Grants and Retail Hospitality and Leisure Support Grants closed on 10 July.

See for more on what support may be available.

Northern Ireland

Applications for both the Small Business Support Grant Scheme and the Retail Hospitality Tourism and Leisure Grant closed on 20 May. Applications for the Micro Business Hardship Fund closed on 12 June.

See for more on what support may be available.

Coronavirus Business Interruption Loan Scheme

This scheme is available to all UK small businesses and is backed by the government-owned British Business Bank. To qualify you must:

  • need the loan to support your UK trading activities, having been adversely affected by coronavirus (you will need to self-certify this fact);
  • have an annual turnover no higher than £45 million;
  • have a borrowing proposal a lender would consider viable, were it not for the current pandemic; and
  • want to borrow no more than £5 million.

You will have the option of extending the length of your loan from 6 years to a maximum of 10 years to help you repay it in a more manageable way.

There are over 40 approved lenders for the scheme. You can apply for a loan here.

The government has announced that it is working on a new successor loan programme, set to begin in January 2021, although the details are not currently available.

Bounce Back Loans Scheme

On 27 April, the UK government announced a new loan scheme for small businesses. These loans are 100% backed by the government, in the hope that businesses will be able to access them quickly and more easily than some of the other loan schemes.

Businesses can borrow between £2,000 and £50,000. The loans are interest free for the first 12 months.

See GOV.UK for details.

The repayment of these Bounce Back Loans has been extended from 6 to 10 years under the Pay as You Grow flexible repayment scheme. Under this scheme, interest-only repayment periods and repayment holidays will also be available.

Self-Employment Income Support Scheme (SEISS) Grant Extension

This is a UK-wide scheme to provide support for the self-employed (including members of partnerships). The original SEISS was split into 2 grants. This has now been extended to offer 2 further grants that will last for 6 months from November 2020 until April 2021. The grants will be paid in 2 lump sums each covering a period of 3 months.

Qualifying for the scheme

To qualify you must declare that:

  • you're currently actively trading and that you intend to continue to do so; and
  • in the qualifying period of the extended grant you are claiming, you were impacted by a reduced demand as a result of COVID-19. The qualifying period for the first grant is between 1 November and the date of your claim.

You must also have been eligible for the original SEISS grant (although you don't need to have actually claimed it). This means you must:

  • be a self-employed individual or a member of a partnership;
  • have submitted your self-assessment tax return for the tax year 2018-2019;
  • have traded in the tax year 2019-2020; and
  • have trading profits of £50,000 or less, which are more than half of your total income for either the tax year 2018-2019 or the average of the tax years from 2016-2017 to 2018-2019 (inclusive).

Different criteria apply if you have loans covered by the loan charge or you're a farmer claiming farmers' averaging relief.

How much can you claim

The 1st grant will be paid in a single taxable instalment to cover 20% of your average monthly trading profits over the period 1 November 2020 to 31 January 2021, but it is capped at £1,875.

The 2nd grant will also be paid in a single taxable instalment to cover the 3-month period from 1 February 2021 to 30 April 2021, but the level of support isn't yet known.

More information

See the main business support pages for England, Wales, Scotland and Northern Ireland

There is also a Coronavirus business support finder that you can use to find help that's available to you from all the UK jurisdictions.

Temporary insolvency law changes

On 28 March 2020, the UK government announced that it would amend insolvency law to give companies breathing space and keep trading while they explore options for rescue.

On 26 June, the Corporate Insolvency and Governance Act 2020 came into force.

New moratorium

The Act creates a new moratorium intended to give companies breathing space to explore options for survival.

The directors of an eligible company can get a moratorium by filing relevant documents at court. Normally, a company with an outstanding winding-up petition would need a court order to apply for a moratorium. But before 30 March 2021, they will also be able to simply file papers at court.

There must also be a statement from an insolvency practitioner (the monitor) that, in their view, it is likely that the moratorium would result in the rescue of the company as a going concern. Or, before 30 March 2021, they can say that the rescue would be likely were it not for the effects of COVID-19.

The initial moratorium lasts for 20 business days. The directors can extend the moratorium for a further 20 business days, provided they can – among other things – confirm that all moratorium debts have or will be met. Further extensions (up to a maximum of 1 year) require the consent of creditors. The court may also extend the moratorium. There does not appear to be a maximum extension period if the extension is granted by court order.

During the moratorium

  • Creditors can't take enforcement action for pre-moratorium debts, i.e. debts that have fallen due before or fall due during the moratorium. However, there are some exceptions, including amounts payable for goods/services supplied during the moratorium, rent for the period of the moratorium, salaries, and debts or other liabilities involving financial services.
  • No insolvency proceedings can be started against the company during the moratorium period, though the directors can still start them via the monitor.
  • No creditor can enforce security or repossess goods in the company's possession, unless they get the court's permission. No proceedings or legal process can be started or continued, and a landlord can't exercise a right of forfeiture by peaceable re-entry. The moratorium prevents a floating charge from becoming a fixed charge (i.e. crystallising) and stops restrictions being imposed on the disposal of assets.
  • The monitor must ensure that it's appropriate for the moratorium to stay in place, and sanction certain acts by the company. The monitor must end the moratorium in certain situations, e.g. if the company's rescue is no longer likely, or if the company can't pay its moratorium debts.

Creditor protections

There are protections for creditors (or members) of the company to apply to court for relief on the grounds that the management of the company's affairs, business and property unfairly harms their interests.


Companies are generally eligible, unless they:

  • are a financial service company;
  • are already subject to a formal insolvency proceeding;
  • have already been subject to a moratorium during the 12 months prior to the filing date (unless the court orders otherwise); or
  • have already been subject to a Company Voluntary Arrangement or administration during the 12 months prior to the filing date (although until 30 September 2020, this restriction is lifted to account for the impact of COVID-19).

New restructuring plan

Under the Act, a restructuring plan can be proposed between a company and its creditors (and/or members) for the purpose of dealing with financial difficulties.

This will apply to any company liable to be wound up under the Insolvency Act 1986 that has encountered (or is likely to encounter) financial difficulties that affect its ability to carry on business as a going concern.

Any creditor or member whose rights are affected by the plan must be allowed to participate in the process, and be given enough information to vote on the plan. However, those with no genuine economic interest in the company can be excluded.

The voting majority for each class is 75% in value. If passed, the plan has to be approved by the court, who will assess whether it's just and equitable. However, it's also possible for the court to sanction the plan where a class has voted against it. It can do that if:

  • the members of the dissenting class would be no worse off under the plan than they would be in the event of the relevant alternative; and
  • at least one class who would receive a payment (or would have a genuine economic interest in the company in the event of the relevant alternative) voted in favour.

'Relevant alternative' is whatever the court considers would be most likely to happen if the plan were not sanctioned.

Where a plan is proposed within 12 weeks of the end of the new moratorium period, it can't affect the rights of creditors in respect of either moratorium debts or pre-moratorium debts that weren't subject to the moratorium restrictions.

Restrictions on statutory demands and winding-up petitions

The Act temporarily:

  • prevents certain statutory demands made by creditors from being effective, and
  • stops winding-up petitions from being brought against a company on the grounds that it can't pay its debts (or a winding-up order being made on those grounds), if the inability to pay is the result of COVID-19.

This applies to any statutory demand served between 1 March 2020 and 31 December 2020. It prevents them forming the basis of a winding-up petition presented at any point after 27 April 2020.

A petitioner can still present a winding-up petition against a company if they have reasonable grounds to believe that the inability to pay is not the result of COVID-19.

Likewise, a court could still make a winding-up order if it's satisfied that the debts would have arisen even if COVID-19 had not had a direct financial effect on the company.

These restrictions will apply retrospectively. That means existing winding-up orders will be cancelled if they were made for coronavirus-related reasons between 27 April 2020 and 26 June 2020 (the date the Act was passed).

For winding-up orders that were based on petitions presented between 27 April 2020 and 31 December 2020, the commencement date of the winding-up will be the date of the order, not the petition. This will have a number of knock-on effects, including that dispositions of property by the company made after the date of the petition will not be automatically void, as they would be otherwise.

Protection of supplies of goods and services

Contracts for the supply of goods or services will often allow suppliers to take action if the company they're supplying becomes subject to an insolvency procedure, e.g. by allowing them to end the contract. This helps the supplier to manage the risk of continuing to supply the goods/services but not getting paid.

The Act provides that certain suppliers won't be able to make use of such clauses. This applies even if the right to end the contract arises before an insolvency procedure, but wasn't taken up (the right is suspended when the insolvency procedure begins).

This restriction doesn't apply where the company or supplier is involved in financial services, including insurance companies and banks.

There is a temporary exemption, which began on 26 June and lasts until 30 March 2021, for suppliers that are defined as small entities. Broadly, a supplier is a small entity if at least 2 of the following 3 conditions apply to its most recent financial year:

  • Its turnover wasn't more than £10.2m.
  • Its balance sheet assets total wasn't more than £5.1m.
  • Its average number of employees wasn't more than 50.

(If the supplier is in its first financial year, these conditions are adjusted accordingly.)

If a supplier isn't a small entity, there are still exceptions. They can still end the contract if:

  • the company stops paying them (provided the contract allows that); or
  • the company agrees; or
  • a court allows it, which it can if it's satisfied that continuing the contract would cause the supplier hardship.

Bankruptcy help for debtors (Scotland)

Under both the Coronavirus (Scotland) Act and the Coronavirus (Scotland) (No. 2) Act, those with significant debts have more flexibility to apply for bankruptcy and more protection from creditors.

The changes will apply until 31 March 2021, and could be further extended to as far as the end of September 2021.

We've listed the main changes below, but see the Accountant in Bankruptcy website for more information on both the first act and the second act.

Moratorium extension

A moratorium is the period during which those owed money can't take any formal action against those who owe it. The purpose is to give those in debt time to consider their options and get appropriate advice.

The moratorium starts on the date on which an individual or other eligible entity gives the Accountant in Bankruptcy (AiB) notice that they intend to apply for bankruptcy (also known as 'sequestration'). It now ends after 6 months, rather than the usual 6 weeks. It's also now possible to give notice to the AiB more than once in a year.

If you're thinking of making use of this, keep in mind that if a moratorium is approved, your details will be published on the public Register of Insolvencies and this will probably affect your credit score.

Creditor petitions

Creditors can now only apply to court to make an individual or entity bankrupt (also known as 'sequestration') if they're owed £10,000 or more. The previous limit was £3,000.

Minimal Asset Process (MAP) bankruptcies

MAP bankruptcies are designed to be a simpler process for those on lower incomes and with few assets. Previously, you can't make use of MAP if your debt exceeds £17,000, but that threshold has now been raised to £25,000. Any student debt you have is ignored for the purposes of calculating this total. Also, the MAP application fees have reduced from £90 to £50, and have been removed entirely if you receive certain benefit payments.

Social distancing

Meetings of creditors can now take place virtually. All forms (except Form 9) prescribed by the Bankruptcy (Scotland) Regulations 2016 can be signed using an electronic signature.

Court action

Businesses can still take court action to resolve disputes during the pandemic, provided you're not a landlord taking action in response to rent arrears. It's likely claims will take longer than normal.

If your claim is already in progress, it is likely to be handled differently.

England & Wales

Her Majesty's Court and Tribunal Service (HMCTS) is making use of phone and video hearings. If a particular hearing can't be carried out in this way and it's urgent, it'll be held in a priority court and tribunal building (i.e. one that's not been closed due to the pandemic).

You can still find the relevant court in relation to your hearing here.

HMCTS published and will continue to update additional guidance for all court and tribunal users during the pandemic. There are also regular operational updates.


All Sheriffdoms have moved to Phase 3 allowing all existing cases to continue to be progressed. New claims under the simple procedure (i.e. those where you may be due a sum of money of up to £5,000) can be registered online or in paper form. See Civil Online for more information, and the Scottish Courts and Tribunals website for information on court arrangements generally.

Northern Ireland

For the situation in Northern Ireland see Judiciary NI.

What is the law guide

The Desktop Lawyer law guide aims to present the law to you in a comprehensive yet jargon-free and easy-to-read format. Our law guide is constantly kept up to date with changes in business and family law by our team of in house solicitors, and includes information across all the legal jurisdictions in the UK.

Our law guide is free to use. Where we provide documents related to this area of law, or where they may help you with any legal issue in this area, they will be listed to the right of this message.