The government has issued a final 48-hour warning to businesses and sole traders who received Covid loans or financial support they were not entitled to during the pandemic. Recipients who have not yet repaid these funds must come forward by midnight on December 31, 2025, through the Voluntary Repayment Scheme to avoid enforcement action.
Failure to repay the funds voluntarily will lead to recovery efforts, including potential interest charges and fines. In cases where fraud or deliberate misuse is suspected, investigations will be launched, possibly resulting in civil or criminal proceedings.
Since the introduction of a dedicated reporting hotline in September, authorities have received 300 allegations of Covid-related fraud, amounting to £35 million. These claims will be thoroughly investigated by a newly established specialist fraud team in early 2026.
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Chancellor Rachel Reeves emphasized the importance of compliance, stating, “The message is clear – if you wrongly claimed, put it right now. This money belongs to your local community. Our NHS, schools, and vital public services relied on taxpayer-funded support, and those who fail to come forward will face serious consequences.”
The Voluntary Repayment Scheme is designed for those who claimed more business support than entitled during the pandemic, covering various government loan programs. Businesses struggling to repay are encouraged to speak to their lenders about flexible options such as extending loan terms, making interest-only payments, or taking repayment holidays under the ‘Pay As You Grow’ scheme.
Even businesses that have defaulted and received formal demands may still negotiate repayment plans with lenders. For additional guidance, free and impartial advice is available through Business Debtline at 0800 197 6026.
Businesses and sole traders can access the Voluntary Repayment Scheme and settle their repayments before the deadline at the official government webpage.