17 Mar COVID-19 – Update 20 March 2020
Update on 20 March 2020
- Cafes, clubs, pubs, theatres and leisure centres to close tonight by government order – business owners should check insurers regarding their position regarding business interruption clauses
- Coronavirus job retention scheme – all businesses with payroll schemes are eligible including charities
- Government grant to cover up to 80% of salaries up to £2,500 per month/employee and back dated to 1 March 2020
- Aiming to be available by end of April
- HMRC employer helpline is 0300 200 3200
- Coronavirus Business Loan Scheme will be interest free for 12 months (rather than 3 months) and open from Monday 23rd March
- VAT – now until end of June’s VAT bill’s will be deferred until end of year 2020
- Universal and tax credit basic amounts increased by £1,000
- Universal credit help line – 0800 328 5644
- Tax credit help line – 0345 300 3900
- Next self assessment tax payments to be deferred to Jan 2021
- Business rate grants to be paid start of April
Government advice is constantly evolving and there will be impacts on business. Below is a check list of things to consider:
Managing cash will be the biggest risk to your business. As cash begins to stop flowing in the demands for payments will continue. You need a detailed understanding of what precisely you are spending money on.
You may well have little control over debtor payments in the months to come, but you can control what you are paying out.
Then ask some obvious questions. For example, is there capital expenditure that can be deferred now? If so, why not do so immediately unless it will open a new market opportunity.
Put other discretionary spends on hold. For example, is advertising expenditure really going to be useful over the next few months if government advice is for people to stay at home?
Consider how your balance sheet be managed over the coming months? Is now the time to apply for a loan holiday? Are there options for deferring payments on leases? Have landlords been approached for deferred payment arrangements?
Even if these are not issues as yet, have you worked out which of these options is the most important to you, and have you begun to prepare the necessary paperwork to apply for each of these deferments? If you do this now there will be less stress when you need them. And remember to also include HMRC in this mix: they might be the most amenable of all organisations to a deferred payment arrangement. Income Tax, Corporation Tax, VAT or PAYE payments and all be deferred – the number to contact is 0800 0159 559.
Look at all costs and reduce discretionary and non-essential expenses as far as possible. Fixed costs such as wages, rent, utilities, financing costs and tax liabilities are not affected by a decline in sales need to be properly managed. Suggest investigating whether costs can be spread rather than paying in one lump sum (e.g. car insurance).
Where sales are projected to fall you don’t want cash tied up in perishable or depreciating stock . Look at your stock levels and compare this to your projected level of business.
Please review insurance paperwork to assess if you are covered for business interruption. It may be that as government advice changes you find that your insurance position changes. Confirm what action should be taken so a potential claim would be valid.
Many self employed and directors have key man insurance for sickness – review these policies also.
Review Staff Costs
Businesses will be forced to make anguishing decisions about their costs, of which staff normally form a significant part, in order to maintain the viability of their business through this difficult patch.
Look carefully at the terms contained in your employment contracts. Some (but not many) have clauses that cover ‘lay-offs’ and/or ‘short-time working’ which you might be able to make use of. Others may have no minimum or fixed hours/pay entitlement (i.e. causal or ‘zero’ hours), which might be a basis to legitimately reduce working hours/pay in accordance with the contract.
Anything that leads to a reduction in staff pay should be agreed with staff as a temporary measure if at all possible, to be clear on the consequences to your people and to mitigate against the risk of successful claims against the company. Honest and open consultation with staff is therefore vital.
Employee Sick Pay Statutory Sick pay (SSP)
This will be paid from day 1 rather than day 4 and will also apply for those who self-isolate even if they do not show symptoms. The cost of providing SSP for up to 2 weeks will be refunded by the Government in full for employers with less than 250 employees.
Employment and Support Allowance
For self-employed people and for employees earning below the Lower Earnings Limit that are not entitled to claim SSP, contributions-based Employment and Support Allowance (ESA) may be available. ESA will be paid from day 1 instead of day 8 for those affected or in self isolation without symptoms.
Government Business Interruption Loan
The government will provide lenders with a guarantee of 80% of each corona virus loan. Further information on this is available here .
Other Budget Measures
Employment allowance to increase to £4,000 from 6 April 2020 – this reduces employers national insurance costs
Pubs will receive a business Rates discount of £5,000 (this was £1,000)
Retail, leisure and hospitality sectors to have business rates abolished for businesses within those sectors with an annual rateable value below £51,000
Businesses that currently qualify for Small Business Rates Relief to receive funding of £3,000 per business – more details to follow
Removal of the minimum income floor for Universal Tax Credits due to Coronavirus. This could mean higher payments for many and make previously ineligible claimants eligible
The government are providing daily updates, with Rishi Sunak expected to provide further financial measures this evening.
If you would like any further information on the above please contact us.