Insights

Staying healthy is the #1 concern for us all right now - both personally and professionally. These are really difficult times and the anxiety of Brexit seems like a distant memory. Business owners are rightfully very concerned about the impact of coronavirus both in the weeks to come and also longer term, so we’ve compiled a list of the support available to you. In addition, we’ve prepared a separate article on how to maximise cash flow, since this is going to be one of the immediate challenges to overcome.

External support available for businesses battling COVID-19

Statutory Sick Pay for Employees

Your employees may well end up either unwell or having to isolate, which may mean needing to pay and them in full pay or statutory sick pay.  In last week’s Budget, the Chancellor announced some immediate changes to employment policy so that businesses can access support more quickly. Firstly, the government will meet the cost of coronavirus statutory sick pay (SSP) for small businesses with up to 250 employees for 14 days. Exact details have not yet been released, but it is likely that employers will be able to offset statutory sick pay against their PAYE payments.

For claimants, the weekly allowance for SSP is payable for up to 28 weeks and is being increased from £94.25 to £95.85 on 6 April - provided the recipients are earning at least £118 a week. In addition, the SSP and benefit claims rules are being relaxed, allowing people to claim SSP from day 1 of an absence and not the traditional day 4. To access SSP, claimants will need a sick note and this can be obtained by calling NHS Helpline on 111 in order to avoid visiting a GP.

SSP for Self Employed (Employment and Support Allowance)

It was also clarified that SSP will be available to anyone who has been advised by their GP to self isolate, even if they have no symptoms. Self-employed people will be entitled to contributory Employment and Support Allowance instead of SSP, at a rate of £73.10 a week for those over 25. This will be available for eligible people affected by coronavirus or who are self-isolating in line with professional advice, from day one of their sickness rather than day eight. To access Employment and Support Allowance individuals will need a sick note, which again can be obtained through 111 in order to avoid visiting a GP.

For further information about claiming for SSP and the various schemes set up to support taxpayers, visit the Department for Work and Pensions website: https://www.gov.uk/government/organisations/department-for-work-pensions.

Reduced borrowing rates

Although SSP is helpful, the amount of money actually paid out is relatively low and unlikely to cover mortgage payments. To further support people and businesses, the cost of borrowing was dropped by the Bank of England on Budget day and is now back down to a historic low level of 0.25%; for those on variable rate mortgages, the rate drop will be reflected in monthly outgoings. In addition, mortgage lenders have promised to allow payment holidays for people facing financial difficulties. Depending on the lender, it may also be possible to negotiate interest only terms to further reduce monthly liabilities.

More Time to Pay Taxes

HMRC is scaling up the Time to Pay service for deferred tax payments. This is available to small businesses with less than 250 employees and requires that they approach HMRC individually to negotiate set payment terms. During the coronavirus outbreak the usual 3.5% annual interest on deferred tax payments will be waived but it is important to secure payment terms well in advance of the payment deadline. More details can be found at https://www.gov.uk/difficulties-paying-hmrc. It is also important, once a time to pay arrangement has been entered into, to stick to it religiously. HMRC will withdraw the arrangement immediately if even one payment is made late.

Access to Emergency Business Funds

The government has pledged to underwrite loans provided to businesses that have been affected by the coronavirus outbreak through a newly established Coronavirus Business Interruption Scheme. This replaces the existing Enterprise Finance Guarantee Scheme (EFG) and exists to provide loans to companies regarded as ‘risky’, at normal lending rates.

Under the coronavirus scheme, the government will underwrite 80% of any loans provided and will also waive the usual charges (2% of the loan) usually applicable. Up to £1.2m in finance will be available through this scheme, which can be used to support businesses through cash flow difficulties.

Business rates cut

To boost town centres and high streets, business rates are being cut or frozen for a wide range of service providers. Eligible retailers, cinemas, restaurants and music venues with a rateable value below £51,000 will see business rates abolished for the coming year. Other businesses in leisure and hospitality, including pubs, will see this 100% rates discount extended to them.

In addition, many of the smallest businesses that currently pay no rates will also get some extra support, with a £3,000 cash grant being made available to them. Overall, the rates cut and cash grant represents a £2 billion cash injection for the UK’s small businesses.

All in all, these government initiatives sound very worthy and it is clearly intended that there should be plenty of support available. However, we have found in the past that some of the government schemes are difficult and very time consuming to access in reality, resulting in business owners struggling to get the help they desperately need. Let’s hope that in these difficult times that isn’t the case.

If you would like assistance with managing cash flow please contact partners@rjp.co.uk.