COVID-19 Update for Businesses

Yesterday the Chancellor, Rishi Sunak, set out further measures the Government will be implementing in response to the Coronavirus outbreak, in order to minimise the economic impact of the necessary steps the Country will take in the coming weeks and months. A summary of the key policies follow but please also keep in mind the measures that had already been announced in last week’s budget; particularly the ability for businesses to defer debts due to HMRC for PAYE, VAT and Corporation Tax. In many cases this will be the most effective step many businesses will be able to take to preserve cash flow liquidity. You can follow the button link below to find out more on this scheme.

Tax Helpline to Support Businesses Affected by Covid-19
www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19

Principal measures announced yesterday
Loan funding for SME business

The headline policy for SME businesses was to extend the Coronavirus Business Interruption Loan Scheme (CBILS) and underwrite £330 billion in loan guaranties, assisting businesses to access up to £5 million in Government-backed loan finance. This scheme will be up and running by the start of next week and aims to provide liquidity to viable businesses which cannot access finance because they have insufficient security to meet lender’s normal requirements. The loans will be interest free for 6 months.

This flagship policy relies on the systems and decision making processes of banks and as we write it is unclear whether the qualifying criteria or the detail and volume of supporting information required will be relaxed to enable the quick decisions that businesses will require. In the previously announced scheme, the Government only guaranteed 80% of the loan value and this meant that an element of risk remained with the banks tasked with delivering the loans. In our experience this led to delays and inefficient decision making processes. Further details are expected to be announced soon to provide some clarity, so please do not hesitate to contact us if you need assistance or wish to find out more in the coming days.

Business Rates holidays

Expanding the scope of previously announced measures to assist the retail, hospitality and leisure sectors in the Budget last week, all businesses in those sectors will now pay no business rates for 2020/21, irrespective of their rateable value.

Cash Grants

The grant scheme first announced in the budget last week that delivers cash grants to 700,000 of the smallest businesses in the UK who already pay no or little Business Rates due to Small Business Rate Relief (SBRR) has now been extended from £3,000 to £10,000. Those businesses currently eligible for SBRR will now be able to apply for non-repayable cash grants of up to £10,000.

Businesses in the retail, hospitality and leisure sectors with rateable values of up to £51,000 will be able to apply for cash grants of up to £25,000. It is unclear at this time whether these grants are in addition to the £10,000 grants mentioned above or simply a specific enhancement to their scope for those sectors.

It is our understanding that these new measures will be delivered by Local Authorities and you may need to apply for them, so our best advice at this stage is to contact your Local Authority.

Off Payroll Workers

In an announcement to the House of Commons last night, Chief Secretary to the Treasury, Steven Barclay, delayed the implementation of the new off-payroll working changes to 2021 as a response to the spread of Covid-19. It is unclear how Industry will adapt to this postponement given the proximity to the original implementation date and in the coming days this will become clearer. We can guide and advise you as the details are communicated so please do contact us if you need any advice or support.

Measures for individuals

People in financial difficulty due to the impact of Covid-19 will be offered mortgage payment holidays of at least three months. It is also possible to defer self employed Income Tax liabilities and you can follow the link here to find out how https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19.

It seems this was the first of what is likely to become a string of further announcements in the coming days to support people’s financial security. We await further announcements regarding the measures that are being worked up by Government for people who are self employed and those who rent their properties.

Recovery of SSP

Previously announced but worth keeping in mind is that businesses with up to 250 employees can recover SSP paid to staff for up to two weeks of an absence if the absence is as a result of Coronavirus. Please refer to further information on this here https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses.

How to contact us

One of our core values at Watson Associates is to “Partner” our clients. This means helping you to navigate both the good times and the uncertain times and our resolve is as strong as ever to deliver meaningful and helpful advice through the coming months. Please do contact us at the office or by email to clarify anything you have read or have questions about and we will do our best to help you.

Further reading

The content of this information has been collated from both the statement given by the Chancellor last night – you can read the full statement here https://www.gov.uk/government/speeches/chancellor-of-the-exchequer-rishi-sunak-on-covid19-response and from the recent budget – you can read the summary of measures announced in the budget last week (some of which have already been superseded) here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/872618/Covid-19_Budget_fact_sheet_FINAL__1_.pdf

Paul Severn, Director

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