With the scourge of the pandemic that is Covid-19 accelerating and showing no signs of waning, the employment of tighter measures to close down ‘non-essential’ industry sectors such as non-food retail shops etc. the future of Small to medium sized businesses (SME’s) remains evermore uncertain. With the life blood of businesses now on pause; and costs & overheads ever increasing – Business Owners and Industry Professionals (the self-employed demographic) have compelled the government to put in place several fiscal packages and plans to support and prop up the collapse of the SME industry in the UK; a sector which accounts for a whopping 50% of turnover of all business in the UK. So, how really is the Government supporting our SME businesses during these unprecedented times?

First of all the statistics…

UK Small Business Statistics (Figures obtained from the Dept. of Business, Innovation & Skills, as well as the FSB)

Summary

• There were 5.8 million small businesses at the start of 2019.
• Compared with the previous year, the private sector business population increased 3.5% (+200,000 businesses).

SMEs and the Economy:

• At the start of 2019 there were 5.82 million small businesses (with 0 to 49 employees), 99.3% of the total business. SMEs account for 99.9% of the business population (5.9 million businesses).
• SMEs account for three fifths of the employment and around half of turnover in the UK private sector.
• Total employment in SMEs was 16.6 million (60% of the total), whilst turnover was estimated at £2.2 trillion (52%).

Composition of the business population:

• In 2019, there were estimated to be 5.9 million UK private sector businesses
• 1.4 million of these had employees and 4.5 million had no employees.
• The UK private sector business population is made up of 3.5 million sole proprietorships (59% of the total), 2.0 million actively trading companies (34%) and 405,000 ordinary partnerships (7%) in 2019.
• 2.6 million private sector businesses as registered for VAT or PAYE, 45% of the estimated total population.

So, this is a demographic not to be ignored by the government.

WHAT THE GOVERNMENT HAS TO SAY ABOUT YOUR EMPLOYEES

Wages

To encourage employers to keep their employees on the payroll and prevent them from being made redundant, the government recently introduced the Coronavirus Job Retention Scheme.

This scheme will reimburse 80% of your employees’ wages of up to £2,500 per month. The Scheme will reimburse your employees’ wages backdated from 01 March 2020. For now, it will operate for 3 months.

The requirements are simply that:

1. you are a UK employer
2. you have a PAYE scheme
3. you have changed the status of your employees to furloughed workers
4. you have submitted information about the furloughed workers and their earnings to HMRC through their new online portal

Sick pay

The scope of SSP has been temporarily expanded: The government will allow SME’s to reclaim Statutory Sick Pay (SSP) from Day 1 instead of the usual Day 4 provisions if an employee is absent due to Covid-19 related sickness.

Employers will be refunded for up 2 weeks’ worth of SSP for an employee; as well as being able to reclaim certain expenditures incurred for an employee who has claimed SSP.

For this the requirements are:

1. the employer must have fewer than 250 employees (as of 28 February 2020)
2. must maintain records of staff absences and payment of SSP

Self employed Consultants

Those not eligible for SSP e.g. the self-employed or people earning below the Lower Earnings Limit can now more easily make a claim for Universal Credit or Contributory Employment and Support Allowance.

WHAT THE GOVERNMENT HAS TO SAY ABOUT YOUR BUSINESS

Business rates holiday

Is your business based in England?

Are you in the retail, hospitality and/or leisure sector?

Do you own a shop, restaurant, café, gym, hotel, catering business?

Then you may be eligible for a business rates holiday for the 2020 to 2021 tax year. This means the business rates payable to your Council will be exempt. This exemption will be automatic and will apply to your next council tax bill in April 2020.

Small Business Rate Relief

If you are:

1. a business based in England
2. considered a small business and already receive small business rate relief (or rural rate relief)
3. a business that occupies property

then you will be provided with a grant of £10,000 to help your ongoing business costs.

If you are eligible for this scheme, your local authority will write to you.

Cash grants

If your business operates within the retail, hospitality and leisure sector then you may be eligible for a cash grant of up to £25,000. This includes businesses who operate as shops, restaurants, café, bars, gyms, hotels, self-catering and accommodation provision.

The government have issued 2 grants:

1. The £15,000 grant: If your business has a property with a rateable value of up to £15,000 you will receive a grant of £10,000
2. The £25,000 grant: If your business has a property with a rateable value of between £15,000 and less than £51,000 you will receive a grant of £25,000

If you are eligible for this scheme, your local authority will write to you.

Deferral of VAT and Income tax

If you are concerned about the ongoing payments of income tax or VAT, then rest assured! The government have proposed that they will support businesses by deferring VAT payments for 3 months. They have also proclaimed that income tax payments that were due in July 2020 may be deferred until January 2021.

The deferral is an automatic offer – so no lengthy and strenuous applications needed! Simply cancel your direct debit with the bank and freeze payments until the end of 2020. Again, the devil is in the details… so take clear advice before actioning any proposals. am

Coronavirus Interruption Loan Scheme

SME’s may temporarily be entitled to help and support to access loans, overdrafts, invoice finance and asset finance for up to 6 years.

The government have proposed to cover the first 12 months of interest payments using the Business Interruption Payment so the financial burden on SME’s is lessened. They will also provide lenders with a guarantee of 80% on each loan.

40 accredited lenders and all major banks have agreed. If you are unsure if your lender has signed up to the scheme or would like to make an application, then either visit their website or simply contact them directly.

You may be eligible for this if your:

1. business is based in the UK
2. turnover does not exceed £45 million per year
3. Having a borrowing proposal which the lender: (a) would consider viable were it not for the Covid-19 pandemic (b) believes will enable you to trade out of any short-term to medium-term difficulty

Finally…Commercial Leases

It is also worth noting that commercial landlords are now compelled to put a moratorium on lease forfeitures and evictions for the next 3 months. This does not mean that your commercial lease is automatically terminated though so beware! Put as simply as possible, this means that Commercial Landlords must hold off issuing any proceedings against a business tenant which does not or cannot afford to pay its rent in these hard times.

But as we all know its not always that simple, the devil is always in the detail….

If you are struggling to navigate the labyrinthine regulations and laws being reeled out by the Government please contact one of our legal and tax advisors for a free  of charge 30 minute consultation on how we can help ease the burden of COVID-19 on your business and industry practice.