The Coronavirus outbreak has demanded a significant change in not only the way we operate in our daily lives but also in the way we operate our businesses and practices. As we are all aware, social-distancing is imperative in ensuring that the Covid-19 infection is limited as much as possible. Of course, for many businesses, this may mean reduced custom and a reduced need for employees. In an effort to curb the impact that this could have on the British economy, the UK Chancellor has announced a comprehensive support package backed by the UK government to assist businesses during this unprecedented time.
The support package includes various measures, some of which include:
1 - The Coronavirus Job Retention Scheme
This will provide support to UK employers to enable them to continue to pay part of their employees’ salaries, thereby avoiding mass redundancies and terminations of employment.
All UK businesses will be eligible for support under this scheme.
In order to benefit from this scheme, employers will need to designate employees as ‘furloughed workers’, notify employees of this change and submit information to HMRC regarding these employees through HMRC’s online portal. Once HMRC have set up a system for reimbursement, they will reimburse 80% of these employees’ wages up to a limit of £2,500 per month.
2 - Sick Pay Support
The government have announced that they will soon introduce legislation to allow small and medium-sized business to reclaim up to 2 weeks of Statutory Sick Pay paid to employees for sickness absences due to Coronavirus.
UK based employers with less than 250 employees will be eligible and able to claim such support the day after the new legislation comes into force, although we have not yet been informed of when this legislation will be effected.
3 - The Coronavirus Business Interruption Loan Scheme
This temporary loan scheme will be offered by any accredited British Business Bank and is intended to support small and medium-sized businesses. The government are providing lenders with a guarantee of 80% on each loan without charge in order to incentivise them to provide such loans.Under this scheme, the maximum loan amount is £5million and such loans will be interest-free for the first 6 months.
UK based businesses with a turnover of less than £45million per year will be eligible for this scheme providing that the business also meets the bank’s eligibility criteria.
This scheme will be available from this week and to obtain support under this scheme, businesses will need to submit an application to an accredited British Business Bank.
4 - The Coronavirus Corporate Financing Facility
Under this facility, the Bank of England will buy short-term debt from companies. This will allow such businesses time to finance their liabilities appropriately while supporting corporate finance markets by easing the supply of credit. This facility will operate for at least 12 months and is intended to benefit larger companies.
When deciding whether a business is eligible for this facility, the Bank of England will consider if the business makes a material contribution to the UK economy and can show that it was financially stable prior to the Coronavirus hit.
This scheme is available from this week and applications can now be made to the Bank of England.
5 - Small Business Grant Scheme
English and Welsh businesses that already pay little or no business rates due to Small Business Rate Relief will receive a £10,000 cash grant to support their businesses.
Businesses will not need to apply for this scheme as they will be contacted by local authorities if eligible for this scheme.
6 - Support for retail, hospitality and leisure businesses
These businesses are being granted a business rates holiday for 12 months, which will automatically be applied to council tax bills by local authorities.
The Welsh Government have also announced that it will offer a grant of £25,000 to businesses in these sectors that have a rateable value of between £12,001 and £51,000. Businesses based in England with a rateable value of between £15,001 and £51,000 will receive £25,000.
Local authorities will contact businesses that are eligible for these grants.
7 - HMRC’s Time to Pay Service
HMRC may be able to offer support to businesses and self-employed people in financial distress with outstanding tax liabilities who have or may miss tax payments due to the Coronavirus outbreak. Such businesses/individuals should contact the HMRC about this service, who will offer support based on individual circumstances.
The above is by no means an exhaustive list of the types of support being offered to businesses.
The Welsh Government have stated that further to the £1.4 billion package they announced for small businesses, a further £100million will be available for a new grant scheme for small businesses. Moreover, banks such as the Development Bank of Wales and Lloyds Banking Group are offering increased support and financing arrangements.
Although the Coronavirus epidemic has been alarming for businesses around the world, UK businesses can take some comfort in knowing that there are forms of business support and relief that have been made available.
We at Berry Smith advise and work with businesses of all different sizes and are extremely well-placed to help your business navigate its challenges during this tough time. Therefore, for further information or assistance, please contact Abbie Anthony at firstname.lastname@example.org or alternatively give us a call on 029 20 345 511 and ask for the Corporate Finance team.