Business Rates Relief
Businesses in the retail, hospitality, and leisure sectors (such as shops, restaurants, cafes, pubs, bars, gyms, spas, and hotels) (RHL) will pay no business rates for the 2020/2021 tax year.
This is an automatic relief for all businesses in these sectors regardless of the rateable value. No application has to be made to receive the relief; the Local Authority should apply the discount automatically starting April 2020.
If you think you are entitled to this relief and you do not get it, you should contact your Local Authority.
Further information about the application of this relief and the eligibility of your business can be found at the Ministry of Housing, Communities & Local Government.
Grant Funding Schemes
Grants are available for (1) small businesses and (2) businesses in the RHL sector, but a small business which is also in the RHL sector may only apply for one grant per property.
Small Business Grants
Any business which is currently in receipt of Small Business Rates Relief or Rural Rates Relief will be eligible for a payment of £10,000 per property.
The responsibility for applying these the grants rests with the Local Authority, who should contact eligible businesses. If you believe your business is entitled to a grant but have not received notification you should contact your Local Authority.
RHL Grants
A business which is in receipt of the Expanded Retail Discount with a rateable value of less than £51,000 will be eligible for a cash grants of £10,000 or £25,000 per property.
A property that has a rateable value of up to and including £15,000 will receive a grant of £10,000. A property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.
Businesses with a rateable value of £51,000 or over are not eligible for this scheme.
Again, the Local Authority should contact the eligible business directly to arrange payment of the grant.
Coronavirus Business Interruption Loan Scheme (CBILS)
This scheme targets the business continuity of small and medium-sized businesses by giving them access to finance on favourable terms. The British Business Bank delivers the scheme though 40 accredited lenders.
Businesses are eligible if they are UK based, have an annual turnover of up to £45 million and have a business plan which would be viable, but for the COVID 19 pandemic. Eligible businesses will have access to loans, overdrafts, invoice and asset finance of up to £5 million for up to 6 years.
Of significant benefit, the UK government will also pay the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.
Also, for facilities below £250,000, personal guarantees will not be taken in any form. For a facility of more than this amount personal guarantees may still be required, but they exclude the guarantor’s primary place of residence and recovery will be limited to 20% of the outstanding balance of the facility.
For more information, you can go directly to the British Business Bank.
Coronavirus Job Retention Scheme
In order for companies to continue to pay employees’ salaries where they otherwise may have been laid off during the pandemic, the government will pay the lower of (1) 80% of an employee’s salary or (2) £2,500 plus NICS and pension contributions of the subsidised payment.
The scheme is backdated to 01 March and is open for an initial period of three months which may be extended if the government deems necessary.
Employers make the payment and seek reimbursement from the government. A new portal has now been set up allow businesses to recoup payments here.
For more information, Helen Crossland, Head of the Employment Department has written the following article: Furloughing – changes to the Coronavirus Job Retention Scheme.
Future Fund
Although precise details will be announced later, on the 20 April the government announced the headline points of a ‘Future Fund’ which will initially be made up of £250M to provide convertible loans to eligible companies. The government will use the Future Fund to match funding from private investors.
To qualify, UK registered companies must have raised £250,000 from third party investors in the past five years and have a ‘substantive economic presence’ in the UK.
Companies will be able to obtain between £125K and £5M from the government.
The loan converts into equity at a minimum 20% discount; interest is at 8% and there is nothing contained in the announcement which tells us if this can convert into equity or must be paid in cash by the company.
If the private investor has secured more favourable terms for conversion and interest, then those terms will apply for the Future Fund investment.
Other assistance
Statutory Sick Pay
Provided that a business employs less than 250 people as at the 28 February, the business can reclaim two weeks per employee which took statutory sick pay as a consequence of COVID 19.
Further detail is expected and the repayment mechanism has not been confirmed at this stage.
Deferred VAT payments
All VAT payments from the 20 March to 30 June can be deferred until a later date, and no interest or penalties on any amount deferred will be charged by HMRC. VAT returns still need to be submitted to HMRC on time.
If businesses choose to defer their VAT payments, they do not need to tell HMRC and all VAT collected by the business from the 20 March to 30 June must be paid to HMRC on or before the 30 March 2021.
Finally…
The government is accelerating projects that have been in the pipeline for a while, like the Future Fund, as well as crafting new solutions to minimise the economic impact of the COVID 19 pandemic. We expect to see developments on these policies as the lockdown and social distancing is managed over the next few months and will update clients if they are able to take advantage of the financial support.