5 Ways The Government Is Helping Businesses Through The Pandemic

The coronavirus pandemic is placing pressure on some firms. The government has announced a raft of business support measures to help.

The current situation is challenging for many businesses. As coronavirus has spread, you or your client may have found they’ve been affected by the measures put in place to minimise the spread of the disease.

Whether a business has had to close completely due to the lockdown or operations have been adapted to maintain social distancing, it’s likely the pandemic has had some impact on operations. This may mean short-term upheaval and could affect long-term prospects, but measures have been put in place to provide businesses with some certainty and financial support.

These five measures can help maintain cashflow during the uncertainty as the lockdown continues.

  1. Coronavirus Job Retention Scheme

If the lockdown or short-term financial problems are an issue for a business, meaning they may have to lay off members of staff, the Coronavirus Job Retention Scheme is important.

The government has committed to paying 80% of the salary of ‘furloughed’ workers up to a maximum of £2,500 a month for three months. This may be extended depending on how the situation develops over the coming weeks and months. This allows businesses to essentially lay off workers temporarily knowing that employees will be able to return once the lockdown measures have been lifted. Firms will pay their staff, with HMRC then issuing a refund.

Any employer of any size is eligible to use the scheme if they have PAYE employees, this includes businesses, charities and public authorities. For employers to be eligible, they must have been on the PAYE payroll on or before 19 March 2020. This includes employees who are part-time staff, agency employees and those on flexible contracts, assuming they are now working at all.

It’s a measure that can provide some security for the future if operations have been forced to cease due to the pandemic.

  1. Statutory Sick Pay support

Coronavirus has also affected how and why employees may have to take time off as sick. This could increase the cost to businesses due to paying Statutory Sick Pay (SSP). However, small businesses, with fewer than 250 employees, will be able to reclaim the cost of SSP.

SSP paid to an individual for up to 14 days will be refunded by the government in full for eligible businesses. This covers an employee being off work due to having Covid-19, being unable to work because they are self-isolating at home, or are shielding in line with public health guidance.

To be eligible, firms must keep records of the employee’s absence and SSP payments. However, the employee will not have to provide a doctor’s note.

  1. VAT deferral

All businesses are eligible to defer their Value Added Tax (VAT) payments for three months.

This is an automatic offer that businesses don’t need to apply for. The deferral period will apply from 20 March 2020 to 30 June 2020. Liabilities that have accumulated during the deferral period won’t need to be paid until the end of the 2020/21 tax year.

It’s a step that can improve cashflow during these difficult times. However, businesses should keep in mind that the payments will need to be made in the future and take this into account when deciding whether to take advantage of the deferral period.

  1. Business Interruption Loans

The new Coronavirus Business Interruption Loan Scheme can support businesses for up to six years. Businesses based in the UK with an annual turnover of no more than £45 million and that meet British Business Bank eligibility criteria can access these loans if needed.

The business loan scheme can offer loans of up to £5 million through high street banks of one of 40 accredited finance providers. The government will pay to cover the first 12 months of interest payments and any lender-levied fees. As a result, businesses can access these loans with no upfront costs and lower repayments over the first year. However, they will need to make repayments, including interest, over the long term.

This financial support can come in the form of term loans, overdrafts, invoice finance and asset finance. The borrower remains fully liable for the debt, so it’s important that future repayments are weighed against immediate needs.

  1. Business Rates support

Retail, leisure and hospitality businesses have been some of the worst hit by the coronavirus. Many have been forced to close for an uncertain amount of time. The government has announced that businesses within these industries, along with nurseries, will be exempt from business rates for the 2020/21 tax year.

In addition, businesses within the retail, hospitality or leisure sector with a rateable value of less than £15,000 can also access a cash grant of £10,000. For those with rateable values between £15,000 and £51,000, a grant of £25,000 may be available. Businesses that want to learn more about the grants should contact their local authority to check eligibility.

Supporting business owners through the pandemic

At Beaufort Financial, we’re committed to providing support business owners need to get them through the pandemic. Whether in need of personal financial advice or understanding what is on offer for their business. Please share the above information with clients that may find it useful and get in touch with us if you have any questions at all.