The Budget announced by the Government last week offered some assistance for Britain’s small and medium-sized enterprises (SMEs) – businesses with fewer than 250 employees – who will undoubtedly be impacted by this global crisis over the coming months.
The Chancellor, Rishi Sunak, has highlighted 5 things to help prevent you from going ‘under’ and to preserve cash. I have also added a few of my own ideas to help those who are self-employed ‘one-man bands’.
Any business with property in the retail, leisure and hospitality sectors will not be charged any business rates at all in the 2020-21 tax year, so if you’re a hotel, restaurant or coffee shop then you’re in luck!
The Government have also introduced a £5,000 discount on pubs with rateable values of less than £100,000.
The introduction of these measures means that around 900,000 properties or 45% of all business premises in England won’t pay any rates in 2020-21.
You should be contacted by your local authorities to help use this grant if you are a property owner or renter.
Sadly, these measures will only cover businesses in England, if you are in Scotland, Wales or Northern Ireland, then you will need to seek further advice from your local government agency.
If you cannot afford to pay your tax bill on time, you may be able to take advantage of a system that has been in place since 2008. Calling HMRC and asking for a ‘Time to Pay’ agreement on any debts owed will offer some short-term relief.
Each agreement is bespoke so the arrangement that is put in place for you, won’t necessarily be what ‘your mate down the pub’ gets. Using this helpline can help waive the usual 3-5% annual interest which for some debts can help massively! Be sure that you get an upfront agreement, preferably on paper.
To use this service, call this number:0800 015 9559
More information can be found here: https://www.gov.uk/difficulties-paying-hmrc
If you utilise business premises (as opposed to working from home) and are exempt from paying business rates (as part of the small business rates relief scheme), you will be eligible for a one-off grant worth up to £3,000 to help meet business costs.
It is yet to become clear how you will be able to access this, as one of the smallest 700,000 businesses in this country, so it remains to be seen as to whether this promise will be delivered and whether it will be easy to access.
I’ll share more details on this one as and when they’re released.
The UK Government has offered to underwrite loans for those affected the most by the Coronavirus. However, this is not without risk and is not a decision to be taken without care and consideration.
The Coronavirus Business Interruption Scheme has been designed to replace the Enterprise Guarantee Scheme (EFG), under which the Government guarantees the debt to encourage lenders to give loans to companies that would otherwise be deemed too risky. Interest rates will be similar to existing bank lending. Under the CBI scheme the British Business Bank will provide lenders with a guarantee of 80% of the loan’s value. The government will waive the 2 per cent it charges borrowers annually for the guarantee under the EFG and will support loans of up to £1.2m. The total amount it will guarantee this year will jump from £500m to £1.2bn.
You may well have to provide proof of your losses and again details are still vague on how to apply.
Do you employ staff? You will be able to reclaim the costs of up to 14 days of sick pay per employee, equating to around £200 for each member of staff.
However, there is a catch! HMRC have cautioned that you may have to wait months to get your money, as again the process of how to make a claim has not yet been established.
You’ve probably heard this one before – Prior Planning Prevents Piss Poor Performance. This is a large part of our ethos here in our role as Profit First Professionals, we actively encourage our clients to have money set aside in separate accounts for rainy days. So, why not open a rainy day count and siphon off some money on a monthly basis now before things get worse, then when you need that extra £100 or that extra £1,000 it will be there waiting for you.
This is a big one! If you’re self-employed and have a ‘payment on account’ payment due in July, then get your return in early to your accountant. This can help reduce payments if you’re experiencing a downturn in trade. Combining this with the ‘Time to Pay’ scheme currently offered by HMRC means that you could be in a better place than others come the end of the year.
If you are a café or shop or what we call a B2C (business to consumer) business, then you can’t really take advantage of this. However, if you are a B2B (business to business) company then make use of conference calling, video calls and project planning apps to help keep you safe. We all know reduced contact with others helps keep the infection rate low. So, limit contact by using free apps and programs to conduct business for the foreseeable future.
I hope you’ve managed to glean a few ideas from reading this and if you are a client and want to talk more about planning the rest of the year to minimise any damage to your business then I will be at the end of a phone or video call.
Stay safe people, and remember, if you’re tired of singing happy birthday whilst washing your hands, you can always start reciting the immortal words of Captain Jean Luc Picard at the start of every episode of Star Trek The Next Generation; “Space, the final frontier…” it’s 20 seconds long and beats singing! Plus, it lets your inner geek out, like me!
Live long and prosper!