Over the last few days the UK Government has announced a number of measures to protect businesses from the effects of Coronavirus and of the restrictions imposed by the Government on people, movements, places of business and places of entertainment. Never in peacetime has a UK Government spent so much money.
Before looking at the financial aspects, it might be helpful to consider some of the other measures taken by the UK Government over the recent days with the objective of reducing the spread of the virus and helping people and the Health Service to function.
The UK Government has made arrangements with the private sector hospitals to provide their resources to the state health sector. This provides an additional 8000 hospital beds and 20000 medical staff which will now be available exclusively to the state sector until this crisis is over.
This week 11000 retired doctors have returned to work, in one day 250,000 members of the public have registered to volunteer to help, unpaid, the elderly and others unable to look after themselves at home, and a 4000 bed hospital is being built inside an exhibition centre in London with the help of the military. More temporary hospitals will follow in other parts of the country in the next two weeks.
Also, the UK Government is writing to 1.5 million people considered to be at high risk of catching Coronavirus due to their existing medical conditions, to advise them to stay at home for up to 12 weeks. The Government recognises that this may be difficult for many, and to help, it is arranging for their medicines and food to be delivered to them at home. The medication is already provided free of charge in the UK, and the food deliveries, which will be designed to meet any dietary needs of the individual person, will also be free of charge.
The deliveries will be made using the volunteers and military personnel, up to 20000 of which have been allocated to support the population in this way.
Turning now to the financial aspect which may impact your business. I will summarise the individual schemes first, and attached is an extract from the official Government website for the detail.
Job Retention
The objective is to encourage companies not to dismiss workers who might otherwise lose their jobs because of the impact of Coronavirus on their employers.
UK Government will pay 80% of the salaries (up to GBP 2500 per month) of those employees who would be dismissed on condition that they are kept in their jobs. The employees must be “furloughed”, an American expression meaning temporarily laid off from work. The employee must be retained on the payroll and the company must pay the remaining 20%.
The UK Government is still working out how to do this, and further information will be available later this week.
VAT Payments
Businesses do not need to pay any VAT due for payment between 20th March and 30th June 2020, being the next VAT quarterly payment. There is no requirement to apply, simply do not pay it if you do not want to. The unpaid amount must be paid by March 2021.
Sick Pay
Normally Sick Pay cannot be reclaimed from the Government, and the employee had to be away for 3 days before it should be paid.
Sick pay is now payable from day 1 of self-imposed isolation and lasts for 2 weeks. It can all be reclaimed from UK Government. However, do not get too excited, the amount you can claim is limited to GBP 94.25 per person per week.
Business Rates (property taxes)
All businesses occupying property pay Rates (a local property tax) based on the assumed rental value of the property. If the value is less than GBP 15000 per year, a cash grant of GBP 10000 will be paid by the Community. No action is needed – this will automatically be paid without correspondence with the local authority.
Business Interruption Loans
Loans at zero interest for the first 12 months will be made available to businesses which can show that they will be affected by Coronavirus and its impacts generally. The UK Government will guarantee 80% of the amount of the loan to the lending bank.
Applications should be made to the company bank. When I contacted some banks earlier, no further guidance was available.
EBS Support Role
We will, of course, support all our clients through this rather complex process. Some matters will happen without any further intervention from us, others may take some considerable time to process, and we may have to make a charge for this. However, we will aim to keep costs to a minimum and would only proceed where there will be a net benefit to our clients.
If you have any queries or concerns, please feel free to get in touch with us.
