It has now been 6 weeks since Boris announced our lockdown on 23rd March. I must say it feels an awful lot longer!
Boots the Chemist deserves my first Thought today. There is one on every high street with each branch offering a safe space for those affected by domestic abuse. This type of sanctuary is a godsend for those who need it, perhaps more now than ever. It being a chemist should afford victims a justifiable excuse to say where they are going.
Hot off the press: On Saturday 2nd May the government announced that local business grant funds scheme would receive a 5% top-up aimed at closing the support gap for businesses that don’t qualify for the existing business rates relief. The funding is aimed at small businesses of less than 50 employees with ongoing fixed property-related costs. Further details and the amounts involved will be announced later this week, but it is likely to be based on economic need and will prioritise businesses in shared spaces, B&B’s that pay council tax rather than business rates and regular market traders. I’ll bring you more news on this as it arrives.
There appears to be some Android banking trojan threat to online banking. Please be aware of anything unusual when you log in on an Android device.
I’m very excited to report that the business bounce back loans are happening. I am speaking with my bank manager this afternoon about mine. Furlough payments continue to filter through which remains good news. These two initiatives seem to be the priority of the Government at the moment, with SEISS and enhanced SSP yet to be officially activated.
A snippet not about COVID 19 for a change: HMRC are urging contractors to take independent advice before working with an umbrella company to avoid finding themselves liable for unpaid tax and national insurance. In new guidance, HMRC warns that promoters of tax avoidance schemes are using brokers and price comparison websites to attract clients to umbrella companies not abiding by the tax rules. Contractors can be won over by offers of higher take home pay, with claims such as: “Retain 80% of your earnings after tax – safe and compliant”. Sites can offer a mix of compliant and non-compliant providers, the latter may be called ‘advanced’ or ‘enhanced’ umbrella services, which can make them hard to spot. We’ve been worried about these offers for years!
A nice touch from the Revenue: Some organisations have been incorrectly refused support under the Coronavirus Job Retention Scheme (CJRS) due to tax arrears and should reapply, HMRC confirms, as ONS data shows CJRS is most popular support scheme.
And so, the next official announcement regarding lifting some restrictions on lockdown will not be made until Sunday. That’ll take us to almost 7 weeks Mr Prime Minister…
I think that this week’s news will most likely centre around the claiming process and the actuality of the bounce back loans for small businesses. The theory is there are 7 questions to answer and then the money will be with you in 24 hours. I applaud the Government for putting this in place very quickly. However, the system was struggling yesterday and so I would recommend you trying very early in the day or very late.
Here’s the scheme in a nutshell:
Applications for small business ‘bounce-back’ loans opened on 4 May 2020. Smaller businesses adversely affected by the Covid-19 pandemic can apply for a loan of between £2,000 and £50,000, capped at 25% of turnover.
The loans are billed as ‘easy access’ loans. Businesses are able to apply online to accredited lenders by completing a simple form that has only seven questions. If the application is approved, they should receive the money in a matter of days.
The loans are 100% Government backed. They are repayable over six years, with no interest payable for the first 12 months. Interest is charged at a flat rate of 2.5% and the business does not need to provide any security. There is no penalty for early repayment.
Businesses that have already taken out a Coronavirus Business Interruption loan of up to £50,000 are eligible to switch over to a ‘bounce back’ loan to be able to benefit from the more favourable terms.
Businesses have until November to apply for the loan.
Applications can be made via the portal on the Gov.uk website (see www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan). Applications can also be made directly to participating lenders via their websites.
Further details about the scheme can be found on the Business Bank website at www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans.
The loan represents an easy and cheap source of finance for smaller businesses that may need some additional support. However, it should be remembered that the loans do have to be paid back, and businesses should consider whether they will be able to manage the repayments and whether, attractive as the terms are, they really need the additional debt.
The above measures were correct at the time of writing. However, the Government are making new announcements daily. Please check the Gov.uk website for the latest information.
Update on SEISS – agents cannot claim for this on their client’s behalf. Full details can be found here:
We will be contacting all of our clients who this affects between now and the time that HMRC contact them, to inform them of their personal position.
Given the new introduction of the Bounce Back Loan scheme, and new updates on other funding and support from the government, I thought it may be useful to summarise the different sources of funding available:
Small business grants: There are two grants that are delivered by local authorities: Small Business Grant Fund (SBGF) which gives a grant of £10,000; and the Retail, Hospitality and Leisure Grant (RHLG) which gives a grants of £10,000 or £25,000 per property. The SBGF gives eligible businesses in England a payment of £10,000 if they are in receipt of Small Business Relief (SBRR) or Rural Rates Relief (RRR).These appear to have been easy to access, and the money quickly paid upon application. This is a grant and not a loan.
Bounce Back Loan Scheme: Launched 4 May 2020 for loans up to £50,000. The government guarantees 100% of the loan and there will be no fees of interest for the first 12 months. The interest rate thereafter will be 2.5%. The loan term is up to 6 years, with no repayments due in the first 12 months.
The application process is meant to be “quick and easy” with only seven questions, with the “cash arriving within days” – only time will tell if it lives up to it’s promise! You are encouraged to apply to your own bank first, as that bank will have already completed the “know your customer” checks etc, which will make the application more straight forward.
If you have already applied and received a loan under CBILS, you can get it transferred to the Bounce Back Loan Scheme by talking to your lender, but this must be done by 4 November 2020.
HMRC guidance, including a link to the British Business Bank website to apply, is on the link below:
Coronavirus Business Interruption Loan Scheme (CBILS): Launched 23 March 2020, the scheme helps businesses with turnover of less than £45m to access loans and other kinds of finance up to £5m. The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months. The business must be viable if it were not for the pandemic, and must have been adversely affected by the coronavirus. For borrowings of £30,000 or more you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019.
This scheme has proved difficult to access with most borrowers facing lengthy delays to get any response at all from their bank. The Institute of Chartered Accountants in England and Wales (ICAEW) has produced a checklist in conjunction with the large accountancy firm EY, which has a high acceptance rate on subsequent loan applications. A link to the website is as follows, and you don’t need to be a member of the ICAEW to access it.
Coronavirus Large Business Interruption Loan Scheme (CLBILS): This scheme helps large businesses affected by coronavirus to access loans of up to £25m. The business must have annual turnover of over £45m. Launched April 2020 but further details have only been made available today. Applications are through the British Business Bank website.
Covid Corporate Financing Facility (CCFF): This scheme helps large businesses affected by coronavirus through the purchase of their short-term debt. It is backed by the Bank of England, and is only for those larger businesses that make a material contribution to the UK economy.
Future Fund: This scheme is not yet available and is expected to launch later in May. The Future Fund will provide government convertible loans to innovative UK-based companies that are facing financial difficulties due to the coronavirus outbreak. Loans will range from £125,000 to £5m, subject to at least equal match funding from private investors.
The Business Finance Guide, in conjunction with the British Business Bank and ICAEW, has a good concise information on the above information as well as a guide on managing cash in turbulent times. The website is as follows:
Keep well please,
A bounce back loan scheme update: 70% of claimants have found the forms easy to use but the rest have hit technical hitches, myself included. This is likely to do with the sheer volume of applications. There is evidence of someone getting their money within 7 hours of applying, so if this is the case – well done to the banks! This is in distinct contrast to the Business Interruption Loan initiative which is still not going very well.
Looking towards an ease off of lockdown, perhaps as soon as next week, I have been reflecting on the industries who have been mostly affected by these strange circumstances. Of course, every business will have suffered some impact of the Coronavirus restrictions but those which had to close by law have struggled the most. Travel industries have featured in the news fairly regularly but I question whether retail businesses and pubs will ever return to ‘normal’ again.
On pubs, some landlords who rent their premises to publicans are still expecting full rent despite the fact that no income is being generated. I am concerned that pub tenants who can’t bear that cost may have to close permanently. Being a member of CAMRA since 1974, I believe the death of even more pubs, particularly in rural areas, really would be a tragedy. They are social centres as much as anything else. I would love to see more long-term help for helping pubs stay in business, as they are an enduring and special feature of our wonderful Countryside.
As for retail, the prediction is that people will do more of their shopping online going forward. I must politely request that you do try to shop locally where you are more likely to get choice and locally sourced goods. Many shops will be able to adhere to social distancing. It is really important that we try to keep these places going where we can. The impact of lockdown has shrunk the economy by 1/5, so as soon as we can we must help bring this figure back up again.
Coming out of lockdown will be difficult for many. There is concern that there could be a double or more the normal rate of business failures. There are insolvency solutions for restructuring available – take good advice on this.
HMRC have managed to shut down a number of scam Covid-19 phishing websites. Super job HMRC!
For the self-employed - here is a link to ICAEW guidance on the SEISS scheme. It includes an eligibility checker and notes on what is meant by a business being adversely affected by the virus. https://www.icaew.com/insights/tax-news/2020/may-2020/seiss-guidance-and-eligibility-checker?utm_campaign=Members%20-%20ICAEW&utm_medium=email&utm_source=1396966_ICAEWDaily_News_5May2020&utm_content=seiss&dm_i=47WY,TXWM,KF12U,3MUQ8,1
VERY IMPORTANT: HMRC may get in touch with applicable persons for the SEISS scheme this week either by email, text to a mobile, or in writing. At NO POINT will you be asked to click on a link or give any information out. Don’t be scammed please. You will be signposted to your Government Gateway account in order to progress with the claim. Unfortunately there has not been the time to allow agents, such as ourselves, to make the claims for you. We are however at the end of the phone to help and assist with each stage of your application. Within the next week, we will be emailing our self-employed clients with more details and an estimate of the amount of grant likely to be given.
Just a bit of non-Covid news. If you take a lump sum out of your pension, you may well will be paying too much tax when the payment is made. It is important that you claim this back.
With the awful daily coronavirus death rates, one’s sensitivity has become rather dulled as they are produced so frequently. We have however recently lost a member of the wider family to it, which reminds one of the individual stories behind each of those affected. I want to therefore take the opportunity here to remind you to get your will up to date. Most solicitors are offering virtual meetings and if you have time on your hands, this would be a good opportunity to get your affairs in order. Another thing might be to think about succession planning if you haven’t already done so.
Sorry for the morose note to end on. It is never an easy subject to broach at the best of times.
Very best wishes,
Lets get rid of the technical stuff at the start:
ICAEW are saying some small businesses have made errors on their furlough claims, meaning that they will have to make repayments later. In some cases this is because they have claimed the employers’ national insurance (NI) in their claim, when many small businesses are also claiming employment allowance and therefore do not have to pay the employers NI anyway. This is something I have warned about in previous thoughts.
HMRC have confirmed that those on the tax credits system will still receive their usual tax credit payments even if their working hours have reduced due to coronavirus or they have been furloughed by their employer. They will also not have to contact HMRC about the change.
HMRC have a webpage for people to find out if they can use the Coronavirus Statutory Sick Pay Rebate Scheme to reclaim employees' coronavirus-related Statutory Sick Pay (SSP): https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-employees-due-to-coronavirus-covid-19. However, the online system in order for employers to claim a rebate is still not available, with no date set.
Tax payer government gateway accounts have SEISS guidance and an eligibility checker on them: https://www.icaew.com/insights/tax-news/2020/may-2020/seiss-guidance-and-eligibility-checker A new employer is now eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28 February 2020 - if either the TUPE or PAYE business succession rules apply to the change in ownership.
We have today emailed all our clients who might be able to make an SEISS claim. Sadly since preparing these, the route to set-up a government gateway account (if you haven’t already got one) has already changed. We’ll update everyone again next week.
Our office hours will revert to 9am – 5pm as of Monday 11th May.
VE Day Commemoration
I had hoped with Boris‘s intended announcement of tonight that we might all be out to some extent celebrating 75 years since VE Day is tomorrow. Unfortunately with the announcement now due on Sunday, we will all still be ‘Staying at Home, Protecting the NHS and Saving Lives’
I feel some fellow feeling with my parents-in-law - both of whom were in a tuberculosis sanatorium on the 8th of May 1945 and therefore missed out on the celebrations. I think we tend to forget that TB was a big killer and was around right the way up until the invention of penicillin and then Sulpha drugs which became commonly available only in the 1960s. The first patient was treated with penicillin in 1941. The death rate from TB in 1941 would have given a country such as UK about 25,000 deaths from TB in that one year. So, my parents in law must’ve felt very much like the people in intensive care with coronavirus do today. Perhaps the TB sanatoria that littered our countryside - now largely demolished -were the Nightingale Hospitals of their time, the difference being they were full whilst the Nightingales are thankfully empty - such is the difference in health care in 75 years!
My parents-in-law lived to tell the tale and to see a new millennium with my father-in-law dying at 82 (in 2003) and my mother-in-law at 90 (in 2012) but it is interesting to note that they didn’t tell us that they had TB until we actually had children ourselves - such was the stigma that they felt it might mean we, or rather my husband, would’ve found it difficult to get a job! So great was the cost of an employer of an ill member of staff in the days before the NHS.
I know we all rather feel like we’ve been fighting a war these last seven weeks but at least we haven’t been doing it for six years and whilst the death toll is horrible it does pale into insignificance when you think of the death toll in that World War was 85million worldwide (the UK population was then 41million) and possibly even when you think about the death toll in Africa for children under five even today and every day (approximately 14,500).
Anyway, we can all celebrate our parents/grandparents generation for winning that immense battle for freedom and liberty - so enjoy hanging your flags and as they say ‘LEST WE FORGET’.
I think we’re also celebrating the fact that if it hadn’t been for that World War, there might be no commercially available penicillin as it was produced for war injuries largely. There might also have been no NHS which was, after all, the inspiration of the post-World War II Attlee government. What a lot we have to be thankful for. The battle against this virus is likely to be won by our scientists in - if you believe the reports - less than a year, rather than the well over 2 centuries it took to beat the TB that took a hold on society 'big time' with the Industrial Revolution.
I'm signing off for the week-end and from these daily 'thoughts' now that things are a bit more under control. I'm hoping to change these into weekly thoughts from now on, unless there is some burning topic I feel you all need to know.
HAPPY FLAG WAVING
I hope you enjoy this - perhaps the real battle has always been fought AT HOME - then as now.
Take care and Keep Well