Business owners pay attention...this is about money to protect you and your business.23 March 2020
We all live in difficult and scary times and many of the priorities we thought were important just aren't any more. It's been a crazy month, with pubs and schools now closed and, based on other countries' Covid-19 statistics, we haven't even started yet! As a business owner, and above any normal personal concerns you may have for your family and friends, you are likely to also have great concern for your business future, staff and customers. You don't want it to go wrong now.
Many have already lost their jobs, or are trying to work from home, and if you are self-employed, it's been really tough to keep existing arrangements going. The Government has correctly taken swift action in unprecedented style, and it looks like we're going to need it.
The Bank of England has also cut base rates to 0.1% (the lowest ever) and is pouring money into the UK economy. They have also relaxed retail bank liquidity requirements for banks to help businesses as cash flow may slow, so do talk to them promptly. They are there to help with funding solutions now.
There are a range of new funds/grants/allowances that could be available to businesses small and large from Government and Councils to help with wages, sick pay and business rates, along with easing on payment requirements for VAT and tax.
One point is clear from reading the Government website on these changes is that it is invariably down to the employer to start the process. So, please don't wait, and take a look at the details here: https://www.gov.uk/government/news/coronavirus-covid-19-guidance-for-employees-employers-and-businesses
The Government is also aiming to slow (probably won't halt) losses to ensure that the fall is less and the recovery quicker. But what are they proposing in their announcements of 20 March 2020 with regards to wages / salaries?
The devil is in the detail, but the headlines are (and by the way being furloughed from work apparently means 'granted a leave of absence').
From a team member's perspective, if your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer's payroll, rather than being laid off.
To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary but does not have to.
If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
The Government intends for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020 but will extend if necessary.
More can be found on the Government website here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees
We of course are not responsible for their website content.
We hope this update helps you as business owners (and team members) look at the way some business risk can be mitigated as we enter this unknown territory. Stay safe please!
No individual advice is provided during the course of this blog.
Chartered Financial Planner
Chapters Financial Limited