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COVID-19 CORONAVIRUS – HEADLINES AND HOW CAN WE CAN HELP

Firstly, all my thoughts and well wishes are with you all, and hope you all keep safe and be sensible to avoid catching the Coronavirus. We have been taking a number of calls with regards to the current situation and apologises for not being able to get round to all of our clients. As a result, we have drafted the following brief note to keep you updated.

Since last week the Chancellor made announcements to help small and medium sized businesses. Many of these announcements have been extremely encouraging, however, the way to get help is still somewhat unclear.

On 20 March 2020, Boris Johnson  took the extraordinary step of ordering pubs, clubs and restaurants across the UK to close that night. This has affected a large number of our clients who operate as restaurants and take-aways but also shop-keepers and those supplying to the retail industry.

Please note, restaurants and take-aways can, for now, can remain open only if they are providing take-out food.

The Chancellor’s speech of 20 March 2020 announced an unprecedented wage-support scheme to try to prevent thousands or millions of job losses.

WHAT CAN WE DO

I am here to assist and help you to access what ever grants and loans there are available under the various Government Schemes and together we can get through these very troubling and difficult times for all our businesses.

At this moment in time, the various schemes are not accessible and when these various portals to access the schemes are available, I will contact you at that stage.

SCHEMES AND GRANTS AVAILABLE

The following is a summary of what is the current position based on the Chancellors speech on 20 March 2020 and information on the GOV.UK webpages on 20 March and this includes a package of measures to support businesses including:

  1. Coronavirus Job Retention Scheme (CJRS)
  2. Deferring VAT and Income Tax payments
  3. HMRC Time To Pay Scheme
  4. Statutory Sick Pay relief package for SMEs
  5. Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  6. Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  7. the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank – https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

CORONAVIRUS JOB RETENTION SCHEME (CJRS)

The Coronavirus Job Retention Scheme will be a government grant – employers can claim for 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

The scheme will be:

  • Backdated to March 1st March 2020
  • Claimed initially for at least three months but could be extended ‘for longer if necessary’

Who is eligible for the CJRS scheme?

All UK businesses are eligible (or in the Chancellor’s words “Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.”)

When will you be able to make a claim under the CJRS scheme?

No date has been set as yet, but the following are indications it will not be immediate:

  • “HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.”
  • “HMRC are working night and day to get the unprecedented Coronavirus Job Retention Scheme up and running and we expect the first grants to be paid within weeks.”
  • “If your business needs short term cash flow support, you may be eligible for the Coronavirus Business Interruption Loan Scheme”

What is a furloughed worker?

We understand that a furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” per GOV.UK news story.

It is noted that employers will need to notify employees of this change in employment status to furloughed, but that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

OTHER GOVERNMENT ASSISTANCE

On 18 March 2020, the Scottish Government (https://www.gov.scot/news/gbp-2-2-billion-for-business/) support relating to business rate.

Economy Secretary Fiona Hyslop has addressed the Scottish Parliament on the economic impact of COVID-19 in Scotland.

In her statement she warned that as a result of coronavirus, the Scottish economy is facing an immediate collapse in demand.

She outlined the actions being taken by the Scottish Government to support businesses including a package of measures worth £2.2 billion from 1 April:

  • a full year’s 100% non-domestic rates relief for retail, hospitality and tourism
  • £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
  • £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000

Self employed

Sadly, with the exception of the VAT and 31 Jul income tax deferral payments and applying for Universal credit there is currently no income support as is the case for employees. The Government has stated that it is looking into the position with regards to the Self Employed and will make further announcements in due course.

Sources of further information

I would expect HMRC’s and the gov.uk websites will be updated to provide additional information on the CJRS scheme, Small Business Interruption Loans and grant claims for rates relief.

Once more information is available, I will contact you at that time. But for now please keep safe and follow all the Government guidance on social distancing.

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Social care faces annual deficit

An increasing amount of individuals are underestimating the growing costs of social care by £7 billion per year, research claims.

Independent think tank the Centre for the Modern Family polled more than 2,000 adults on behalf of Scottish Widows and found, on average, people estimate residential care would cost £549 a week.  

However, in real terms it would cost on average £866 for a place in a nursing home – leaving a shortfall of £317 per week.

In addition, 25% have no idea on how to cover social care costs for themselves or a relative, while just 15% were saving on a monthly basis to pay for their own social care.

Around half (49%) of adults would have to rely on a relative to help cover care costs, with 42% having £2,000 or less in savings – enough to fund less than 3 weeks of care.

Jane Curtis, chairwoman of the Centre for the Modern Family, said: 

“The number of people in care in the UK will almost double by 2035. Our research shows an over-reliance on relatives and the state could put families in serious financial difficulty. 

"It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford."

Contact us to discuss your personal finances.

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Savers likely to increase pension contributions

75% of 25 to 34-year-olds with a workplace pension said they would increase their pension contributions in line with a pay rise.

Insurance company Royal London polled 1,500 ‘millennials’ and found 40% plan to increase their monthly contributions next year.

Employers are required to make a minimum contribution into a workplace pension, which is currently 1%. This will increase to 2% in 2018/19 and 3% from 2019/20. 

A further 74% of respondents would continue to save into their workplace pension if total contributions increased automatically to 5%, with 3% from their employer and 2% from them. 

However, if total contributions increased to 8% (employee paying 5% and employer paying 3%) only 62% of people would continue to save into their workplace pension.

If contributions were matched (employer and employee paying 4% each), 76% would be willing to continue saving into their pension.

Jamie Clark, pensions business development manager at Royal London, said:

“It’s great to see that automatic gradual increase in contributions, perhaps in line with pay rises, is potentially viewed by millennials as a way to help lessen the financial impact.

“However, although saying they are saving, there is the risk some may still sleepwalk into poverty in their retirement by not regularly reviewing their savings and not taking advantage of opportunities to increase their pension savings when possible.”

Contact us to discuss your workplace pension.

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Digital spending for SMEs passes £1.2bn

Small businesses have benefitted from the government spending £1.2 billion on digital services since 2012, according to official figures. 

Almost half of total spend – or £1.39 in every £3 – has gone to small and medium-sized enterprises (SMEs), which boosted the technology sector.

Public sector spending on cloud storage and IT support for businesses of all sizes reached a total of £2.6 billion over the same period.

The cash is being provided by public bodies through the Digital Marketplace, which is available for SMEs to source technology or people for digital projects in the public sector.

This has helped SMEs obtain government contracts to deliver efficient public services, often at cheaper rates than previously provided by multi-national suppliers. 

Caroline Nokes, minister for government resilience and efficiency, said:

“Small businesses have an important role to play in helping the government to spend taxpayers’ money wisely.

“That is why we continue to find ways of improving how the public sector, schools and hospitals, for example, puts money back into services for those they look after.”

Warren Smith, director of the Digital Marketplace, added:

“We are continually focused on breaking down the barriers to entry for SMEs to do business with government, for example, by simplifying the application process.”

Get in touch to discuss digital services for your business.

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Generous grandparents hand out £37bn

The Bank of Gran and Grandad has lent more than £37 billion to their grandchildren, according to a study.

Insurance company Saga polled 5,529 grandparents and found that the average donation was £9,365.

Grandchildren in London and the South East received the largest deposits, while grandparents in Yorkshire were the most likely to donate.

More than half the grandparents would prefer seeing their relatives spend the money rather than leaving it as inheritance.  

40% said they were happy for the money to be spent on whatever the recipients liked, with other grandparents earmarking cash to go towards:

  • education (23%)
  • holidays (13%)
  • driving lessons (12%) 
  • house deposits (9%).

Alex Edmans, head of product at Saga Money, said:

“Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.

“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder.  On average they take £33,000 out of their property in order to give to family.”

Contact us to discuss your personal financial planning.