Budget 2020: Five ways your company could get Government support to manage coronavirus concerns

Last week, Chancellor Rishi Sunak’s Budget unveiled measures to preserve cash and prevent insolvency for many businesses across the UK.  British Garden Centres and Farm Shops

The Budget offered support for Britain’s small and medium-sized enterprises — those businesses with fewer than 250 employees — that could struggle as the coronavirus pandemic worsens.  With many farm shops and many independently owned garden centres falling into this category the opportunity to receive support should not be missed if you need it.

It’s a double whammy in the garden centre industry especially, with the coronavirus effects expected to impact on footfall at the most profitable part of their year, alongside an anticipated increased level of staff sickness which is expected. 

The Chancellor focused on five measures to preserve cash and prevent insolvency among UK businesses from all industries:

1. Revenue’s ‘time to pay’ tax suspension

SMEs that cannot afford to pay their tax bills can ask HM Revenue & Customs for a “time to pay” agreement which would suspend debt collection.  Each agreement is negotiated on an individual basis through a dedicated hotline and during the coronavirus outbreak the usual 3.5 per cent annual interest on deferred tax payments will be waived.

2. Business Rates relief for 900,000 properties

The Government will not charge business rates on companies in the retail, leisure and hospitality sectors in 2020-21. This includes hotels, restaurants and coffee shops with a Rateable Value below £51,000; which we know is a large part of garden centres and farm shops make-up. There is also a £5,000 business rates discount for pubs with a rateable value below £100,000 in England. 

These measures mean that around 900,000 properties, or 45 per cent of all business premises in England, will not pay rates in 2020-21. Local authorities, which collect rates, will be provided with £2.2bn by the government to make up for the shortfall.  That said, it’s worth noting that a recent article in ft.com did state that the Centre for Cities think-tank has calculated that many businesses in the north of England will be excluded from the measures, because they are already exempt from business rates due to the value of their property is too low.  In Oxford, around 16 per cent of properties qualify for the new rates discount, while 13 per cent of premises would be eligible in London. Some 11 per cent of businesses in York — the only city in the top 10 beneficiaries that is not in the south-east — would be eligible. 

Andrew Hulbert, Rating Director at our sister company Harris Lamb, said: “It is likely that businesses in these properties may have already factored exemptions into their business models.  However given the recent changes and the forthcoming new financial year we would now encourage businesses to contact us at our Birmingham or Nottingham office to discuss possible rates reliefs or any other opportunities to reduce their charges.”

3. Grants for smallest enterprises

The 700,000 smallest businesses who are already exempt from paying rates will be eligible to apply for £3,000 grants to help meet their business costs. That is a three month rent bill for a typical small shop, according to the Government. It is not quite clear yet just how businesses will access the grants.  Andrew Burton of Malcolm Scott Consultants said: “The question is whether the Government deliver what they promise, and also we need to see that the paperwork is not too onerous for people to claim.” 

4. Risky loans to be underwritten by the Government

The Government is offering to underwrite loans to businesses adversely affected by the coronavirus outbreak.

The Coronavirus Business Interruption Scheme will replace the Enterprise Finance Guarantee Scheme (EFG), under which the government guarantees debt to encourage lenders to give loans to companies where Interest rates will be similar to existing bank lending.   The scheme will be delivered by the British Business Bank, a state-owned wholesale bank that currently operates the EFG.

Under the coronavirus scheme the BBB will provide lenders with a guarantee of 80 per cent of each loan. The BBB said that as companies are affected by coronavirus they will be eligible to apply for funds under the scheme.

Its thought that the government will also waive the 2 per cent it charges borrowers annually for the guarantee under the EFG and they will support loans of up to £1.2m. The total amount it will guarantee this year will jump from £500m to £1.2bn.   We await more details about this scheme, which we should see in the coming weeks.

5. Sick pay costs can be reclaimed

SMEs will be able to reclaim the cost of 14 days of sick pay per employee. This is thought to be approximately just under £200.  However, the government has cautioned that they may have to wait months for reimbursement because it has yet to set up a repayment mechanism.

Image: iStock/da-kuk