Last updated : 25th March 2020.
The rapid spread of the COVID-19 has had unprecedented challenges for our restaurant and hospitality clients. We are closely monitoring all the unfolding developments and gather further details on loans, grants and subsidies to help you navigate your way through these circumstances
Key COVID-19 measures for Cafes, Restaurants, Bars and Hotels include:-
- Up to £330 billion of Government backed and guaranteed loans, equivalent to 15% of GDP, with more to be made available if needed. Up to £5 million Business Interruption Loan scheme for SMEs. As well as loans, there are many other types of finance supported by the programme, such as overdraft. This will be interest free for 12 months (government will cover the first 12 months of interest payments) and can be applied for via over 40 lenders including the big four banks — Barclays, Natwest, HSBC, Lloyds and others. It is our understanding that the Business Interruption Loan scheme will be available for viable businesses but unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. If you are thinking of applying, It would be wise to have the following information ready:-
- Cash flow statement showing the impact of COVID-19 over the next 3-6 months,
- Latest year end accounts,
- Latest management accounts (full P&L and Balance Sheet).
- Government to help employers pay people wages via the COVID-19 Coronavirus Job Retention Scheme. It is understood any business that asks employees to take a temporary leave of absence due to the needs of an employer but kept on the payroll, also known as “furloughed workers“, will be eligible for the scheme. Employers will be reimbursed 80% of the salary, up to a cap of £2,500 per employee, per month and backdated from 1 March 2020, and open for at least the next three months. Employers could choose to fund the differences between this payment and the salary, but does not have to. To claim Coronavirus Job Retention Scheme, employers will need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC are working urgently to set up a system for reimbursement. It is understood the first set of payments from HMRC will be paid late-April.
- For businesses with fewer than 250 employees, the cost of providing 14 days of statutory sick pay per employee will be refunded by the government in full;
- Business Rates Holiday for 12 months for all retail, hospitality, leisure and nursery businesses irrespective of rateable value. We understand local authorities will automatically be sending revised 2020/21 rates bill in the coming weeks;
- £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000. It is not yet clear when or how businesses will access the grant, but as it is linked to rateable value, it may be administered by the local authorities;
- One off cash grants of £10,000 to businesses who pay little or no business rates because of small business rate relief (SBBR). We understand If your business is eligible for SBRR, you will be contacted by your local authority – you do not need to apply. Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly;
- The Chancellor announced that businesses will be permitted to defer VAT due on their next VAT return, automatically. VAT return periods ending between 20 March and 30 June 2020 need to be submitted, but we understand the VAT will not have to be paid until the end of the 2020 to 2021 tax year, whilst any VAT refunds and reclaims will be paid by the government as normal. This is a very generous move and represents a major boost to businesses. It also opens up some very significant opportunities for businesses to structure themselves to maximise the potential benefits. NB – If your next VAT return is for the period ended 31 March, please seek advice as soon as possible, to avoid missing this deadline for maximising the opportunity;
- All businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. We understand that HMRC is willing to allow businesses defer tax payments but there are significant delays when calling. If you are concerned about being able to pay your tax due to COVID-19, please contact your usual Relationship Manager;
- Whilst most restaurant and hospitality operators have negotiated a rent reduction, or rent deferment with their landlords, the government has announced tenants who cannot pay their rent because of coronavirus will be protected from eviction;
- Moreover, if COVID-19 has affected your company and you need more time to file your accounts, you should apply for an extension before your filing deadline.
As developments unfold, we will make further announcements on our website and social media.
For further information, please contact your usual contact or Relationship Manager, or telephone on 01923 332586.