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What the Chancellor’s latest announcements mean for you, a hospitality business owner.

Posted 7 months ago

On Tuesday, 17th March 2020, Rishi Sunak announced what he called an “unprecedented” package of support for UK businesses. Following the previous day’s “advice”, from the Prime Minister, for the public to stay away from restaurants, bars, pubs and clubs, it’s unsurprising that the hospitality and retail sectors were two main beneficiaries of the additional measures announced on the 17th.

It’s important to note that the Government is updating these packages on a daily basis. We’ll keep this article up to date as new developments happen.

The package can be broken down into three main types of relief:

1. Tax / Rates Relief

a) Business rates relief

Business Rates are, at the best of times, overly burdensome for businesses in hospitality and retail.

The Chancellor has announced that all businesses in the retail and hospitality sectors will be given a 12-month holiday from the payment of business rates. In his own words, “this means that every shop, pub, theatre, music venue, restaurant and any other business in the retail, leisure and hospitality sector will pay no business rates whatsoever for 12 months.”

We are waiting for confirmation of how this will be operationalised, but we recommend ceasing the payment of any business rates from today. However, any enquiries should be directed to your relevant local authority.

b) Outstanding Tax Liabilities

Further to this, any business who is struggling with its tax affairs, or with outstanding tax liabilities, may be eligible to receive support through HMRC’s ‘Time to Pay’ service. The government makes it clear that this is decided on a case-by-case basis.

HMRC have set up a dedicated COVID-19 helpline for businesses and individuals who need support at this time. Call 0800 0159 559 to speak to an advisor and ask for time to pay.

2. Grants and Rebates

a) Statutory Sick Pay Coverage

If you’re a business that employs staff, the government has announced that it will refund up to 14 days of Statutory Sick Pay (SSP) for businesses with fewer than 250 employees if that absence has been taken due to COVID-19.

It’s important to note that businesses are required to keep track of staff absences but, vitally, that your staff won’t have to provide a GP's note.

The Government hasn’t yet put in place the mechanism for payment but will work with employers over the coming months to put this mechanism in place.

b) Grants for SMEs

The Chancellor announced a change from the original position laid out in the budget. Now, instead of a £3,000 cash grant for those who are eligible for Small Business Rate Relief (SBRR) or Rural Rate Relief, the Chancellor has extended this to a £10,000 cash grant.

This grant will be administered by local authorities and paid for by central Government. We are awaiting more details on how this will be operationalised, and will update this post as soon as we know more.

**c) Grants for larger businesses

In addition to the grants of £10,000, larger businesses (those occupying premises with a rateable value above £12,000 and less than £51,000 p.a.) are now eligible for a cash grant of up to £25,000

This grant will be administers by local authorities and paid for by central Government. We are awaiting more details on how this will be operationalised, and will update this post as soon as we know more.

3. Loans

**a) Business Interruption Loans

The Chancellor has announced that the Government is working with banks to provide cash loans of up to £5 million for small businesses who need some additional support with liquidity during this period.

80% of the loan will be underwritten by the Government (which, theoretically, should improve a business’ likelihood of being accepted) and the Government will be covering all interest on these loans for the first 6 months.

These loans will be available in the coming days and weeks. Please get in touch directly with your bank if you would like to explore this option.

b) Larger Business Loan

For larger businesses who require funds in excess of £5 million, the Treasury has arranged a borrowing facility with the Bank of England that aims to provide for the greater liquidity needs of these businesses.

We are awaiting announcements on the operationalisation of this loan facility. If you are a larger business who things they would benefit from this larger amount of finance, we expect details will be forthcoming in the next few weeks.

Overall, this set of measures goes some way to alleviate the immediate pressure on hospitality business owners. However, we understand that for some this will provide little reassurance as to how your business will survive in the longer term.

Obviously, each business needs to make its own decision, but we’re generally wary about low-liquidity businesses operating on narrow margins entering into any additional loan agreements until the true scope of the current situation is properly understood. We’d therefore advise businesses to be cautious and take advice from your accountant / Finance Managers before rushing into anything.

We’re currently working on resources that are designed to support you and your business through this unprecedented challenging time. So check back regularly for updates.

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