THE SINGLE MOST IMPORTANT ACTION WE CAN ALL TAKE IN FIGHTING CORONAVIRUS IS TO STAY AT HOME IN ORDER TO PROTECT THE NHS AND SAVE LIVES.
This update is written and posted on 3rd April 2020 and is likely to quickly become out of date. We will endeavour to update information as it becomes available.
Previous updates and other useful information can be found at our WEBSITE.
Coronavirus Business Interruption Loan Scheme (CBILS)
As expected, The Chancellor made an announcement to “tweak” the CBILS, following representations made by business and representative bodies, such as the Federation of Small Business, CBI etc. This is due to some complaints that banks were steering business away from the CBILS to other more expensive products.
The following changes have now been made:
- no personal guarantees for loans under £250,000;
- personal guarantees for loans above £250,000 may still be required at the lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the loan after the proceeds of business assets have been applied. (As the bank gets 80% back from the Government);
- a home cannot be taken as security to support a personal guarantee or as security;
- the requirement to have first tried to get a normal commercial loan elsewhere, will be dropped.
The Chancellor has also requested that operational changes are devised to speed up lending approvals. The number of providers of the CBILS is also going to increase, with new alternative finance lenders being accredited under the scheme creating more choice and diversity of supply for smaller businesses.
Still no restrictions on interest charges after the 12-month interest free window.
The Government has advised that £90 million of loans have been approved for 1,000 businesses under the scheme, since last week.
Although it looks like the process will be simpler and less onerous, consideration should always be taken regarding the level of borrowing and how it will be repaid.
National Minimum and Living Wage
Despite lobbying, on the 1st April 2020, the minimum wage increases have still gone ahead as planned and should not be overlooked by either employers or employees.
The new national minimum wage (NMW) rates are as follows:
|
|
From 1 April 2020 |
|
Age 25 and over (national living wage - NLW) |
£8.72 |
|
Age 21 to 24 |
£8.20 |
|
Age 18 to 20 |
£6.45 |
|
Age 16 to 17 |
£4.55 |
|
Apprentice rate – payable to all apprentices under the age of 19 and to any apprentice in the first year of their apprenticeship, regardless of age |
£4.15 |
Making the right decision
We understand that many people are under significant financial pressure at the current time and may need to consider accessing savings, including pensions, to help. While we cannot give financial advice and do not know enough about the benefits system, individuals need to understand the tax consequences of drawing on savings.
Individuals who are looking at taking lump sum from their pensions, probably not the best step what with the fall in the markets, but this could have an impact as follows:
- If you are still responsible for children this could trigger a child benefit repayment;
- Tax credits claimants might also see unwittingly see a reduction in their award from such actions, not only for the tax year in which the payment is taken, but also in the following year;
- Welfare benefits might also be impacted as a result of decisions taken in haste, for example, untouched pension savings may be ignored in means-tested benefits calculations, whereas pension funds that have been withdrawn, could be assessed as income or capital, depending on how the individual has withdrawn the funds.
We can’t advise on these areas and anything involving pensions and investments should be discussed with your financial advisor.
Miscellaneous:
Innovation UK - UK Research & Innovation is providing for funding for ideas that address the COVID-19 crisis. More details can be found at HERE.
The Arts Council England is offering financial to support individuals and organisations working in the cultural sector.
Business rate grants – Further to our note yesterday that central government has passed the funding to Local Authorities for the business rate grants (£10k and £25K schemes), Local Authorities are definitely working at a pace to get the funds out to businesses, as we received ours today!
