COVID-19; key support for the leisure and hospitality sectors
This snapshot of support available to the hospitality industry during the coronavirus epidemic was produced by Galloways Accounting. Full up to date and comprehensive information is available via the Government website.
The Retail and Hospitality Grant Scheme
This scheme provides businesses in the hospitality and leisure sectors with a cash grant of up to £10k per property for properties with a rateable value under £15k and up to £25k per property for properties with a rateable value between £15k and 25K.
You may be eligible for the grant if:
- Your business is based in England
- Your business is in the retail, hospitality or leisure sector
- Your business has a rateable value of under £51,000
Access requirements
As this scheme is being administered by local authorities, your local authority should write to you if you are eligible for this grant.
A business rates holiday. Local authorities are also granting a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. You are eligible for the business rates holiday if your business is based in England and in the retail, hospitality or leisure sector operating as:
- Shops, restaurants, cafes, drinking establishments, cinemas and live music venues
an assembly and leisure venue - Hospitality, hotels, guest and boarding premises or self-catering accommodation
How to access the scheme
There is no action for you. However, local authorities may have to reissue your bill to provide this support. They will do this as soon as possible.
The job retention scheme.
The job retention scheme is available to all UK employers for at least three months starting from 1 March 2020 and is designed to support employers whose operations have been severely affected by the coronavirus (COVID-19). Employers can claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
What can be claimed?
Once staff have been furloughed, you can claim a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
For full-time and part-time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%, again, this excludes fees, commissions and bonuses. For employees whose pay varies, if the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either: the same month’s earning from the previous year; or the average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
How to claim
The online service you’ll use to claim is not available yet. It is expected to be available by the end of April 2020. You should speak to your payroll provider, who should be able to support you in preparing details and submitting the claim.
Other options
VAT deferral
All UK businesses are eligible for the deferral, which will apply from 20 March 2020 until 30 June 2020. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
The Coronavirus Business Interruption Loan Scheme
This scheme aims to support businesses access bank lending and overdrafts. Under the scheme, the Government will provide the lender with a guarantee of 80% on each loan to give lenders confidence to provide finance to small and medium-sized enterprises (SMEs).
There are some further hurdles to clear in order to be eligible for support. To qualify for the Government guarantee your business needs to be:
- UK based, with a turnover of no more than £41 million per annum;
- Operate within an eligible industrial sector;
- Be considered to have a sound borrowing proposal, but have insufficient security to meet a lender’s normal requirements; and
- Be able to confirm that they have not received state aid beyond €200,000 over the current and previous two years.
The key to accessing business interruption loans is speaking to your bank as soon as possible. Banks will review your ability to repay loans, so it’s vital they understand how you’re planning to rebuild your business and that you can demonstrate how you can afford the debt. Speak to your accountant if you are not comfortable with preparing cash flows and forecasts, they can help you.