As of today, the COVID-19 pandemic has affected more than 200 countries and shows no sign of ending soon. Unfortunately, the crisis is affecting businesses, especially those in the construction sector. In this tough time, the financial assistance currently on offer from the government could be the key to a small heating and plumbing company surviving the pandemic. As such it is important to know what is available – so here is some essential information.
As mentioned in our previous blogs, as of today, construction work is allowed to continue but only in situations where social distancing can be ensured. As such, heating engineers are still able to carry out routine repair and maintenance jobs, but should look to enact new working policies. We recently wrote a piece explaining our advice to installers including details of how we are amending our own practices to ensure that our engineers remain safe on the job.
Unfortunately, despite work being allowed, the reality of the current lockdown will mean that some find their rate of businesses temporarily slowing. We recently carried out a number of polls on Facebook between the 24th and the 30th April, one of which indicated that 87% of respondents felt their workload had decreased since the start of the pandemic. Fortunately, the government has introduced a set of economic measures, which it is hoped will lessen the immediate impact on businesses. The wide-ranging set of policies is applicable to both companies with employees, as well as the self-employed. For those experiencing economic hardship, the policies represent a valuable lifeline.
For companies with employees, the government is offering to cover 80% of workers’ monthly salaries, up to £2,500, for an initial period of three months. Through this scheme, you are able to furlough employees instead of having to lay them off, meaning employees are given temporary leave from work. This applies to anyone who was a full time employee (or on a PAYE basis) on the 28th February 2020. Unfortunately, anyone who switched jobs between the end of February and the government’s announcement is not covered.
If you think your business could benefit from furloughing some staff, it’s important to apply for the scheme now. The grant, which can be backdated to March, will start paying out in April. Furloughed employees can also be rotated but each employee must be placed on leave for a minimum of three weeks before they can return. During that period, furloughed employees are not allowed to do any work for the company that has furloughed them but will continue to pay taxes from their income. Again we recently asked our Facebook followers whether they have yet taken advantage of this scheme. It seems a large number of plumbing and heating businesses are using this scheme as a lifeline, with 59% claiming to have taken advantage of this scheme so far.
The scheme for the self-employed is broadly similar. Based on the same initial period, self-employed individuals can claim 80% of their earnings, based from their last three years’ tax returns. However, the scheme will not come into effect until June. When it does, eligible individuals will be contacted by HMRC with an application form. Once the grant has been approved, the three-month total will be paid as a single lump sum.
Sadly, if your business is new, or if you do not have three years of tax returns, then you will not qualify for the scheme. In this circumstance, the only available option is Universal Credit, which has been made more accessible since the start of the coronavirus crisis. Similarly, if you do qualify for the Self-employment Income Support Scheme, but are struggling with cash flow while you wait for the scheme to pay out, Universal Credit is again a viable option, especially as providers are now able to offer an advance payment, which can be available in just a few days.
In addition, the government has announced a significant allocation of new loans for companies affected by the pandemic. The Coronavirus Business Interruption Loan Scheme (CBILS) is available for SMEs through more than 40 accredited lenders across the UK. The scheme allows you to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years. The government will also make a Business Interruption Payment to cover the first 12 months of interest payments for the company. Very small firms, who pay little or no business rates are also eligible to a one-off grant of £10,000.
From our research, it seems that this scheme has not been utilised as extensively as other options, with only 3% of respondents to our poll claiming to have accessed the CBILS.
We would recommend making sure that you are fully aware of all of the available schemes in order to make sure you are accessing everything your business is eligible for, to assist during this difficult time.
For further information on the government’s financial advice, please visit: www.gov.uk/coronavirus.