Who would have thought when we set down to work on 1st March that we would find ourselves here by April. Unprecedented times for business globally.
Here at Business Partnership we work with and represent businesses across all sectors, including those in retail, hospitality and leisure which have been particularly hard hit this week. Our thoughts are with you.
We understand that many businesses will be suffering right now on the back of social distancing tactics and it is important that everyone has access to the changing information released this week. So here, we have summarised the key financial support available for business along with some key contact numbers and government guides in one place.
Above all other things, we urge you to TALK.
The government have made some huge financial commitments, but they cannot cover every eventuality and specific businesses are falling between the gaps. Talk to HRMC, you banks, you local authorities, you insurance companies, you staff. This is a changing situation and not all the detail has been set. Keep talking to the relevant contacts for your business but have patience, they are going to be busy.
The Government
Top in all of this are the UK Government’s Department for Business, Energy and Industrial Strategy who have a business support line on 0300 456 3565 or email them on enquiries@businesssupporthelpline.org.
Top source for all information and updates is their website
Corporation Tax, PAYE, VAT, IR35
A lot of SMEs are going to struggle with the drop in trade due to social distancing tactics. That will put a huge strain on cashflow so paying all your taxes may not the be healthiest thing for your business right now, but you can’t avoid them altogether.
HMRC are offering Time To Pay schemes to help SMEs spread the payments and these can be arranged in a short phone call to 0800 015 9559.
HMRC are also waiving late payment penalties during this time, so speak with them on this too.
Finally the IR35 changes which were imminent have been postponed until April 2021.
Business Rates
Businesses who are in the retail, hospitality or leisure sector will now receive 100% rate relief for 12 months.
Businesses with a rateable value of between £15,000 and £51,000 who are also in the retail, hospitality or leisure sector will also receive grants of a further £25,000.
Businesses who already qualify for Small Business Rates Relief or Rural Rates Relief will be given a cash grant of £10,000 with more details of how this will be administered due next week.
Statutory Sick Pay
For SMEs with up to 250 employees the government has pledged to pay SSP for a period of 2 weeks per employee who takes time off due to coronavirus. SSP will come into effect from day 1 of sickness, not day 4.
Costs will be covered by way of a rebate but the mechanism of how this happens is still being finalised. It is not yet clear if SSP can be claimed for employees who are well, but self isolating due to members of their household being ill.
Comprehensive SSP records will need to be kept by the business, but no GP certification is required.
British Business Bank
The government have made billions of pounds available for domestic banks across the UK in order to specifically help small businesses in this crisis, although some qualifying criteria must be met. Assistance will be via lending, invoice financing and asset financing on favourable terms. All major high street banks and many others have signed up to the scheme. Full details. https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
Bounce Back loans are also now in place with low lending rates. Interest and repayments are suspended for the first 12 months. Again full details of the scheme will give you who can and how to apply. https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/
Customer Invoicing
Increasing sales will potentially bring cash into your business in 3 months time, when what you may need is cash in your business now. Large PLCs have been asked to pay small businesses without delay and Morrisons have led the way on this making immediate payments to 3,000 small suppliers.
It may seem callous, but chase your debtors for immediate payment and issue invoices quickly. This is all about managing cashflow right now and you should be on top of it.
Discuss invoice discounting with your bank/finance provider. It might bring cash in now rather than waiting to be paid.
Insurance
You are looking to see if you have Business Interruption Cover in your commercial insurance policy which would cover you for loss of earnings. Then you are looking to see if you are covered for Notifiable Diseases within this.
Speak with your insurance company to find out the exact terms of your policy, what you are covered for now, and what you can retrospectively add at this point in time.
Grants & Hardship Funds
£500m have been allocated to local authorities to support vulnerable people. No further definition is yet available but it is hoped this definition will include the self-employed and small businesses in distress as well as individuals. Check your own local authority website for details, which are now starting to appear.
Universal Credit
Whilst this is a benefit for the unemployed, it is also a benefit for those on low incomes and covers those classed as self-employed.
Various restrictions on income levels and waiting times have been lifted during this time. It is likely that Jobcentre Plus, who administer the benefit, will switch to phone and online consultations only. https://www.gov.uk/contact-jobcentre-plus
Rent Holiday
Whilst announcements have been made for mortgage holidays and rent suspensions for individuals, no such announcements have been heard commercially. Bodies like the FSB, Chamber of Commerce and Institute of Directors are speaking to major landlords about the support they can offer to their SME tenants, but we wait for news.
We urge you to speak with your own landlord, open up a dialogue and discuss a compromise payment schedule.
Salaries – Coronavirus Job Retention Scheme
Under the Coronavirus job retention scheme, 80% of PAYE salaries will be covered by the government during this time for employees who have been furloughed. Those furloughed employees must not work during that time and employers can make up the additional 20% salary if they wish. Full details https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
Self Employed – Income Support Scheme
Like the furlough scheme for employees, the government is committing to cover 80% of the profits of the self employed. Calculated as an average and for those self employed who have submitted tax returns for the 2018-2019 tax year. Conditions do apply and can be found here https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
First applications for the self employed have begun to be processed. If you believe you quality but have not yet been contacted by HMRC, get in tough with them directly.
Who else can help you?
It is difficult to predict who needs what help but your own accountant is also a good place to start. They are used to dealing with HRMC and tax rebates so have a head start in navigating these new allowances.
If it is support on staff matters and employment issues that you seek, ACAS will be your starting point but there are many other recognised bodies who are disseminating the government messages on a daily basis to the public. Below are some main ones.
Federation of Small Business
https://www.fsb.org.uk/campaign/covid19.html
Institute of Directors
https://www.iod.com/news-campaigns/news/articles/COVID-19-coronavirus-advice-and-resources
ACAS
https://www.acas.org.uk/coronavirus
World Health Organisation
Don’t forget your local Chamber of Commerce and your Local Authority.
Finally, Lansberg Gersick have put together a Crisis Management Toolkit for business on the link below.
Can your business help?
If your production can be changed to manufacture medical equipment such as ventilators you can offer your services https://ventilator.herokuapp.com
If you think your business can help in other aspects visit coronavirussupport@cbi.org.uk
Business Partnership
Clearly, if you want to take this opportunity to assess your business value or discuss your plans for sale, we are happy to talk and you will find your local office details here(Opens new window).
May you all stay healthy and may all our businesses survive and then thrive when we are through the worst of this crisis.
on behalf of
Regional Partners and supporting staff
Business Partnership
Entrepreneurs Relief gives you the opportunity to reduce your Capital Gains Tax on gains stemming from the sale of things like shares, assets, leaving partnerships and LLPs, and can cut the CGT by half. If you are interested in benefitting from Entrepreneurs Relief, you may well need to seek advice from legal experts who know the law inside out and can help you satisfy legislative requirements and help you with tax planning.
A growing number of entrepreneurs are finding it is harder to claim the relief due to challenges from HMRC. We have vast experience in helping entrepreneurs overcome challenges from HMRC, and our help could be the difference between obtaining the relief and missing out. We can help you obtain relief to reduce CGT payable on share transactions, for asset sales, for trading company share sales and get the relief under employee share plans approved by HMRC.
Those who meet the requirements for the relief and wish to sell shares can reduce the effective rate of tax payable to 10%. The relief is also available on lifetime gains up to £10 million. This means you could save up to £1 million.
The flat 18% capital gains tax rate was introduced during the 2008 Budget. After this, a new scheme was created to compensate entrepreneurs who would have paid 10% tax with maximum taper relief applied when selling their businesses prior to the changes. The lifetime limit was originally £1 million on the proceeds of business sales but was eventually raised to £10 million.
The relief can be claimed when all or part of a business is sold, when shares are sold or when business assets are disposed of once the entity is no longer trading. You may be able to claim the relief if you are in a partnership, an individual, a sole trader or have shares in your own limited company. Limited companies cannot claim the relief, though certain trustees are eligible. You will need to have owned your business for at least a year prior to disposing of it or for a year before it ceased trading.
You can claim the relief through your Self-Assessment Tax Return or by completing Section A of the ER fact sheet. Any gains over the £10 million lifetime allowance will be taxed at the usual 10% CGT rate or 18% if you are a higher-rate taxpayer. You have one year following the 31st January after the year the disposal was made. This means if you made your disposal during the tax year ending in 5th April 2016, you will need to make your claim by 31st January 2018.
The legislation around Entrepreneurs Relief can be very complex, which means it’s wise to seek advice from market-leading experts who can help you take the right steps and avoid missing out on the relief. There are many circumstances which may prevent you from obtaining it, so contact us today if you suspect you are eligible but require the support of professional Entrepreneurs Relief experts.
As business owners ourselves we know tax is an unpopular topic for you. We know how hugely dispiriting it can feel when you receive your final tax bill from your accountant; but have you ever considered that paying your taxes now could help to line your pocket in the future when you come to sell your business?
Whilst many business owners are off picking their accountant’s brains for legitimate techniques for mitigating tax, they probably haven’t considered the fact that these methods designed to reduce tax could actually be having a harmful effect on the value of their business.
Please note, we are not talking about increased benefits for the owner, such as pension contributions, but more hidden ones like stock write downs etc, which cannot easily be added back when looking the value in a sale.
If you’ve ever employed techniques to reduce your business’ tax bill then you will know that this often involves reducing your profit figure.
Reducing profit to reduce tax works something like this:
If you can manage to reduce your business’ profit figure by £100, then you stand to save either £20 in corporation tax or even £40 in personal income tax.
These figures look great in the short-term as they mean a smaller payment to the taxman and more cash kept in your business or back pocket.
But how about if we told you that for every £100 you reduce your business profit by you could devalue the business by £200 – £400! I bet these short-term gains suddenly don’t look so attractive, especially when considering your business’ exit strategy.
In other words, every £40 saved in corporation tax could actually be costing you up to £360 when selling your business.
On top of this when a business is sold then you would probably wish to receive full value for the saleable stock. A little hard to argue if previously written down and if you revalue at full cost, you end up paying the tax anyway!
When you come to sell your business, your accounts will not only affect the value of your business and your final sale price, they also help to dictate how much potential buyers can borrow towards the purchase.
By avoiding tax reducing techniques and keeping your business’ profits (and thus value) high you are likely to get more interest and a better deal, i.e. more cash when you sell.
Also, you can probably sleep safer at night, knowing you are giving the buyer minimal scope to claim under the tax indemnities if he finds something he is not happy with after sale.
In our experience reducing profit in business accounts to pay less tax is often a short-sighted move. Business accounts should always be a true and fair reflection of your company’s financial position.
We, therefore, advise businesses to take the hit with their taxes now to reap the rewards in the future; this advice is particularly pertinent if you are planning on selling in the next few years.
Thinking about selling your business and looking for more professional advice? Get in touch with one of our skilled and experienced regional partners for discrete advice about selling your business. Just some of the areas we can help you with include valuation, negotiation, preparation, finance and legal matters.
Regional partner Paul Dodgshon has been appointed to the board of Business Partnership (Management) Limited.
Paul DodgshonIn addition to his executive responsibilities, Paul who covers the Manchester Central, South Cheshire, Staffordshire, Shropshire and Mid Wales areas for Business Partnership and Business Partnership Corporate, also has an equity stake in the company.
Chairman Alistair Glaze said: “We look forward to working with Paul over the coming years. His appointment reinforces our collective desire to embrace the experience of our younger regional partners, whilst providing a plan which will underpin the future of the business into the next generation and beyond.”
Ian Craig has left the board and will continue as a shareholder and regional partner responsible for the Nottinghamshire and North West Leicestershire areas.
Mr Glaze added: “The board and I would like to thank Ian for all his support and wise counsel over the past 16 years. He remains a cherished colleague and will continue to provide training and support for new regional partners joining us.”
If we had a pound for every time we heard the old wartime adage: “Keep calm and carry on” since last Thursday’s Brexit vote, we’d all be on our sun loungers in the Maldives by now.
Experts, along with people who have an opinion on pretty much everything, have been hogging the airwaves and social media and it is easy to be bamboozled by the sheer volume of claims, counter claims and statistics.
Business Partnership has collated post June 23 responses from four high profile membership organisations.
Our first commentator is Mike Cherry, national chairman of the Federation of Small Businesses, who called for clarity on “what these decisions now mean for business, including how businesses will have access to the single market and the free movement of people and trade”.
Mr Cherry continued: “Nearly a quarter of FSB members export, with the majority exporting to the single market, which means access to 500 million potential consumers, more than 26 million businesses and is worth 11 trillion euros.”
Clarity is also the watchword for Dr Adam Marshall, acting director general of The British Chambers of Commerce.
“The immediate priorities for UK business are market stability and political clarity,” he said.
“All companies will expect swift, decisive, and coordinated action from the government and the Bank of England to stabilise markets if trading conditions or the availability of capital change dramatically.
“Business will also want to see a detailed plan to support the economy during the coming transition period – as confidence, investment, hiring and growth would all be deeply affected by a prolonged period of uncertainty. If ever there were a time to ditch the straightjacket of fiscal rules for investment in a better business infrastructure, this is it.”
A “nervy time” ahead was predicted by Simon Walker, director general of the Institute of Directors:
“It is imperative that our political leaders manage the transition as smoothly as possible,” said Mr Walker.
“The weeks and months ahead are going to be a nervy time for business leaders, so they have to know that the Government is focused on maintaining stability while a new relationship with the EU is established.
“British businesses are resilient and, with their characteristic ingenuity, they will weather this storm. Even once we have left, the EU will continue to be our biggest trading partner, and the first destination for many companies when they start to export. One thing the Government must do immediately is to guarantee the right to remain of EU citizens currently in the UK. Companies do not want to have to worry about losing valued staff.”
Completing our round up is Pip Wilkins, chief executive of the British Franchise Association, who said: “We want to be clear that for us, and for franchising, it is very much ‘business as usual’.
“We will continue to work closely with the European Franchise Federation and reap the opportunities that it affords to guide and inform on franchising across Europe.”
As the political wrangling rumbles on, Business Partnership’s regional partners will continue to work hard for their clients, whether they are buying or selling a business. Find the partner for your area on our Offices page.
After the headlines and sound bites comes the task few of us would envy – picking through the fine details of Chancellor George Osborne’s eighth Budget. The proposed sugar tax predictably grabbed the tabloids’ attention but many of the more heavyweight commentators have chosen to focus on the implications for Britain’s small businesses including newsagents in Nuneaton, corner shops in Barnstaple and hairdressers in Leeds.
Most agree that small businesses are the big winners following the announcement that 630,000 small businesses will pay no business rates at all from 2017.
The annual threshold for 100 per cent relief on business rates for small firms will rise from £6,000 to £12,000 and the higher rate from £18,000 to £51,000. Mr Osborne claims the reduction will save small businesses some £7 billion per year.
The Chancellor didn’t hang around to introduce a change to commercial stamp duty, which came into force at midnight on March 17. The rate is now nought per cent on purchases up to £150,000, two per cent on the next £100,000 and a five per cent top rate above £250,000. There is also a new two per cent rate for high value leases with a net present value above £5 million.
Also of significant interest to SMEs is the news that the self-employed will no longer have to pay class two national insurance contributions, which will be abolished from April 2018. Businesses of all sizes will also be relieved that there is no increase in fuel duty.
At Business Partnership, we believe the increase in the small business rate relief threshold will have a significant impact on the profitability of small retail businesses, which in turn will help business owners to realise a higher value when they come to sell their business.
Long term confidence regarding small business rate relief will breed confidence in the High Street which will improve the marketability of these types of businesses. In recent years they have become less attractive to new buyers, especially younger generation buyers.
A reduction in corporation tax to 17 per cent by 2020 will allow small businesses to retain more profit which provides cash flow. This in turn can be reinvested to achieve growth and enhance their value on sale.
The Chancellor has looked after small businesses generally which will make the sector more attractive at the point of sale. This will hopefully encourage young investors to start or purchase a business as an alternative to employment.
If you are considering buying or selling a business, contact Business Partnership’s team of experts, who are based across the UK.
The 2014 Edelman Trust Barometer, which focusses on levels of public trust around the world, has just been published. Its key findings include that (with the exception of Asia) family owned businesses are THE most trusted, outpacing other SMEs and private companies, ‘big business’ and state-owned businesses.
This report follows an earlier one by the Institute for Family Businesses (IFA) which suggests a number of reasons why family firms are not just popular with consumers: businesses buyers are particularly keen on them, too. Why?
Closely linked reasons for popularity
The IFA report found that family-firm owner managers run businesses with an eye to the long-term. They are much better at continuing to invest during recessions and take more modest salaries and dividends, preferring to reinvest instead. They also command greater staff loyalty. These factors help family businesses to build strength in depth – and develop the high levels of trust revealed by the Edelman survey.
Family firms are often criticised by financial industry professionals for being overly-cautious, for a sentimental approach to their staff and for holding cash. But these are the very reasons behind staff and customer loyalty. They were also central to the ability of many family firms to weather recent storms more successfully than highly-geared businesses run by employee managers focussed on quarterly results – and maximising the share price when their options mature.
The challenge facing new owners
No wonder business buyers are keen on family firms. They want a business with strong foundations and thus value the same things that the staff and customers prize. Yes, the transition of ownership out of the family has to be carefully managed but, done with sensitivity, that is rarely a problem in itself. No, the real challenge is in subsequent management strategy and style. Will you, the new owner, follow the practices which made the business so good in the first place, or succumb to shorter-term temptations?
Whether you’re selling, buying, or planning for the future, Business Partnership is here to help. Contact us today to speak with your local Regional Partner and start your journey toward success.
