COVID-19 has caused havoc across the world. It has not spared the rich or the poor. This global pandemic has destroyed lives and businesses of people and has left thousands jobless. A survey named Business Impact of Coronavirus (COVID-19) Survey (BICS) showed that 47% of responding businesses had a lower turnover following lockdown especially 90% of the food services and accommodation sector belonged to this category.
Following are the sectors that saw a lower than normal turnover due to corona virus:
- Wholesale and retail trade
- Accommodation and Food services and
- Manufacturing
- Administrative and Support services
However, there are a few sectors that have not been negatively impacted:
- Information and communication services
- Professional, scientific and technical activities
Some of the important issues affecting SMEs are:
- Now that there is a reduction in sales, managing cash flow has become a problem.
- Employers of small businesses in the UK too have started reassessing their responsibilities as they are now required to support the well being of the staff through efficient control of the distribution of Personal Protective Equipment among their employees and facilitating their working from home.
- As per the UK government instructions with respect to people working from home, the small businesses in the UK have started increasing their use of technology and software to simplify and aid online meetings, sharing of information allowing employees to do their regular duties. The direction of the UK government elaborates that only when people cannot work from home are they allowed to travel to their workplace. It also states that the businesses not adhering to the measures will be compelled to close down.
- Employees are getting increasingly becoming sick because of the overdose of work due to the absence of other employees and hence have to spend long hours working. This too is a major concern that many small businesses in the UK are facing. And the UK government is strictly monitoring the treatment meted out by the small and big businesses in the UK to their employees against the employment law during this COVID-19 pandemic. The workers have the right to disengage and decline to return to the hazardous workplace as per the right provided in Section 44 of the Employment Rights Act 1996. So the small businesses have to look into this matter and ensure that the frontline employees in the business don’t work from their workplace but work from their home.
How small businesses in the UK can counteract COVID-19 effects
The UK government in its plan for people’s jobs and incomes has announced that its major responsibility will be job protection of people, generously supporting the unemployed and strengthening safety of the working people and help in making people stay at homes.
Many businesses have implemented the following:
- Working from home for employees
- Furloughing the employees
- Employees taking salary cuts
- Making redundancies
- Reducing office opening hours/shifts
- Going online
- Temporarily closing down their operation
The small businesses in the UK might have missed a range of initiatives and schemes:
- Coronavirus Job Retention Scheme: 80% of furloughed employees’ wage cost upto £2,500 a month can be claimed by all the UK employers who have started the PAYE scheme on or before 28 February 2020. Along with this these employers are also eligible for Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. This scheme can be accessed by the employers at anytime during this period.
- VAT and Self-Assessment payment Deferment: All VAT payments are being deferred until June 2020 by HMRC. And the deferred VAT is then due by 31 March 2021. The small businesses must still file the returns. The eligibility to access this scheme is for all UK VAT registered businesses. There is a confirmation on the delays for payments-on-account by the update on 31st March 2020. Changes to the Making Tax Digital (MTD) for VAT regulation by the UK government Phase 2 has been delayed by this update. Paying VAT on supplies of certain digital services has been kept out from three months VAT holiday. If the taxpayers on direct debit want to take advantage of this then they have to cancel them.
- Accessing the HMRC Time To Pay Scheme: This scheme aims to assist with tax and gives its access to all the small businesses in the UK by providing them an organized loan repayment plan over an agreed period time. The companies will be given more time to pay overdue tax due to the virus by the HMRC case by case.
- Statutory sick pay relief: If the employers of small businesses have atleast 250 employees under them then they can get access to this scheme.
- Having a 12-month business rates holiday: The eligibility for this scheme is for those small businesses in UK that are into hospitality, retail, leisure and nursery.
- A new lending facility: Bank of England facilitates liquidity among larger firms through loans and makes this accessible to the businesses that make a material contribution to the UK.
- Using grant funding: This scheme that covers £25,000 includes retail, leisure and hospitality sector and can be availed by small business employers with a rateable grant.
- SME grant funding: Through this scheme, the UK businesses can use up to £10,000 of rate relief or rural rate relief.
- Coronavirus Business Interruption Loan Scheme: A loan amount up to £5 million can be availed by the small businesses with an annual turnover of minimum £45 million through the British Business Bank. This is aimed at supporting long term viable businesses that have cash flow pressure and would need extra cash.
The small businesses can counter the negative impact of Covid-19 and be prepared for long-term business outcomes during this pandemic by these schemes.
There is also good news during this pandemic the accounting service providers for small businesses in the UK can actually help the businesses to simplify the complicated area of international payments and foreign exchange exposures. They can help back up small business employers focus on business performance, customers, staff.
