As is often the case with seismic events, the coronavirus pandemic has generated a new glossary of terms, as well as increasing the use of everyday words such as ‘unprecedented’ to a level that is, well, unprecedented.
To keep you up to date with the latest Covid-19 language, we’ve created a jargon buster for business owners:
Coronavirus Business Interruption Loan Scheme (CBILS)
In response to the pandemic, the government pledged a £330bn loan scheme to help small businesses recover. Although headline grabbing, there has been some speculation about who will be eligible for these loans and how easy they will be to claim. The CBILS will be mobilised by the British Business Bank through accredited lenders. The government will back these lenders, but they will still be bound by their own lending policies.
Coronavirus Job Retention Scheme (CJRS)
Launched by the UK government in March 2020, the Coronavirus Job Retention Scheme is designed to save employees from redundancy, by giving employers the opportunity to ‘furlough’ an employee.
The government has pledged to cover 80% of furloughed employee’s wages up to £2500p/m for three months.
Furlough/Furloughed
A furlough period is a paid leave of absence willingly taken by an employee. The UK government has encouraged businesses to furlough staff under the Coronavirus Job Retention Scheme, rather than making them redundant.
Whilst on furlough, employees must not do any work which provides services or generates revenue for their company.
Lay-off
If you do not have enough work for your employees you can ask them to take a period of unpaid leave – this is called a lay-off. However, unless your employment contract includes a lay-off clause, you cannot suspend staff with no pay unless you have their agreement. If you do, you will be in breach of contract and they can bring claims of unlawful deduction of wages against you.
If your contract does include a lay-off clause, be aware that employees can apply for redundancy after four weeks, or if they’ve been laid off for six weeks in a 13-week period.
Self-Employed Income Support Scheme (SEISS)
Under this scheme, freelancers and self-employed people whose business has been affected by the coronavirus can claim 80% of their profits up to £2500 per month for three months. Like the CJRS, this money will count as a government grant, it does not need to be paid back and will be counted as income under tax law. For more information on who is eligible for this scheme, visit this government page.
Short term working
Short term working is where a business reduces the hours of its staff due to a lack of available work, and pays them less as a result. Similar to lay-offs, if your employment contract does not include a short term working clause you must have the agreement of staff before you pay them at a reduced rate.
Small Business Rate Relief (SBRR)
As a result of coronavirus, it was announced in the 2020 Budget that businesses in the retail, leisure and hospitality sector with a rateable value of less than £51,000 will no longer have to pay business rates (commercial property tax). In addition, no business is required to pay business rates if their property’s rateable value is less than £12,000.
If your property’s value is between £12,001 and £15,000 your business rate relief will fall on a scale between 0% and 100%. Nurseries will also be exempt from business rates for the 2020/2021 tax year. For more information, visit the government website.
Statutory Sick Pay support
Under this scheme, employers with fewer than 250 employees can reclaim Statutory Sick Pay for up to two weeks for any employees that are off sick due to Covid-19, even if they are not displaying symptoms.
However, it’s worth noting that Statutory Sick Pay is currently fixed at £94.25 per week. Employers will still have to cover any additional sick pay as per their employment contracts.
The Covid-19 Corporate Financing Facility (CCFF)
This is a government scheme in which the Bank of England will purchase short-term debt from larger companies who can prove they were in a healthy financial state prior to the Covid-19 disruption. The scheme is aimed at reducing cashflow pressure on businesses and on the economy as a whole.
VAT and Self Assessment Payment Deferral
The government has given businesses the opportunity to defer their VAT and Self Assessment Payments for three months. HMRC will not charge interest on these deferred payments. However you will still need to submit your VAT returns to HMRC on time.
You can gain a better understanding of how coronavirus could affect your business’ cashflow by using Fluidly’s Goal Planner tool. Goal Planner allows business owners to easily see how different scenarios, including a reduction in costs and revenue, will affect your cashflow forecast.
Join Fluidly Starter today and try Goal Planner for yourself. Or, if you’re already a member, login to the Fluidly platform to get started.
