Information Update: 6 April

Please find below our latest update (April 6) which is based on GOV.UK updates, questions and conversations we have had over the past week. This is quite long, so please use the summary below to jump to the sections relevant to you.

Our conversations have covered a wide variety of issues and it is clear that individual circumstances vary, meaning that some of the advice below may need to be checked further with professionals who understand your specific circumstances.

If you do not have access to this support, please get in touch. Over the past few weeks we have arranged professional HR, Legal and Financial advice at no cost to the business, and are in the process of arranging support for those who need help with negotiations.

To summarise, this April 6th update includes:

  1. The BID Business Survey (Please complete if you haven’t already)
  2. Grants News – incl VAT & Corporation Tax advice
  3. Commercial Tenant Protection – withholding rent and eviction
  4. Empty Properties – Security and Insurance
  5. The Job Retention Scheme (80% wage relief)
  6. Bank Loans – SME Update
  7. BID Lobbying – We Need You!
  8. Pubs / Restaurants – HMRC Guidance on Disposing beer
  9. Love Leamington / Leamington Delivers – What Do You Think?
  10. Additional Business Support


1.  Business Survey (please complete)

Below is a link to a survey that I would be very grateful if you could complete. We are working with a number of partner organisations to understand business concerns and lobby for additional support, which we know is needed if this lockdown continues. We also know there are a number of issues and gaps in existing support measures. This week we will be contacting and / or speaking to political and business leaders including the Minister for Business and Industry, so it is very important we understand the details of your unique challenges as this helps us all find practical and timely solutions.

The questions within were formulated at a regional level and we have adapted them. Your answers will only be seen by myself (Stephanie Kerr), and then they will be anonymised. The outcome will help us to direct our support to you and the fully anonymised and collated data will be shared with regional and national policy makers, politicians and local authorities. All personal data will be destroyed once it has been collated.

There are 10 survey questions (7 min is the average time):

Thank you very much in advance.


 2.  Grant News – Including VAT and Corporation Tax

Warwick District Council have begun the process of distributing grant funds. At the time of writing (Sunday 2pm) we are advised that 450 grants had been processed but there is still some way to go. We have passed on our sincere appreciation to the WDC team who have worked through the weekend. For those still wondering if they are eligible, please click here or get in touch.

For those that have not registered yet, don’t worry – here is the link:

Grants – VAT and Corporation Tax:

We sought advice from our accountants on the question of if grants are subject to VAT. The answer we received is: “As we currently understand it, there will be no conditions attached to this grant and therefore it should be classed as outside of the scope of VAT. Based on this there would be no VAT to pay on the grant income. However, our current understanding (as of the 31 March) is that the grant will be classed as income in the accounts and therefore will be subject to corporation tax

If you are at all unsure about this, we would recommend you flag this with your accountants, or direct any other questions back to us and we will try to help. With many of these things, business specific advice is required.


3.  Commercial Tenant Protection – Including withholding rent

On the 23 March 2020, the government announced tenants would be protected from eviction for three months, in the event of non-payment of rent. This is now law, contained within the Coronavirus Act 2020, Section 82.

In summary this says:

Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction. Many landlords and tenants are already having conversations and reaching voluntary arrangements about rental payments due shortly, but the government recognises businesses struggling with their cashflow due to coronavirus remain worried about eviction. These measures mean no business will be forced out of their premises if they miss a payment in the next 3 months.

However, a closer look reveals that this approach needs careful attention, so the following points highlight potential considerations. Please note, these are generic observations and may or may not be relevant to your business so are offered without prejudice. Please get in touch if you would like further professional advice or support in this area of decision making.

The Issues:

  1. Whilst the tenant cannot be evicted for 3 months if rent is unpaid, the tenant is still obligated to pay rent for this period.
  2. The policy is silent on the time period over which the outstanding sum must be paid, meaning it could be due once the emergency measures end (June 30th – but this could be extended).
  3. The policy is silent on what happens after the 3 months period ends, so in effect, the tenant could be evicted after this time.
  4. The policy does not suspend interest owed on the unpaid sum, which is significant as some leases have punitive interest rates for unpaid sums (e.g. 5% above base rate).
  5. The policy does not protect the tenant from other forms of legal action.
  6. Depending on the lease, there may be consequences for the deposit (if relevant).

Here is some generic legal advice on the topic from the perspective of landlords.

Possible Considerations: 

If you are considering withholding rent during this period, please consider:

  1. Carrying out cashflow analysis, including assumptions to clearly understand your circumstances over the coming months and decide accordingly. Please let us know if you would like support with this.
  2. Speak to your landlord. You may be able to discuss payment options such as a rent reduction for a limited time, monthly payments or another arrangement suited to your needs.
  3. If you are considering withholding rent:
    1. Ensure you have an agreement with the landlord (in writing) that covers the subsequent repayment terms and period.
    2. Please check your lease to ensure you know if you will be charged interest and how much.
    3. Please ensure that your deposit (if relevant) is considered.

Importantly, any changes to the lease or agreements should be in writing and we strongly suggest you take legal advice on this.

As explained further below, lobbying further on some of the issues highlighted above is a priority for us so we welcome your feedback. Over the past two weeks we have heard a mixture of heart-warmingly good and concerning feedback, and we have also spoken to some landlords, so we know it is important to support all interests.


4.  Empty Properties  – Insurance

As set out in the Burgis and Bullock (available here) fact sheet, if a property is vacant for an extended period of time, as well as security, there are a number of insurance considerations for tenants, freeholders who lease properties and owner-occupiers.

Here are a few things for tenant to check:

  1. Are there any requirements to maintain a particular level of security if the premises are empty?
  2. Is there a requirement to notify the landlord if the property will be empty for an extended period of time?
  3. Check your general insurance policy and any notification requirements

Please click here for:


 5.  The Job Retention Scheme – (Wage relief and holiday entitlement)

For many the word ‘furlough’ is quite new and don’t be worried if you are still not 100% sure how to say it. For both employers and employees this is a term and a process that we know many of you have very quickly become familiar with. The details of the UK GOV Coronavirus Job Retention Scheme in respect to ‘furloughed staff’ raises important questions the details of the scheme, and who it applies to, have become clearer.

By far the best and most up to date guidance can be found on the GOV.UK site by clicking here.

We also found that the CIPD Q&A which can be found here, very helpful. This addresses key questions and areas to be mindful of.

Some key areas of interest we noted were:

  • Where impacted by COVID-19, you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month plus employers NI and pension contributions.
  • Employers should have consulted and notified staff in writing and have their agreement to furlough them. Changing the status of employees always is subject to existing employment law. Please get in touch if you would like a template letter.
  • The scheme applies to staff on flexible zero-hour contracts, as well as agency staff and full and part time employees, who were on the employer’s PAYE payroll on 28 February 2020.
  • Directors can be furloughed and still carry out their ‘Statutory Duties’ even sole directors, but they cannot ‘sell’ or provide services on behalf of the company. Please note, this needs to be appropriately recorded in the company records.
  • The scheme will run for three months from March 1st (but may be extended as necessary).
  • The subsequent funding is a grant which employers do not have to pay back.
  • Three weeks is the minimum length of time an employee can be furloughed for.
  • To claim the reimbursement employees must not undertake work for the employer at all while furloughed. Staff can be brought back to work after the three week period.
  • Employees with two or more employers can be furloughed for each job separately.
  • Claims will be made via an online portal, which will be operational from the end of April and monies paid by BACs into a UK bank account.
  • Employers can make a collective claim for the group of furloughed employees, but it is anticipated that employers may need to make more than one claim throughout the period, and that employers will submit one claim at least every three weeks.
  • Employers cannot backdate (to the 1st March) the furlough period for all employees. The scheme is only backdated to cover employees who have already been made redundant as a result of the coronavirus restrictions.
  • Furloughed employees’ wages are subject to Income Tax and National Insurance as usual, and employers also pay employers’ NI and automatic enrolment contributions unless the employee has opted out.
  • Employers can make up the additional pay (20%), but they are not required to do so. Please also note Tax, NI and pension implications of this.
  • Payments received by a business under the scheme must be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
  • HMRC will retain the right to retrospectively investigate and audit employers’ claims.

Holiday Leave Entitlement:

  • Employees remain employed during furlough leave so statutory holiday will accrue during the furlough period.
  • We note new legislation relating to holidays: Workers who have not taken all of their statutory annual leave entitlement by the end of 2020 due to COVID-19 have a legal right be able to carry it over into the next two leave years. Please click here for details.

Here is some generic advice on the topic:

Please note, advice is being updated regularly so make sure to check back on the GOV.UK website.


6.  Bank Loans – SME Update

A number of members have fed back issues in respect to accessing bank loans – including the government backed Coronavirus Business Interruption Loan Scheme (CBILS). These loans are promoted as a possible option for businesses to relieve short and medium term cash flow challenges. Feedback was that banks were asking for personal security (even though the loans are 80% backed by government), the process was taking too long or in some cases denied, as banks steered their clients to other options, that had higher interest.

Late last week the government introduced measures to rectify some of these challenges including: 

  1. Banks are no longer allowed to take personal guarantees of any form for loans (facilities) below £250,000.
  2. The requirement that banks consider other lending options has been removed, which will likely help speed up the process.
  3. The minimum size CBILS loan sum of £25,000 remains, however different lenders are offering a range of options for sums below this (please see below).

Specific eligibility criteria and guidance for SME’s has been updated on the British Bank website, which you can view here.

In summary, now that access has been opened up to smaller businesses, who previously would not have been eligible for CBILS, it may be worthwhile re-contacting your lender if you have previously been unsuccessful in securing suitable funding.

Interest rates: We have been asked about interest rates in year two of the CBILS scheme (after the interest free period ends) and we can advise that this would be at the discretion of the banks. We spoke to one bank who advised that (for them) interest rates would be in line with standard secured policy and client risk rating, typically from 2% – 5%, but it would be best to speak to your own bank directly.

Here are links to the updated CBILS scheme terms of the major banks. You will see a minimum of £25,000 can be loaned and lesser amounts are directed to other lending facilities.

  • Barclays – £25,001 minimum
  • Lloyds – £25,000 minimum
  • HSBC – £25,000 minimum for sole traders and partnerships and £10,000 for incorporated entities
  • Nat West – a range of options from £1000 upwards
  • Santander – £25,000 minimum

I also note that a number of banks such as Lloyds are offering their commercial clients a repayment holiday on property, which we hope may create opportunities for the benefits to be passed onto their tenants.


 7.  BID Lobbying – We Need You!

As mentioned above we would be very grateful if you complete our survey. We are in direct contact with our MP and through The BID Foundation and other organisations such as the FSB, Growth Hub and Chamber of Commerce, have direct contact with the UK Government, so we are also looking for your feedback to ensure the right kind of additional support is made available going forwards. If this is relevant to you, please feedback your experiences.

Key issues that are currently lobbying for additional support on are:

  1. Support for businesses with a rateable value greater than £51,000, who did not receive any grant funding.
  2. Greater protection for commercial tenants as we feel the existing ‘protection from eviction’ needs to go further.
  3. Guidance for landlords who are in receipt of grant funding (as the registered rate payer), but are not the current tenant (e.g it is leased, subleased or not sole occupancy).
  4. Further protection for businesses if the current emergency measures are extended.

We are also aware of a petition for Small Ltd Company Directors to get Government support like the Employed and Self Employed. We note the recent update to Job retention Scheme, does now include salaried company directors (as noted above). We would be interested to understand how many of our business owners this now applies to, so please get in touch if this is still an issue relevant to you?  


8.  Pubs and Restaurants – HMRC Guidance on Disposing of Beer

If you are a brewer or publican, please note that temporary changes to the destruction of spoilt beer. The recent guidance covers who can destroy spoilt beer, how long the change applies, what you need to do as a brewer, and the evidence that HMRC needs. Please click here for more information.


9.  Love Leamington and Leam Delivers!

The website is now live. We are constantly updating it so please let us know if you are not there and want to be. For now we are listing essential information on the homepage, but all town centre businesses who are trading online, via a website, facebook or other are listed within the site. We will be supporting this with social media promotion.

Please feel free to share it and send us your updated content such as:

  • Your store hours (where relevant)
  • Your current activities (online, delivery etc)
  • Online events you are hosting

As well as #LoveLeam, we are also using (hashtag) #LeamDelivers and I have attached a logo (in various formats) that you are welcome to use on or within your own material if you are delivering from Leam!

For those businesses still trading, COVID-19 Safe Distancing Floor Stickers are sure to be delivered this week, so we will be in touch shortly.

Member Questions: We are actively exploring options on the following and would value a conversation if you are interested in these ideas:

  1. Supporting local deliveries with a car and driver who you can contact (note, we have had someone volunteer so need to establish the details)
  2. Offering ‘click and collect’ from multiple local stores from a centralised location
  3. Joining / promoting a local scheme that would enable you to sell certain products online (if you don’t already and /or wish to focus on certain products in a collective way). Examples include ShopAppy(Video) and Your Local Delivery. All of these have their pros and cons so we are interested to gauge interest if you have time.


10.  Further Business Support 

Other advice and support from previous emails can be found on our website by clicking these links:

Specific Information relating to Grants:

Alternatively, please join our Leamington Town Centre Facebook Group if you haven’t already. We will also post updates on the BID Leamington Facebook Page – and the Royal Leamington Spa Town Centre Facebook page is where we will showcase what you are now doing.

Please keep in touch and share your ideas with us, as we are stronger together.

Best wishes and stay safe,
Steph and Alison.