Cash flow

The government is helping businesses through the current situation by allowing you to defer tax payments.

If you have a VAT payment due before 30th June 2020, you can defer payment of this until 31st March 2021 without contacting HMRC. If you have a direct debit set up with HMRC for VAT, cancel this to avoid the payment being automatically taken. It’s also possible to defer other tax payments, including PAYE and corporation tax. We’ve put together a short guide showing you how to do this.

A lot of businesses are also entitled to a grant payment of £10,000 under the Business Rates Payers Scheme. This amount is more if you’re a hospitality business. Look at holding off your business rates payment while you check with your local authority to see if you are eligible for any of the concessions. Different councils have different procedures to apply and receive it. If you haven’t heard from yours yet, please give them a call.

HMRC payment plan

Approach your landlord about a rent holiday or deferment. The government has announced that no business will be forced out of their premises if they miss a rent payment between now and June. There have been a lot of businesses that have negotiated with their landlords. These businesses have successfully negotiated a three month rent holiday. Could you? At the very least, see if you can pay your rent monthly, instead of quarterly in advance. 

Your landlord may have received a grant through the Business Rates Payers Scheme mentioned about. Depending on the type of contract that you have with your landlord and what the deal is with rates, a reduction in rent may be passed onto you. It is worth asking them if they have received the grant payment and whether a reduction in your rent will be passed onto you.

Businesses who have negotiated a rent holiday

In times of uncertainty, it’s more important than ever to get to grips with the numbers in your business. The good news is that you don’t need to be an accountant to have the key information you need at your fingertips. 

1. Produce a visual dashboard for your business – the three or so metrics that tell you whether you’re on track. Make sure there’s a balance of leading and lagging indicators on there, and ensure they’re aligned with your strategic objectives. Update and review them every day or week to ensure you’re on track. 
2. Calculate your break-even point; it’s a good number to know. Ideally, make sure you set targets above break-even. Plan to make a profit, but know where the break-even line is in case things don’t go to plan. 
3. Increase awareness amongst the team about what each objective means. If things are simple, clear and aligned – good things will happen. If not, it’ll be much harder work to achieve your objectives. Don’t forget, revenue is much easier for someone to affect (and understand) than profit.  

If you’re worried about your personal finances throughout this time, our key recommendations are:

1. Reduce your bills – this could involve cancelling subscriptions you no longer use, switching and saving on your energy bills or finding a better mortgage deal.
2. Delay your bills – talking to your bank about a temporary payment freeze on loans and credit cards for up to three months or taking a mortgage repayment holiday (this won’t affect your credit score).
3. Act quickly if you need credit. Unfortunately, the financial impact of COVID-19 has forced lenders to withdraw a number of their products from the market. So if you need to apply for credit, doing it sooner rather than later will help you secure the right product at the right price.

Our financial planning team has put together some other tips in key areas to help your personal finances.