Accura Accountants update – Rents and Job Retention Scheme
I do hope this email finds you and your family well and keeping safe.
Based on Government comments, we could see some light at end of tunnel, however social distancing will be with us for some time to come. There will be inevitable changes in many businesses as a direct result of this pandemic. The retail market will change materially, primarily with the food market where more people will buy on line and this will eventually affect rents on the high street.
Major retailers will reduce the need for a high street presence and over the coming months, restaurants will have to rely more on “take away”. As the pandemic subsides, people will be eager to meet up with friends and family and this trade will re-emerge but bruised. Smaller owner managed restaurants will in my opinion survive but with severely damaged profits.
I believe that landlords of retailers, whether that be restaurants, estate agents or other may have to have a reality check in regards to rents charged and take the view that a previously good tenant is worth assisting by agreeing to a major rent reduction to enable that business to survive. This option is far better than losing a good tenant and having premises empty with a prayer and a hope to find a new tenant.
No doubt, any incoming tenant will demand a rent free period, possibly up to one year, so is it sensible to offer a previously good tenant the same facility, rather than to a new tenant that has no payment track record. The above is just food for thought for our retail clients, with apologies to our clients owning retail premises that have struggled with rent receipts. Covid-19 and the emergence of the Coronavirus Act of 2020 is weighted against property investors in an attempt to assist the retailer.
20th April 2020, Job Retention Scheme claims
As clients are asking on an hourly basis, I set out once again advice as to the quantum reclaimable for furloughed staff.
This will be capped at £2,500 per month or 80% of the gross wages paid. You can claim 80% of the lower of £2,500 or based on the figure below a gross of £2,000.
If gross wage is say £2,000 the grant reclaimable would be £1,600 plus the NIC paid by the employer on the £2,000. This will be reclaimable via the HMRC portal that opens 20th April.
If the salary is say £4,000 gross, the grant is capped at £2,500 plus the National Insurance on £2,500.
As I have stated previously based on Government advice, there is no necessity for employers to make up the difference in wages in the second example. It will be based on agreed arrangements and employment law. Possibly in the future, as businesses survive this crisis, the employers can voluntarily make up the shortfall of staff income at a later date, when cashflow improves.
The Government assistance is an attempt to help stabilise small to medium businesses (with little help to larger firms) and to ensure that our country does not spiral into a major recession. My opinion is yes, the future looks a little bleak today, however the question I ask is whether pre-Covid-19, your business was surviving and producing you a long-term living wage. If the answer is yes, then 12 weeks is not an insurmountable period and clients should not look back, but instead plan and look forward to overcoming this present dilemma.
We at Accura Accountants are here to help, whether that be struggling landlords, restaurants or any other trade.
At this time, all businesses must support each other.