We’ve pooled together all our experts’ advice and sources of support together in one place. This should make it easier for you to find useful information and to share what other businesses are asking us.
I’m worried about my investment portfolio and how it is performing. What should I be doing about it?
The recent market correction and, moreover, the speed of it will understandably have created concern for some investors – even those who may have seen significant market movements in the past. The unique circumstances of the current market correction and the impact on public finances will undoubtedly lead some investors to question their investment philosophy and consider de-risking their holdings as solace is sought in cash holdings in the face of falling markets. Coming out of markets following significant drops has typically proven to be the worst action to take however, as such action can often crystallise larger losses than had been the case if remaining invested within markets.
Regular corrections have often been seen within markets in the past:
|Crash||Date of peak before craash||Date of lowest point||Date of return to pre-crash peak||Maximum drawdown|
|Black Monday 1987||16/07/1987||10/11/1987||31/07/1989||-35.89%|
When investing monies, it is important that investors always think about the longer term (five years or more), rather than weeks or months, and that is the context through which we would encourage you to view current market turbulence. If, when originally investing, you were investing for the longer term, and you have no specific requirement for that money now, we would not recommend short-term reactions to market volatility. We would however encourage you to review your portfolio to ensure it is suitably diversified and appropriate for your requirements going forward.
I’m worried that my life cover is inadequate. Can I take out more cover at the moment or change the type of policy that I have?
Changing an existing policy is likely to be dependent on the type of policy you have and you would need to speak to your existing policy provider to see what might be possible.
Effecting new or replacement life cover typically requires medical underwriting, whereby the provider assesses the risk associated with an application based on medical and lifestyle details provided, with the requirement for GP reports in some instances (particularly for individuals with health issues or requiring significant levels of cover).
At present, due to the difficulty in obtaining GP reports and conducting medical screenings in person, insurers are understandably struggling to complete medical underwriting for life and critical illness cover applications. Providers are taking varying approaches, including deferring underwriting decisions on applications above certain pre-prescribed limits, or seeking alternative medical evidence from clients directly. Where cover is urgent you may need to reduce the amount of cover applied for to a level within medical underwriting limits.
We understand that some providers have temporarily increased their underwriting limits in some instances and others will be offering video medical screenings shortly.
Changes are happening quickly in this area so it is well worth speaking directly to your provider – or to an adviser if you wish to consider putting in place further cover.
I’m worried about my occupational pension scheme. What happens if my employer goes bust? Should I make any changes to my pension?
Employers may operate different type of pension schemes, but whichever scheme they offer, you won’t lose your pension pot if your employer goes out of business.
Defined contribution pensions, where both you and your employer make contributions which are invested in funds with a clear fund value provided, are usually run by pension providers – not employers. Your fund is effectively ring-fenced from your employer and remains in place regardless of the employer’s financial position. Some defined contribution schemes are run by a trust appointed by the employer and are called ‘trust-based schemes’.
You would still get your pension from these schemes if your employer goes out of business – but you might not get as much because the scheme’s running costs would need to be paid by members’ pension pots instead of by the employer. Defined benefit pensions, which provide a pension based on the number of years you have worked, are less common now but these pensions are usually protected by the Pension Protection Fund – in which case you’ll receive 100% compensation if you’ve reached your ‘selected retirement age’ (the age you agreed with your pension provider to retire) or 90% compensation if you’re below your selected retirement age. Compensation is paid from the Pension Protection Fund.
Concerns about the viability of your employer would not normally require you to consider making changes to your pension but in the event of any concerns, you should speak to an adviser.
I’m a key worker and working considerable overtime and spending very little at present. Should I be topping up my pension, contributing to an ISA or paying down my mortgage?
Much will depend on your own personal circumstances and financial position. Difficult times like these demonstrate the value of first building up a suitable “emergency fund” of cash reserves that you can call upon should your circumstances change.
Making pension contributions can be a very tax efficient means of saving for later years as you can claim tax relief on pension contributions at your marginal rate. Contributions are even more tax efficient if you are able to do this through a salary sacrifice arrangement with your employer where there is also an NI saving.You should remember however you won’t have access to this money until age 55 at the earliest (rising to age 57 in the future). Contributing to your ISA is tax efficient during the investment term and when accessing benefits, but you don’t get the same tax relief ‘on the way in’ that you do when making pension contributions. You do however have access to this money at a time of your choosing. Paying down your mortgage can reduce your balance, the interest payable and ultimately your monthly payments, though it is usually a gradual process and you won’t see much difference in the early years unless you make significant payments.
You should carefully consider your short and long term objectives for your money and seek advice if you have any doubts.
I’m over 55. In what ways can I use my pension fund to support my business? And would it be sensible?
Depending on the plan you have and the circumstances of your business, there are various options including using your pension fund to purchase your business premises, taking a commercial loan from your pension, or simply accessing the funds. You have the option of entering flexi-access drawdown and simply taking up to 25% of your fund as tax-free cash – though some legacy plans won’t allow this and it may require you to transfer to a more modern contract first.
You could also access further funds either as a regular income to aid cashflow or by taking lump sums, although you should be aware that this will be treated as taxable income – and it may therefore not be a tax-efficient means of accessing funds. Lump sum payments may also suffer emergency tax initially (although this can be reclaimed). Furthermore, taking out a taxable withdrawal from a pension could trigger the Money Purchase Annual Allowance (MPAA), which would severely limit contributions savers could make going forward.
Taking funds from your pension to support your business would not generally be advisable as this is money that has been set aside to provide for your retirement – and if the worst were to happen, you could be risking both your current and future income, as well as creating tax issues. There are many avenues that should be explored ahead of this, including business loans, payment holidays and using other available capital.
Can I claim the small business or retail, hospitality and leisure grants if I have some private use of the property?
The small business grant fund (SBGF) and retail, hospitality and leisure grant fund (RHLGF) have recently been announced to help eligible businesses at this difficult time. Our article sets out a useful summary on the guidance issued to date.
Businesses can only apply for one of the schemes and guidance for both grants states that properties ‘occupied for personal uses’ are excluded. Their guidance gives examples of personal use such as private stables and loose boxes, beach huts and moorings.
However where does this leave properties where there is some personal use, such as owners’ accommodation above a pub, or a furnished holiday let owner that uses their property themselves for a couple of weeks a year? The original official guidance did not address these types of situations.
We have now seen government guidance notes to local authorities which indicate that if a holiday let is included in the ratings list it has passed assessment to be considered a non-domestic property (i.e. it is available for letting commercially, as self-catering accommodation, for short periods totalling 140 days or more) and would therefore be eligible for the grants.
I’m self-employed – do I qualify for universal credit?
If you self-employed and unable to work due to social distancing and other restrictions, it may be that you need to look at applying for universal credit to help with living costs. Check out our blog with full information at https://www.pkf-francisclark.co.uk/coronavirus/the-importance-of-universal-credit/ that provides contact information and further advice. This page is updated as and when things change.
What advice and guidance is available for charities accounts and finances?
We have put a blog post together covering the following topics:
- Reporting accounts and finances – SORP making body issues COVID-19 related advice
- Extensions to your annual return deadline
- Guidance to help with running your charity during the COVID-19 outbreak
To view the full blog, click here
Is my business eligible for a business rates holiday?
The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19. From a business rates perspective, these include:
- A 12 month business rates holiday for all retail, hospitality and leisure businesses in England
- Small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief
There is also grant funding available of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000. Read more
What can I do if the effects of COVID-19 mean that my company accounts will not be filed on time? (Updated 27 March)
COVID-19: Companies House extends account filing deadline
Companies House is granting an extension of 3 months to companies for filing company accounts, due to the current public health situation and the impact of coronavirus.
Companies will need to apply for the 3 month extension before the filing deadline, however those citing issues around Covid-19 will be automatically granted the extension. Further details and how to apply can be found here: https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts#when-to-apply
By obtaining an extension to your accounts filing deadline, this will result in your Corporation Tax payment date being 3 months in advance of the new accounts filing date, potentially making Corporation Tax liabilities difficult to estimate and pay in the absence of having finalised accounts. You can apply for a 3 month deferral to the Corporation Tax payment date by calling HMRC, but this is not yet given automatically.
How can I help my family out financially, without incurring a big tax bill for them or for me?
In these difficult times you may be considering how you can help family members financially. Whilst tax will not be at the forefront of such thoughts, it is nevertheless a potentially large expense that should at least be considered.
The easiest way is to use your tax free gift allowance – up to £3,000 a year, or £6,000 if you did not use the previous year’s allowance. So you may be able to gift £6,000 by 5 April and a further £3,000 after that date with no inheritance tax implications – that is up to £9,000 or indeed £18,000 for a couple. Subject to certain rules, gifts of surplus income can also be made. Read more
Should I borrow to fund trading?
It may be possible to borrow money, and the government has announced material help in the form of guarantees (as well as some grant funding and rates relief for small businesses). It is now clear that personal guarantees will not be required for loans up to £250,000, but bear in mind that any loan will have to be repaid in due course.
Is it reasonable to assume that the business will generate enough cash when things pick up to repay such loans? Or are the losses being incurred simply too much to be financed?
What additional funding might be available to support my not for profit’s work during the Coronavirus outbreak?
New funding streams are becoming available to support those entities most in need. Some examples can be found below.
In the meantime don’t forget to talk to your existing funders about whether they can be flexible in terms of your delivery or whether some restricted funding could be diverted to cover core costs in the short term. Many funders and donors will be open to these conversations and they will want to support you through this time.
What about debts due to HMRC?
There is an automatic deferment of VAT falling due between 20 March and 30 June 2020 and also of the second self assessment income tax payment due on 31 July 2020.
In the event that a business is unable to pay its tax liabilities by the due date, it might be possible to enter into a Time to Pay arrangement (TTP) with HMRC provided that they believe these liabilities could be met in the future, whether this be Corporation Tax, PAYE and NI, VAT, Self-Assessment etc.
These measures can result in the deferment of liabilities, providing cashflow relief in these periods of disruption. Be sure to check out our Cashflow and Coronavirus blog and HMRC guidance for more detailed information on this.
Should I carry on trading?
If there are concerns about solvency it is essential that the interests of creditors are looked after as a priority. That means that it would certainly be wrong to continue trading if there is no reasonable prospect of paying the liabilities that are being incurred. If you can’t see how such creditors are going to be paid then trading should cease.
Do I have personal risks if I carry on trading my company?
The Government have announced a temporary suspension on claims against directors for wrongful trading. This means that directors cannot, for the short term at least, be personally liable for allowing their company to continue to trade beyond a point where you know, or ought to have known, that there was no reasonable prospect of avoiding insolvency and creditors getting into a worse position during that time.
This suspension of wrongful trading claims does not remove other duties imposed on you by the Companies Act, namely to act in the best interests of all of your creditors. For now, the penalties for breaching these duties remains in force.
The key to ensuring you meet these duties is to have good financial information and projections for directors to record (in writing) that their decisions are taken with the best interests of creditors in mind and to evidence the review of these decisions regularly.
What support is available for commercial tenants who cannot pay rent?
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. The government has announced that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction. To find out more, visit www.gov.uk
Statutory sick pay extension – who can apply for a rebate? How do we apply?
As announced in the budget last week, the extension of SSP from day one for Coronavirus related illnesses and self-isolation (for up to 14 days), will create an additional cost for employers. However, employers with fewer than 250 employees, as at 28 February 2020, will now be able to recover 100% of the SSP costs, which is welcome news. There is no announcement on how the costs will be recovered except that the Government will be working with employers over the coming months to agree a repayment mechanism. Therefore, while it may be possible to reclaim the SSP paid, it will likely be delayed and could create a cash flow issue for employers.
If a potentially infected employee does not want to go home but I think they should, can I insist they do so?
Yes. It is a fundamental duty of an employer to protect its employees in the workplace. If an employee becomes infected with Covid-19, or there is a chance they have been infected, the employer would have a duty to take reasonable steps to protect its employees. Asking the affected employee to stay at home may be a reasonable step to prevent the virus spreading to other employees. If, however, you insist they go home you may have to pay them full pay as you are medically suspending them.
What can I do if I am unable to pay tax liabilities?
In the event that a business or individual are unable to pay their tax liabilities by the due date, it might be possible to enter into a Time to Pay arrangement (TTP) with HMRC provided that they believe these liabilities could be met in the future, whether this be Corporation Tax, PAYE and NI, VAT, Self-Assessment etc. If successful, this would result in the deferment of liabilities, providing cashflow relief in these periods of disruption. It is worth noting that under a Time To Pay (TTP) agreement the business will have to pay both the deferred and current tax liabilities when the TTP comes to an end. Be sure to check out our Cashflow & TTP blog and HMRC guidance at https://www.gov.uk/difficulties-paying-hmrc/youve-missed-the-payment-deadline for more detailed information on this.
I have workers on seasonal contracts, is there anything I need to think about if I need to terminate their employment?
National minimum wage: It’s clear that the Coronavirus has been particularly damaging for the leisure and hospitality industries. Given the seasonal nature of these industries, if the employees being terminated are currently salaried employees, there is potentially an additional payment that needs to be made on termination to account for the minimum wage not having been paid for all the hours worked by employees who have a fluctuating or seasonal working pattern. At its most basic, if a salaried employee paid at minimum wage has worked 80% of their annual hours at the point of termination, but only been paid nine months’ worth (75%) of their annual salary, then there would be an additional payment of the 5% work undertaken, to ensure minimum wage is paid to them. Be sure to check out our Budget 2020 – Employment Update blog following the budget announcements.
What happens if my charity needs to cancel or postpone a fundraising event?
If your charity needs to cancel or postpone a fundraising event, it is important that the Code of Fundraising Practice is followed. Considerations include whether you have received any donations in advance. Should those donations be postponed? Have you already received donations online? The Fundraising Regulator https://www.fundraisingregulator.org.uk/more-from-us/news/covid-19-fundraising-events-advice holds up to date advice on fundraising events for charities.
Is my money safe in my bank account?
The FSCS guarantee provides up to £85,000 compensation when financial firms fail and as yet, the Government hasn’t offered any pronouncements on whether this amount is going to change. However, we would always advise checking whether the company that holds your money is covered by this guarantee at www.fscs.org.uk/check-your-money-is-protected/
What are the tax implications of termination payments to employees, if we have to let staff go?
It is important to be aware of the tax implications of termination payments. It is a notoriously difficult area of tax, particularly since the changes introduced in April 2018 for post-employment notice pay (PENP) and payments being made need to be considered on a case by case basis. Termination payments is an area which is often scrutinised by HMRC as part of their employer compliance visits and will undoubtedly be looked at more closely over the period in which Coronavirus impacts on the economy. Be sure to check out our Budget 2020 – Employment Update blog following the budget announcements.
Will my insurance cover my business for pandemics and government ordered closure?
If your business has insurance for pandemics and government ordered closures included in your insurance cover, you should now be covered to claim. However, we have heard from some businesses that after talking to their insurance companies, additional cover for infectious diseases / pandemics is required to claim. Some claims are being resisted on the basis that coronavirus is not one of the infectious diseases listed.
As insurance policies differ significantly, businesses are encouraged to check the terms and conditions of their specific policy and contact their providers (*)
(* = ‘Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics’ – www.gov.uk)
What actions should my law firm be considering as part of our strategy to counter the economic effects of COVID-19?
The legal team at PKF Francis Clark are helping law firm clients address the current challenges they face.
Read our range of practical tips and actions firms might want to consider here.
What if I can’t pay my creditors?
If there is no way to fund the creditor pressure (or if you feel that the losses are just unrecoverable) then trading should cease and the company may need to go into a formal insolvency process. Advice from one of our Business Recovery team to review options is essential.
Can I mothball my business?
If the demand gap or supply constraint is temporary then the temptation is to cease operations, minimise outgoings and wait for better times to arrive.
The Coronavirus Jobs Retention Scheme is an essential tool in reducing staff costs without having to make redundancies.
It may be difficult to cut other costs, or fixed costs such as rent or chattel leasing/hire payments. Reducing these costs will require negotiation and agreement.
How should I manage my creditors?
Priority must be given to paying for necessary supplies, including staff costs, to keep the business going. Only if there is a surplus can historic creditors be paid, and they ought to be treated equally.
If you are having to stretch creditor terms then communication is important – creditors will understand the underlying difficulty but will need some proposal or at least prospect of payment. And bear in mind that they too are likely to be under pressure.
The Government has announced measures to stop enforcement of creditor claims, including the forfeiture of leases by landlords, but bear in mind that the liabilities will still need to be paid and the moratorium will not last for ever.
My staff are keyworkers but have holiday to take – can this be carried over?
Keyworkers, that include NHS workers, supermarket staff, policy and delivery drivers, who are unable to take their holiday entitlement due to COVID-19, will be able to carry it over into the next two years. The changes will amend the working time regulations (WTR) which apply to nearly all workers that include agency workers, those who work irregular hours and those on zero-hour contracts.
Can my software produce cashflow forecasts to help me prepare my cashflow for Covid-19 closures and disruptions?
Our cloud team can connect some helpful cash-flow forecasting tools to your accounting software such as Fluidly and Spotlight.
These tools use historic data from the software, combined with bill due dates to help produce quick cashflow forecasts for different scenarios.
- if the business was forced to temporarily close
- how long could the business sustain its own cashflow, and
- should funding be considered to help bridge the gap of a temporary loss of sales.
For more information, in the first instance please contact Lois Hussey at email@example.com
Can the current information in my accounting software be used for a loan application?
We have relationships with funding providers who can connect to your cloud accounting software to quickly assess the financial health of a company and compare the available lending products.
We also continue to work with the more traditional lenders to help businesses secure additional finance.
Contact your usual PKF Francis Clark cloud adviser. Alternatively email Lois Hussey in our cloud team at firstname.lastname@example.org.
Can I still set up staff to work from home even though I’m not using cloud software?
For desktop-based software such as Sage 50, you may need to install the software on home devices as a precautionary should staff need to work from home.
Consider the number of software licences you have early on to make this possible.
Sage have prepared a dedicated ‘Sage Coronavirus Hub’ which explains how to install some of their desktop products on different devices, or how to use remote access to ensure business as usual. We can assist you with this if needed – contact Lois Hussey in our cloud team at email@example.com
Other desktop products can typically be accessed over a VPN.
Cloud accounting – Are your staff set up to work from home?
If you are using a cloud-based accounting software such as Xero or Quickbooks, access is available from anywhere you have a device with a Wi-Fi connection.
PKF Francis Clark recommend ensuring your staff have devices available to them and have their own login access for accountability, which can be restricted to what you want them to view in order to complete their work. This will help ensure your business’ billing and payments continue as usual.
Get in touch with us if you need assistance adding more users to your cloud-based software.