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Daily press briefing was delivered today by Business Secretary Alok Sharma. Stated was that the Government will do everything it can to support business and there will be further news from the chancellor in the coming days. The Business Secretary had a warning for banks saying that it would be unacceptance for them to refuse financial support to firms needing help at this time and referred to the support the banks received from the taxpayer during the 2008 financial crisis. It was stated that funds have now been sent to local authorities for distribution under the Small Business Grant Scheme. It will be interesting to see how long it takes to cascade funds to those eligible. Banks bow to pressure and axe shareholder payments Some of the UK's biggest banks have agreed to scrap dividend payments and hold onto the cash, which may be needed during the coronavirus crisis. The Bank of England welcomed the decision to suspend the payments to shareholders and urged the banks not to pay bonuses to senior staff either. The banks, which include NatWest, Santander and Barclays, were due to pay out billions to shareholders. But in recent days they have come under pressure to hold onto the money. 'A sensible step' The deputy governor of the Bank of England, Sam Woods, wrote to some banking bosses asking them to suspend dividend payments. He asked them to confirm their decision by Tuesday evening. In a statement, the Prudential Regulation Authority, which is part of the Bank of England, said: "Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption." Between them, Lloyds, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered were expected to pay a total of £15.6bn to shareholders, according to analysis from investment firm AJ Bell. But they will now retain those funds and not pay out any money to shareholders until at least the end of the year, which the Bank of England said "should help the banks support the economy through 2020".

Many economists are predicting that the UK, in common with other large economies, will enter a recession this year, with output set to plummet. Last week, a closely-watched early indicator of economic activity fell to its lowest ever reading. That led economists at Capital Economics to predict a 15% contraction in the UK's economy during the second quarter of the year. 'Prudent' move Stephen Jones, chief executive for UK finance, the trade body for banks and finance companies, told the Today programme that banks were considering scrapping dividends before the Bank of England mandated it. "It's very prudent for banks to be retaining capital rather than distributing it in the current environment," he said. Losses will increase on existing loans, he said, meaning lenders need a bigger buffer to protect deposits and keep the bank running. "It's important that the banks are given as much firepower as they can to support the economy," he added. However, the Bank said it did not expect the cash to be needed, noting that the banks had more than enough money in reserve to deal with both a global recession and a shock in the financial markets. Banks were criticised during the financial crisis 12 years ago when they paid dividends months before needing the biggest bailouts in history. Since then, banks have been forced to hold more capital to prevent the need for more public money to be spent on them, although not all banks have fully recovered. The government still owns 62% of Royal Bank of Scotland, for example. Barclays' investors will be the first to be affected by the halting of dividends. Its shareholders had been due to share a payment of more than £1bn on Friday. Barclays chairman Nigel Higgins said suspending the payment was a "difficult decision". "The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now, and ensure that Barclays is well placed to continue doing what we can to help through this crisis," he added. UK consumers are protected up to £85,000 per bank under the Financial Services Compensation Scheme. In other words, if a bank collapses, savers will get any money in these accounts up to £85,000 paid back in compensation. Joint accounts have a protection level of £170,000.

Analysis This is a significant move from the commercial banks. They decided not to pay shareholders several billion pounds worth of dividends after receiving a firmly worded letter from the Bank of England, which wants the banks to hold on to the money to support lending in the economy. And, with some of the payments due to be made in just days, the impact will be felt almost immediately by some shareholders. The Bank of England's watchdog, the Prudential Regulation Authority, also made clear that it does not expect any of the UK commercial banks to pay cash bonuses either, although that is yet to be agreed. The logic here is to preserve cash for where it is needed, but the regulator has also been making the point that this crisis is a moment of potential redemption for the sector. The banks have the opportunity to distance themselves from the financial crisis, which they created, to become the economic saviours of the coronavirus crisis. But that depends on them preserving cashflow, overdrafts and funding lines to businesses that will become viable again once the pandemic passes. For example, the chancellor's freelance worker scheme will result in substantial cash sums being deposited in bank accounts, but not until June, and much depends on banks keeping workers financially afloat until then. The cancellation of dividends also piles on the pressure for other sectors that have received money for furloughing workers - or even more direct government backing - to also consider scrapping their dividend pay-outs.

"These are difficult decisions, not least in terms of the immediate impact they will have on shareholders," said Barclays chairman Nigel Higgins. "The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now, and ensure that Barclays is well placed to continue doing what we can to help through this crisis."


Government COVID-19 support packages for businesses Author(s):

Chartered Insurance Institute

CBILS is a new scheme, announced by The Chancellor in response to the coronavirus outbreak, which can provide finance facilities of up to £5m for smaller businesses across the UK who are experiencing cash flow disruption and loss of earnings.

New Coronavirus Business Interruption Loan Scheme (CBILS):

Key features: • Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years. • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender. • No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme. • Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments. • Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years. • Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Eligibility criteria

Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must: • Be UK-based in business activity, no more than £45m annual turnover • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website.

Businesses should approach their own provider first – ideally by way of the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need. Decision-making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks, to challenger banks, asset-based lenders and smaller specialist local lenders. Note: if the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Additional application notes: Due to expected high demand it is recommended to consider the following: • Apply through the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing • Do you need “emergency finance” or long-term financial assistance? There will be firms that need the former and therefore will be prioritised What types of finance are available? CBILS supports a wide range of business finance facilities, including: • Term loans • Overdrafts • Asset finance • Invoice finance

Note: Not every lender can provide every type of finance listed. Support for businesses through deferring VAT and Income Tax payments The government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.


For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.


All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Support for businesses who are paying sick pay to employees The government is bringing forward emergency legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

Eligibility Criteria:

• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19 • employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020 • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19 • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

Eligibility criteria

You are eligible if your business: • pays tax to the UK government • has outstanding tax liabilities How to access the scheme

If you have missed a tax payment or you might miss your next payment due to COVID-19, you can call HMRC’s dedicated helpline: 0800 0159 559. HMRC prefers if you call nearer to the payment you believe you will miss.

There is a new HMRC dedicated helpline for the self-employed and SME’s to help spread capacity, which is: 0800 024 122

Support for businesses through the Coronavirus Job Retention Scheme Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.


All UK businesses are eligible.

How to access the scheme

You will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required) • HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Support for businesses that pay little or no business rates The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.


You are eligible if: • your business is based in England • you are a small business and already receive SBBR and/or RRR • you are a business that occupies property How to access the scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Support for larger firms through the COVID-19 Corporate Financing Facility Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.


Companies - and their finance subsidiaries - that make a material contribution to the UK economy are able to participate in the facility. Companies must do this via a bank.

In practice, firms that meet this requirement would normally be: UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK; companies with significant employment in the UK; firms with their headquarters in the UK. We will also consider whether the company generates significant revenues in the UK, serves a large number of customers in the UK or has a number of operating sites in the UK.

The facility is open to firms that can demonstrate they were in sound financial health prior to the shock, allowing us to look through temporary impacts on firms’ balance sheets and cash flows from the shock itself. This means companies that had a short or long-term rating of investment grade, as at 1 March 2020, or equivalent.

To discuss eligibility, you can contact How to access the scheme If, after speaking with your bank, you believe you are eligible then you will need to complete the following documents. • Issuer Eligibility Form (XLS) • Issuer Undertaking and Confidentiality Agreement (DOCX)

Further details for the scheme, FAQs and how to apply can be found on the BoE website – CCFF landing page.

Support for self-employed through the Self-employment Income Support Scheme The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19). This scheme will allow you to claim a taxable grant worth 80% of your trading profits for up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.


You can apply if you’re a self-employed individual or a member of a partnership and: • You have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19 • traded in the tax year 2019-20 • are trading when you apply, or would be except for COVID-19 • intend to continue to trade in the tax year 2020-21 • have lost trading/partnership trading profits due to COVID-19 • Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true: • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable): • 2016 to 2017 • 2017 to 2018 • 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount. It will be up to a maximum of £2,500 per month for 3 months. They will then pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online, individuals do not need to contact HMRC now.

Note: You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam. After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits, you’ll need to include the grant in your claim as income.

Other help you can get:

The government is also providing the following additional help for the self-employed: • deferral of Self-Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020 • grants for businesses that pay little or no business rates • increased amounts of Universal Credit • Business Interruption Loan Scheme • If you’re a director of your own company and paid through PAYE, you may be able to get support using the Job Retention Scheme

Useful links

Guidance for employers and businesses about COVID-19 Up to date government support packages for businesses Self Employed Income Support Scheme Guidance British Business Bank information about CBILS BOE Corporate Financing Facility information Turn2Us Benefits and Welfare support guidance for employees Todays’ market close data

We are here to help you through these challenging times, so please don’t be afraid to get in touch.

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