As your trusted advisers, Old Mill is fully committed to helping businesses and individuals during the COVID-19 crisis. Our COVID-19 Hub offers practical advice and information to help you understand government policy and assess your financial situation during this time.
Read on to discover insights, tools and resources to help you navigate your way through this challenging time.
Our COVID-19 Insights offer you general support, guidance and expertise to help you make the right decisions during the crisis. For specific advice around our sectors, please head to our relevant COVID-19 sector pages; Rural, Wealth Management, Food & Drink and Owner Managed Businesses
Banks and building societies remain a safe place to keep your cash in the short term. For those with large cash deposits, consider where these are held and the amounts held due to the level of protection for deposits under the Financial Services Compensation Scheme being restricted to just £85,000 per individual, per financial institution. Please refer to our previous article for more details and guidance.
We don’t believe you can successfully time markets but, obviously, stock markets are at much reduced levels from earlier in the year. If it makes sense for you to invest for the longer term then there is no reason to believe now isn’t an appropriate time to invest, provided the funds are suitability structured. If you’re concerned about committing your funds in one go, there is the alternative of phasing funds into the new investment over a number of months.
If you’re taking a regular income from your portfolio that isn’t being spent and is simply accumulating in your bank account (earning little or no interest), now might be the time to reconsider if that income is actually needed.
People tend to focus on the income they receive rather than the expenditure they make. We explore expenditure as part of our cashflow planning as it helps make informed financial decisions. With a reduced ability for discretionary spending you could consider:
For most investors (where a regular income is needed), the level of income they are drawing will be sustainable even after the recent falls we have seen.
We appreciate that in times of falling values this means that a greater percentage of the investment is being drawn; raising the prospect of accelerating the rate of any capital erosion.
To cover income withdrawals, portfolios generally hold a proportion of the fund in cash which avoids the necessity of having to sell equity investments in the short term. If the downturn goes on for some time it’s likely that the cash held in portfolios will need to be topped up. Rather than being forced into selling equities when markets are low, we can disinvest from the defensive assets within the portfolio which have broadly maintained their value.
We advocate reviewing your existing financial plans to ensure they remain suitable in helping you towards your financial goals now and in the future.
This approach is probably more relevant now than ever before, where a clear investment strategy and the ongoing management of costs can have a significant impact on your investments.
Sometimes people are put off making changes when sudden falls in value happen. If it’s in your interest to make a change we would not delay this because of a short-term reduction in the value of the plan being cashed-in or transferred because:
Cashflow planning plays an important part in delivering the peace of mind many people are looking for when considering their financial well-being.
A cashflow analysis will consider your available assets and income / expenditure both now and into the future to paint a picture of what your financial future might look like.
If there’s a danger of a financial shortfall in the future the cash flow will identify this enabling you to make the necessary changes now to secure your financial well-being.
Conversely, a cashflow analysis may identify that you have ‘more than enough’ enabling you to enjoy life more now or assist your children / chosen charities etc.
It’s too early to make any great predictions given the unknown duration and impact on the economy and businesses generally of COVID -19. However, regularly revisiting the various cashflow scenarios to ascertain when pinch points may occur now or in the future can allow you to take steps now to change or delay plans should it prove necessary.
We advocate holding sufficient available cash to cope in an emergency, be it a one-off cost such as your car or boiler needing replacing, or to provide ‘income’ in a worst case scenario.
Now may be an appropriate time to switch off the income you may be drawing from pension drawdown plans or investments, and instead draw down from cash reserves. If, or when, a recovery happens, these reserves can be topped up again.
Many businesses will be looking to defer rental payments at the current time to help business cashflow. Where the business is your own and the premises are owned by your own SIPP or SSAS, special consideration needs to be taken into account. Please refer to our previous guidance from our expert pension team.
This is a good idea anyway, but particularly at a time like this, all businesses need to have an understanding of their variables, whether it is the price of their product falling, the price of inputs rising, or even the lack of availability of some inputs.
SMEs are no exception, for example, in the construction sector, a business owner would need to understand what is the impact if the price of ready-mixed concrete increases by, say, 15% due to supply chain issues. A forecast cashflow can be constructed to help manage potential cashflow issues, we have a template for this that enables you to test out different future scenarios. Click here to learn more about why it’s important to evaluate your financials.
If you’re self-employed and unable to work due to social distancing, then it may be that you need to look at applying for Universal Credit to help with your living costs.
Individuals can apply for Universal Credit via this link, contacting the Universal Credit helpline on 0800 328 5644 or the new Coronavirus and claiming benefits page.
For those who have a disability or health condition that affects how much you can work, then you may be able to claim Employment and Support Allowance, potentially in addition to Universal Credit. Full guidance can be obtained here.
You may be eligible for the Self-Employment Income Support Scheme, click here for the Government’s guidance on how to claim 80% of your monthly trading profits for three months, up to a maximum of £7,500.
The furloughing of staff should be justified in its relation to the impact of COVID-19. In circumstances where it’s necessary to reduce your number of staff, then it’s reasonable to consider this option. Click here for more information from us on furloughing and the Coronavirus Job Retention Scheme and here for details and how to claim on the gov.uk website.
Importantly, furloughing does not override employment law and the employees need to agree to the variation in their terms of employment.
The government has set out a package of targeted, temporary measures to support public services, people and businesses through this period of disruption. From a business rates perspective, these measures include:
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. For a more detailed examination click here.
These grants are being administered by Local Authorities and they should have written to you by now where they expect your business to qualify.
Yes. One way to bolster your earning potential is to explore whether you can take advantage of Research and Development (R&D) tax credits, particularly as it’s a tax relief you can opt to turn into cash, and there is scope to go back and claim for the two preceding years.
Many business owners don’t believe they can benefit from R&D tax relief because ‘there can’t be much R&D happening in my specific sector’. But this simply isn’t true. R&D tax relief applies to many sectors, including food & drink, property & construction and manufacturing.
In the event that a business or individual is unable to pay their tax liabilities (Corporation Tax, PAYE and NI, VAT, Income Tax etc) by the due date, it may be possible to enter into what’s called a Time to Pay or TTP arrangement with HMRC. You will need to make your case to HMRC as to why you should be allowed TTP, and that these tax liabilities could be met in the future.
If successful, this would result in the deferment of liabilities, providing some cashflow relief in these periods of disruption. NB It’s important to understand that under a TTP agreement the business will have to pay both the deferred and current tax liabilities when the TTP comes to an end. Click here for further HMRC guidance.
There are two automatic deferrals that you don’t need to apply for:
In both cases, you will need to cancel your direct debit arrangement otherwise the money will be collected as normal.
The government has given a three-month extension to the filing of company accounts, but it’s still quite possible for us to prepare your accounts and do any audit remotely in order to keep your business up to date. We would advise that the option to delay your accounting process is only used as a last resort. In many cases the support options including the Coronavirus Business Interruption Loan Scheme will require the most up-to-date set of accounts and management information for the period since the year-end. To discuss your options further and to see if this is something that you should consider please speak to your adviser. For further details click here.
Yes. One way to bolster your earning potential is to explore whether you can take advantage of Research and Development (R&D) tax credits, particularly as it’s a tax relief you can opt to turn into cash, and there is scope to go back and claim for the two preceding years.
Many business owners don’t believe they can benefit from R&D tax relief because ‘there can’t be much R&D happening in my specific sector’. But this simply isn’t true. R&D tax relief applies to many sectors, including food & drink, property & construction and manufacturing.
In the event that a business or individual is unable to pay their tax liabilities (Corporation Tax, PAYE and NI, VAT, Income Tax etc) by the due date, it may be possible to enter into what’s called a Time to Pay or TTP arrangement with HMRC. You will need to make your case to HMRC as to why you should be allowed TTP, and that these tax liabilities could be met in the future.
If successful, this would result in the deferment of liabilities, providing some cashflow relief in these periods of disruption. NB It’s important to understand that under a TTP agreement the business will have to pay both the deferred and current tax liabilities when the TTP comes to an end. Click here for further HMRC guidance.
There are two automatic deferrals that you don’t need to apply for:
In both cases, you will need to cancel your direct debit arrangement otherwise the money will be collected as normal.
