Keep farm and soldier on
The coronavirus pandemic is first and foremost a human tragedy and the first call on our time and energy is the welfare of friends and relatives. But we must confront the economic implications as well. For rural estates, the connection between the human and the economic is close given the central role they play in binding together communities and looking after the physical landscape. Therefore, it is particularly important that estates take sensible and sensitive financial steps to weather this storm.
In some respects, rural estates are well placed, certainly compared to sectors like airlines and high street retailers. Having diverse economic activities spread across many sectors - farming, residential property, commercial property, forestry, tourism, hospitality, conservation, field sports etc – mitigates risk. Agriculture may well boom and demand for staycations and rural property could rise later in the year. That said, clearly rural estates will suffer economically in the short to medium term, especially those who rely on a summer season of visitors, weddings and events such as pop concerts. Unfortunately, these revenue streams will disappear substantially if not totally for 2020.
Our advice is not to panic, think creatively about the future and make use of the government assistance available to keep things going in the short term. We need to fight through the next six months or so and emerge ready to take advantage of the economic opportunities that will emerge when the virus retreats. Once they're allowed, people will be desperate to get out and about again.
The key to surviving without cutting jobs and selling assets is to make the most of the wide-ranging government assistance announced in the past month. The government's plans, as ever, were not designed with rural estates in mind and require some unpacking. Nevertheless, actions relating to employment, tax, sick pay and 'payment holidays' should enable rural estates to survive this crisis and thrive on the other side.
We summarise the government's key measures that you should be aware of below:
Job Retention Scheme
The government will pay 80% of the wages, up to £2,500 per month, of designated "Furloughed Workers" meaning that the employee is laid off temporarily. Both employer and employee must agree to the furlough and it applies to workers on the payroll before 28 February 2020. The online HMRC portal for doing this will be up and running by the end of April.
VAT payments for all businesses have been deferred from 20 March 2020 until 30 June 2020. VAT for the deferral period will be due at the end of the 2020/2021 tax year as usual.
Retail, hospitality and leisure businesses in England will pay no business rates for the 2020/2021 tax year.
Businesses in "financial distress" with outstanding tax liabilities can apply to HMRC for further support, to be assessed on a case by case basis.
SMEs (businesses with less than 250 employees) will be able to recover coronavirus-related statutory sick pay from the government for two weeks per affected employee.
Retail, hospitality and leisure businesses working out of smaller premises with a rateable value of £15,000 to £51,000 are eligible for grants of up to £25,000. Local authorities will write to those eligible.
Small businesses that already pay little or no business rates because of small business rate relief, rural rate relief and tapered relief will be eligible for a one-off £10,000 grant. Local authorities will write to those eligible.
Business Interruption Loan
All SMEs can take out a loan of up to £5million, repayable over six years. The government will cover the first year of interest payments. The money is leant via around 40 approved banks and lenders. You should approach these lenders if you're interested.
Landlords won't be able to begin eviction proceedings against tenants for at least three months. This means that, from 26 March, if a landlord wants to evict a tenant they can't begin the process to take possession until they have given the tenant three months' notice. This will continue until 30 September. All existing possession processes are suspended for 90 days. That said, Tenants are still required to pay rent although the government encourages landlords and tenants to work together and put in place a payment scheme if tenant is struggling to pay.
This article provides a general summary and is for information purposes only. It does not constitute legal advice. Please let us know if you require advice in relation to any of the issues covered in this article.
The current global crisis is evolving rapidly, and the rules and guidance for individuals, companies and other entities to manage its implications are similarly fast moving. Notes such as this may be out of date almost as soon as they are published. If you have any questions prompted by this article or on any other matter relevant to you, please get in touch with your usual contact at Forsters.