Yesterday, UK chancellor Rishi Sunak announced a massive emergency finance package to protect UK jobs and businesses during the Covid-19 shutdown.
The measures include a job subsidy scheme, giving employers 80% of a worker’s wage up to a limit of £2,500 a month, and a strengthening of the welfare system through more generous universal credit, higher working tax credits and an increase in child benefit.
But Co-operatives UK, which represents the UK co-op sector, says there is some uncertainty about eligibility for some schemes, for some types of co-operative, and also some variance between different parts of the UK.
“Officials in government are currently working to get answers and assurances for us,” it said in a statement on its website.
Co-operatives UK had already written to the government seeking assurances that co-ops are as eligible as any other business for support.
“Co-operatives are commercial entities that overwhelmingly trade in markets, in order to create economic and social value for their members and communities,” said the letter. “The vast majority are small or micro enterprises and they face the same challenges and risks as all businesses. The fact that they trade for mutual and social purposes does not change
this, though it does mean that if they fail, the negative social and economic impacts on communities can be especially severe.”
On its latest post, Co-operatives UK gives a breakdown of the government’s rescue package.
It says co-ops are eligible for the job retention scheme, which will see the government reimburse employers for 80% of the wages of furloughed workers up to a cap of £2,500 per month per worker. The Chancellor made specific mention of ‘not-for-profit’ enterprises and charities, it adds.
Co-ops are automatically eligible for VAT deferral, allowing businesses to defer all VAT payments for three months from 20 March 2020 until 30 June 2020. This is an automatic offer with no applications required. Co-operatives will not need to make a VAT payment during this period.
The one-off £10,000 grant to help small businesses meet ongoing costs is open to any business that is eligible for Small Business Rates Relief or Rural Rate Relief. Co-operatives UK says: “Government says your local authority should contact you if you are eligible – you do not need to apply. However, this may mean that local authorities will simply contact all businesses currently claiming the Small Business Rates Relief or Rural Rate Relief, rather than all those who could be eligible for these reliefs.
It recommends co-ops check eligibility with their local authority, and let Co-operatives UK know if they have trouble accessing the grant,.
The Coronavirus Business Interruption Loan Scheme (CBLIS) offers loans of up to £5m in value, with the first 12 months interest free. Government guarantees 80 per cent of the loan, and borrowing proposals must be sound. Any UK-based business with turnover of no more than £45m a year is eligible, unless they operate in one of the small number of ineligible industrial sectors, such as financial services.
Co-operatives UK says: “We believe most co-operatives should and will be eligible for CBLIS. But we also anticipate some co-operatives will experience difficulties in accessing CBLIS. This might be because the scheme is designed in a way which makes some types of co-op ineligible or, more likely, makes their eligibility unclear.
“It might also be because CBLIS lenders misunderstand co-ops’ business model and/or legal structure, leading to co-ops that are very much eligible for CBLIS encountering obstacles and delays.
“We have written to the government and the British Business Bank to get assurances that all co-operatives and community businesses are as eligible as any other business for CBLIS. ”
Retail, hospitality and leisure: Business rates 100% tax holiday (England only) is open to all businesses in this sector that pay business rates.
English businesses in this sector which operate from smaller premises – with a rateable value between £15,000 and £51,000 – are also eligible for a £25,000 grant.
Retail, hospitality and tourism: 100% non-domestic rates relief (Scotland only) : All retail, hospitality and tourism businesses in Scotland will have a 100% non-domestic rates holiday for tax year starting 1 April 2020.
Retail, hospitality and leisure: £25,000 grant (Scotland only): This one-off grant is open to all retail, hospitality and leisure businesses in Scotland operating from premises with a rateable value between £18,000 and £51,000.
The Third Sector Resilience Fund (Scotland only) offers grants between £5,000 and £100,000, and interest-free loans starting at £50,000, to help third sector organisations affected by cash flow and other problems. Co-operatives UK is seeking more information from Scottish Government and partners as to which organisations will be eligible.
Some variations for Wales and Northern Ireland are yet to be clarified: information about what the Welsh Government is doing differently is available here, and what the NI government is doing differently is available here.
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.
Co-operatives UK urges any member having trouble accessing government support should contact them: email: [email protected].