Jyoti Patel from Alternative Finance Provider Fleximize talks us through the financial and business support that construction companies can access during this time.
The coronavirus pandemic has had an unprecedented impact on the UK economy, causing disruption across every industry. The construction sector has been hit particularly hard, with businesses receiving mixed messages about if they should continue to trade or not, and confusion over the financial support available to the many construction businesses that are set up as PSCs.
In this article, we clarify the financial and business support available to UK construction firms during this time.
The UK Government has announced a package of support measures available to UK businesses to help ease the burden of the coronavirus pandemic. You can view the full list on the gov.uk website, but here’s a quick summary of the most useful schemes for construction businesses:
Coronavirus Job Retention Scheme: This scheme has been created to support businesses that may need to furlough employees during this time. It allows employers to claim 80% of furloughed employees’ monthly wage, up to £2500. It’s available to all employers who had a PAYE payroll scheme on 28th February 2020. You can find out how to access it here.
Coronavirus Business Interruption Loan Scheme: This scheme provides financial support to businesses that have been adversely impacted by the coronavirus. The Government is working with accredited lenders to provide loans of up to £5 million over a maximum repayment term of 6 years. Businesses must have a turnover of no more than £45 million and can apply directly through a bank or lender. Businesses that turn over between £45 – £500 million can access similar support through the Coronavirus Large Business Interruption Loan Scheme.
Small Business Grant Fund: If you’re a small business that pays little or no business rates due to the small business rate relief, rural rate relief or tapered relief, you can access a one-off grant of £10,000 to help with ongoing business costs. You must also occupy property to access this grant. More information can be found here.
Self-Employed Income Support Scheme: If your company operates as PSC, the contractors that work with you can access this scheme, which offers a taxable grant worth 80% of trading profit up to £2500 a month. It’s available to all self-employed workers that have traded in 2019-2020, including those who are part of a partnership. You must meet other eligibility criteria, which can be found here.
Support from Alternative Finance Providers: In addition to the financial support available from the UK Government, there are also a number of alternative finance providers adapting their products to continue to be able to support businesses throughout the pandemic. For example, Fleximize offers unsecured and secured business loans to construction companies who may need financial support during this time, and has also launched an Essential Businesses Growth Loan for any businesses who are experiencing a growth in demand and fall into an ‘essential services’ sector.
Making the most of delays & deferments:
Along with grants and funding, it’s well-worth considering how the Government’s recently-announced delays and deferments could help support your cashflow:
VAT deferment: The Government announced that they will defer VAT payments for 3 months for all UK VAT registered businesses that have a VAT payment due between 20th March 2020 and 30th June 2020. More information is available here.
Self-Assessment payments on account deferment: The Government has also deferred Self-Assessment payments on account for those due to pay their second self-assessment payment on account on 31st July 2020. More information is available here.
Time to Pay: Businesses who have missed a tax payment or may miss their next payment due to the coronavirus pandemic are advised to call HMRC’s helpline. Businesses will be assessed on a case-by-case basis for support with their tax affairs. More information is available here.
IR35 delay: The IR35 delay to 2021 directly impacts PSCs in the construction industry. The delay means businesses have an extra year to prepare themselves by undertaking reviews of if contractors are being taxed correctly. It’s important to use the extra year to ensure IR35 compliance. You can find out more about this here.
In addition to financial support, there’s also plenty of advice and guidance available specifically for the construction industry at this time:
Advice & guidance for construction companies: Fleximize has a dedicated online coronavirus content hub which features articles from experts on how to manage your business during these unprecedented times.
In addition, both the Home Builders’ Federation and the Federation of Master Builders have created specialist online guides to help navigate those within the construction industry through the pandemic.
Legal advice: Having impartial legal advice and support on how to move forward in this time can be invaluable. There are many legal advisory services specialising in the construction sector which are well worth looking into, such as LawBite.
Accountancy advice: This is also a good time to seek business guidance and support from your accountant. With plenty of changes regarding how HMRC works with UK businesses, having an expert to hand can help take the pressure off. This resource from Crunch is a good place to start if you want some expert advice from experts in accounting within the construction industry.
About the Author
Jyoti Patel is a content manager at Fleximize. Fleximize is a UK-based alternative business lender dedicated to providing its customers with the support they need to grow and thrive. Its range of business finance includes unsecured and secured loans, which come with flexible features such as top-ups, repayment holidays and no early settlement fees.