Assistance For Firms In The Property Sector Impacted by Covid-19
It’s almost impossible to escape the impact of COVID-19, particularly for firms within the property industry. The entire sector has been significantly affected, from property investors, construction companies and developers, to estate agents and conveyancers. With many construction projects on pause and estate agents and housebuilders having closed their sales offices, the industry is undoubtedly cautious.
For those who work in the industry, Government support packages could assist. There is also a wide range of proactive actions businesses can take now, to assist them in both the short and longer-term.
What support is available to the property industry?
Alexander & Co, chartered accountants are specialist business advisors within the property industry and support many of these firms with a wide range of advisory services, including tax advisory, business restructuring and access to finance, as well as specific coronavirus business guidance.
I believe the Government schemes on offer should be fully explored by all businesses, but are only part of the solution.
All businesses, including those in the property sector, need to look at the wider picture of how they are operating, not just now, during working restrictions, but what they are planning for the future. They should have a strategy in place to ride out the current restrictions and return as strong as possible, when the market begins to show signs of normality. Cash flow will be key and this can be strengthened by maximising tax reliefs, having access to finance and reviewing businesses structuring and operations.
There are various Government support packages available to support firms in the property industry, but a lack of understanding on the required information may be leading to difficulties in accessing these.
Key Government relief packages include:
- The Coronavirus Job Retention Scheme – if necessary, businesses can take advantage of this scheme to furlough staff, with the Government paying up to 80% of these salaries.
- Self Employed Income Support Scheme – available for those who are self-employed (Subject to additional criteria, you will need to have submitted a 2018/19 tax return by 23 April 2020 to be eligible). This provides a payment of up to 80% of profits, initially for at least 3 months. Whilst not relevant to landlords, this may be of relevance to those who support the property industry or work in property development.
- Coronavirus Business Interruption Loan Scheme (CBLIS) – various finance products are available to SMEs who meet the criteria. Note that many property investment companies, including buy-to-let investors, will not be eligible for this as businesses must generate more than 50% of its turnover from trading activity to be eligible. However, development companies and support services may be able to apply
- Deferral of VAT payments – IF you are VAT registered, UK VAT registered businesses with a VAT payment due between 20 March 2020 and 30 June 2020 can defer the payment until a later date. Interest will not be charged or penalties imposed, however, VAT returns will still need to be returned to HMRC on time.
Other actions to consider
Key actions to include:
- Budgeting and planning – with this period of downtime for many firms in the property sector, now is a good time to review budgeting and planning for the year ahead. For example, even if VAT payments are deferred, the costs need to be understood and reported.
- Similarly, now is an ideal time to visit any necessary business restructuring and operations to improve productivity. Restructuring a business may bring greater efficiencies.
- Financial forecasting and modelling, including cashflows, will not only help a business understand its finances better, but this will be a requirement for applying for finance, including the Government-backed CBLIS.
- Ensuring management information, including accounts are up to date will be key in understanding how a business operates. (This will also be required when applying for finance, including CBLIS).
- Utilising all available tax reliefs and credits. This can often free up important cash flow.
- Consider Research & Development Tax Relief, which can be claimed for a wide range of processes, including modern methods of construction in the construction industry.
- Explore all funding options, not just the Government-backed schemes. it is advisable businesses use this time to review existing financing, which could include taking money out of existing assets.
For further information, contact Alexander & Co directly to discuss how they can assist your business.
There are a number of options available and careful planning and analysis now may not only help a business survive through the forthcoming months, but it could also put it in a much stronger, more efficient position for its future.