HM Insights

What do rural businesses need to know during the current COVID-19 pandemic?

During this time of great uncertainty for business and the country as a whole, the role that rural businesses have to play in the current situation and the recovery thereafter has never been more important.

Scotland's modern rural economy remains a vital and fundamental part of Scotland's wider economy which is clearly demonstrated by the measures that both the UK Government and Scottish Government have announced.

Here we look at the information that rural businesses need to know and what help is available to them.

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Financial aid

The UK Government and Scottish Government have provided the following assistance for rural businesses:

Coronavirus Business Interruption Loan Scheme (CBILS)
This scheme is now open to small and medium businesses in any sector loans and provides for loans of up to £5 million with an interest-free period of 12 months. CBILS applies to UK businesses with a turnover below £45 million per year where more than 50% turnover is generated from trading activity.

Eligible rural businesses can apply for finance to cover a loan proposal that would have been considered viable by the lender if not for the current pandemic and where the lender believes the provision of finance will allow the business to trade out short-to-medium term business disruption.

Loans, asset finance, invoice finance and overdrafts are available through UK lenders accredited by the British Business Bank, which includes most high street lenders and finance specialists. The scheme provides the lender with a government-backed partial guarantee of 80% against the facility balance, with an overall cap for each participating lender.

Commercial tenant protection
the UK Government has pledged that all commercial tenants unable to pay rent due to the pandemic over the next three months will not be able to be evicted on this ground. The rent will still fall due but the landlord cannot evict on the ground of rent arrears. Please however note that landlords will still be able to evict on other grounds.

VAT
All UK businesses are automatically eligible for a three month payment of VAT deferral to 30 June 2020.

Business rates relief
The Scottish Government has pledged that all non-domestic properties in Scotland will get 1.6% rates relief. Scottish retail, hospitality and tourism businesses, which are all critical to the rural economy and local communities, have been granted 12 months' rates relief on occupied properties, which includes for example fishing or sporting properties. The delivery of these reliefs is being currently agreed between the Scottish Government and local authorities.

Grants
The Scottish Government has pledged that a £10,000 small business grant will be available to eligible businesses. In addition, there will also be a £25,000 one-off grant available to all businesses that have rateable value of between £18,000 - £51,000. Many smaller rural businesses regard the threshold rateable value of £18,000 as being set too high and this may well be something that the government needs to review again in the coming days and weeks.

Employment

Job retention scheme
The UK Government has announced a scheme to limit redundancies that will run for three months from 1 March 2020. Any UK business is eligible. The scheme works by the employer furloughing the employee (i.e. to lay them off temporarily), with the consent of the employee, in order for HMRC to then be able to pay 80% of the employee's salary up to a limit of £2,500 per month. It is important to note that a furloughed worker cannot undertake any work for the employer during this time.

Statutory sick pay
The UK Government has committed to refund the cost of Statutory Sick Pay for all UK based small businesses with up to 250 employees for up to two weeks. This is either following a diagnosis of coronavirus or the required self-isolation.

Seasonal workers
It will be of huge importance for rural food producers to have access to labour as we enter into spring and summer. This may be helped by the under-employed need for work although careful thought will need to be given to ongoing government guidance on physical distancing.

Self Employed
The Chancellor has announced unprecedented measures to support the self-employed. Full details of the Self-employed income support scheme are yet to be published (as of 26 March) but it has been promised that the UK Government would pay up to 80% of self-employed individuals' profits (up to a cap) that have been adversely affected by the Coronavirus outbreak. Find out more about what has been promised here: https://www.harpermacleod.co.uk/hm-insights/2020/march/coronavirus-protection-and-support-for-self-employed-workers-and-freelancers/

Food supply chain

The current pandemic will of course put pressure on the food supply chain and especially those rural businesses engaged in producing food. The general public is already changing how it consumes food, with a rise from 65% to 90% of meals now being consumed at home. Both the UK and Scottish Governments have pledged to work with suppliers, supermarkets and stakeholders to ensure that the food supply chain is sufficiently strong to feed the country through the pandemic.

Get in touch

This is a cripplingly difficult time for all businesses and especially those in Scotland's modern rural economy.

We have created a Coronavirus Legal Advice Hub where you can find a host of useful information on issues that could affect you and your business.

Should you wish to discuss any of the above or get assistance and guidance in applying for aid please contact a member of our specialist teams. We will do all we can to get you and your business through this difficult time.

Useful links

CORONAVIRUS ADVICE                      

MODERN RURAL ECONOMY ADVICE

EMPLOYMENT LAW