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Help for publicans dealing with the COVID-19 lockdown

The current circumstances are causing issues for every industry, but perhaps one of the most impacted are the owners and operators of pubs. We've been working with beverage provider, Diageo, to offer free guidance to publicans on navigating the COVID-19 situation.

For businesses that rely so heavily on the physical presence of people, COVID-19 has meant business-as-usual is not an option for publicans. To support them through this time, Diageo and Grant Thornton have opened a free information line to offer pub owners and operators information on how to access tax relief and the commercial measures announced by the government.

From our conversations so far, we’ve identified three issues that seem to be a priority for publicans. We’ve summarised our guidance below, based on the most-common questions we’re receiving and the information currently available:

1 Managing cashflow

“How should I be managing cashflow? I’ve got no cash in the bank, so what should I do?”

The government has made grants available that are being administered by local authorities. Some publicans have already started receiving letters from their local authorities with details and instructions on how to access these, so check your mail.

The grant will be either £10,000 or £25,000 depending on the rate-able value of your premises. If this won’t be sufficient, you can also access an interest-free loan for 12 months via the Coronavirus Business Interruption Loan Scheme (CBILS). You can apply for up to £5 million from one of the providers indicated on the British Business Bank website. Contact one of the providers to discuss this option.

“If I borrow money, how am I going to pay it back?”

Be sure to only borrow what you will be able to pay back once normal trading resumes. The loans are being issued by funding providers based on what would have been manageable before the impact of COVID-19 on your business. Another thing to consider is that you will be re-imbursed the money you are paying to your furloughed employees (80% of their salaries or up to £2,500 per person), so any money you borrow for this purpose will be paid to you by HMRC, which you can, in turn, pay back to the lender.

2 Accessing government support

“How can I speed up the processes of accessing grants and loans?”

There isn’t much you can do at the moment to get the grants faster , as these are managed and distributed by the local authorities. Make sure that you are checking your junk mail and post at your business, and be responsive to letters from your local authority.

With regards to Coronavirus Job Retention Scheme (CJRS), make sure that you've had conversations with your employees if they are being placed on furlough, so that this process has been completed in line with government guidance. Be sure to maintain an open dialogue with your people and keep them informed of what is going on from your perspective.

HMRC launched an online portal to process furlough claims on 20 April. They anticipate that it will take four-six working days to process payments, with the first payments from 30 April. You can find the information needed to process a claim on gov.uk.

3 Supporting people

“I’m keen to participate in the Coronavirus Job Retention Scheme, but I have no cash, so how do I pay people (and then get re-imbursed later)?”

Grants may become available before the furlough payments, which should help your cashflow, and there is also support available in the form of business-interruption loans. However, you should consider affordability as these are loans that you will need to pay back.

“How do we calculate the earnings for furloughed employees?”

HMRC will contribute either 80% of the employee’s regular wage or £2,500 per month, whichever is lower. For full- and part-time salaried employees, the employee’s actual salary before tax, as of 19 March should be used to calculate the 80%. Fees, commission and bonuses should not be included. For those employees on zero-hour contracts or where pay varies, you should calculate their average monthly earnings from the previous tax year or the same month’s pay as the previous year, whichever is higher. If employed for less than 12 months you can claim an average of their monthly pay for that period.

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