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How Covid-19 Impacts U.K. Companies

Summary

Unsurprisingly, many ecommerce companies in the U.K. have reported an increase in earnings during the pandemic. This is mainly from the so-called”essential” and do-it-yourself places. Revenue of fashion, clothes, and luxury products, however, have dropped. Time will tell if these […]

Unsurprisingly, many ecommerce companies in the U.K. have reported an increase in earnings during the pandemic. This is mainly from the so-called”essential” and do-it-yourself places. Revenue of fashion, clothes, and luxury products, however, have dropped. Time will tell if these tendencies continue.

Delivery periods from the U.K. have increased. Even Amazon Prime shipments can take up to a week. This is due to decreasing warehouse employees to empower working at distances from one another. Smaller ecommerce providers can benefit from this by delivering fast. However, the global downturn has affected inventory availability. So even little companies are impacted.

A vital question for ecommerce merchants is if first-time buyers will replicate or return to high street shopping.

An integral question… is whether first-time buyers will replicate or return to high street shopping.

The U.K. government has put in place measures which should help my organization and several others.

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VAT

Normally companies which have registered for VAT (value-added tax, the U.K. sales tax) must cover at the close of each quarter. That payment can now be deferred for a year. This instantly boosts cash flow. It’s effectively an interest-free loan of 20 percent (the VAT rate) of earnings for the previous few months. This helps all but the smallest of companies, as those with annual turnover of #85,000 have to register for VAT.

Wages

Any worker could be furloughed, and the government will reimburse 80 percent of his commission. Employers need to pay the commission and then claim it back in a procedure that’s not yet operating. (Hence the need for the cash flow increase.) The employer doesn’t have to make up the extra 20 percent. Hence employees are sent home and get 80 percent of the wages.

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Property tax

Grants are offered for #10,000 or #25,000 for companies that occupy properties subject to company property taxation. This money doesn’t have to be repaid. Moreover, the property tax itself was removed for the year.

The grants operate in two ways.

First, companies that pay property tax and that get small business rates relief (a longstanding program that exempts businesses that own one, small property) receive the #10,000 grant automatically. They simply provide their bank details, and the cash is deposited (finally ).

The second method is much more restrictive. It excludes companies that qualify for rates relief. Further, it’s available only on a per house basis where the land is occupied and used for hospitality, retail, or leisure and at which clients physically congregate. To put it differently, in case you’ve got a physical store, you receive the grant. If you run ecommerce from a warehouse, then you don’t. And it is not automatic. The company must apply.

Solvency

The thrust of these schemes is to maintain small and midsize companies solvent — to encourage them to keep employees and pay their invoices. Otherwise, a large number of people may receive unemployment benefits.

The schemes consist of clever points which reduce fraud whilst enhancing simplicity. Firms that have registered for VAT and have correctly reported worker pay will fully benefit. Firms that have cheated the system, not reported that the company use of a property, and paid workers money will get nothing.

In sum, the aid measures will help my small business and others like mine. It’s tailored to the U.K. market. Other European nations have enacted similar programs to encourage small to midsize businesses. Those companies, after all, employ the majority of the workforce.

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In 2018 small to midsize companies in the U.K. accounted for (I) 99.9 percent (5.9 million) of all businesses, (ii) 60 percent (16.6 million) of employment, and (iii) approximately half (#2.2 trillion) of private-sector turnover.

Popular news outlets will constantly report on large companies with tens of thousands of jobs. However, the government has properly concentrated on those people who collectively employ 16.6 million individuals.

After Covid-19

It is the duty of U.K. business owners to know what help is provided and make sure they get it. It’s tempting to take into account the pandemic as an unplanned holiday. However, a better idea would be to catch up on administrative tasks and other developments , for example to your site. Take better pictures of your merchandise. Compose more precise descriptions. Plan for your re-launch following Covid-19. It will, after all, finally go away.

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