help for businesses facing rising costs

2022世界杯32强抽签时间 is here to support you and your business in light of the rising costs businesses are facing. we can answer your questions about restructuring your business, cancelling contracts and managing your commercial property.

if you have questions about personal or family matters, visit our cost of living guide for individuals.

the energy bill discount scheme (ebds) is a discount that is added to the energy bills of qualifying businesses. the ebds was introduced on 1 april 2023 and is expected to run until 31 march 2024. it applies to all non-domestic customers:

• on a fixed contract agreed on or after 1 december 2021

• agreeing to a new fixed-price contract

• on a ‘deemed’ or ‘out-of-contract’ contract

• on a variable contract, or

• on a flexible purchase (or similar) contract

under the ebds, discounts will automatically be added to your bills.

for more information, see the government’s guidance on the ebds.

if you are struggling to pay your business’ energy bills, reach out to your energy supplier as soon as possible and ask them for assistance. your business may be able to work with your energy supplier to agree on a payment plan that is affordable. you may also be able to request:

• a review of your payments and any debt repayments

• payment breaks (also known as ‘payment holidays’) or reductions

• more time to pay

• access to hardship funds offered by the energy supplier

you may also be able to obtain some financial support for your business from the government (eg from the sme energy efficiency scheme), from your local council (eg a sustainable business growth grant) or from charities. 

if you are being billed for energy used more than 12 months ago, check the back-billing rules. these prevent you from being charged for energy used more than 12 months ago if you have not been correctly billed for it or have not been informed about it via a statement of account.

there are various steps you can take to reduce your energy bills. examples include:

• making changes around your business to reduce your energy consumption. for example, installing solar panels, switching to energy-saving light bulbs, turning appliances off at the wall, using your appliances more efficiently and only turning on your heating or air conditioning/fans when they’re needed

• making physical changes to the premises (eg by replacing old equipment or adding insulation). if you own the business premises you may be able to get financial support. if you rent the premises, you can speak to your landlord about making such improvements

• installing a smart meter. smart meters ensure that your business doesn’t pay more than it needs to because they use accurate use measurements rather than estimated meter readings

if you cannot afford the rent for your commercial premises, consider asking your landlord for a rent concession. this is a more flexible arrangement, for example, a rent holiday, reduced rent payments or monthly payments. landlords do not have to agree to this, but it is worth trying to reach an agreement. 

you could also consider making a rent repayment plan with your landlord so you formally document when any unpaid paid rent will be paid. 

if your landlord does agree to a rent concession, make sure this is documented, for example, in a deed of variation, which permanently changes your commercial lease.

to help with rent payments, you could also consider:

• subletting part of your business premises. by doing this, you allow another business to occupy part of the business premises, reducing the rent you’re responsible for. make sure to get your landlord’s consent to any sublets using a licence to sublet. for more information, read subletting business premises

• renting out spare workstations on the premises using an office sharing agreement. for more information, read sharing space

bear in mind that commercial landlords have a right to forfeit a commercial lease and recover any rent arrears, so you should be cautious about not paying rent.

if you’re a commercial tenant and you cannot afford to continue renting a commercial property and your landlord does not agree to a rent concession, you may consider ending the lease. depending on the terms of your lease, you may be able to: 

• surrender the lease (if the landlord agrees)

• end your lease early using a break notice (only if the lease contains a break clause). for more information, read break clauses notices

• sublet the commercial premises. use a licence to sublet to obtain and formally record your landlord’s consent to you subletting the premises

• assign (ie transfer) your commercial lease. use a licence to assign to obtain and formally record your landlord’s consent to you assigning the lease

for more information, read how to terminate commercial leases.

if your commercial tenant cannot pay their rent, you should have an open and honest conversation with your tenant. find out why they are unable to pay their rent and see if you can come up with a payment plan or solution that works for both of you.

if you cannot come to an agreement, and your commercial tenant is in commercial rent arrears, you can consider forfeiting (ie ending) the commercial lease. note that this can only be done if the commercial lease contains a forfeiture clause and this clause enables the forfeit of the lease in respect of the tenant’s breach (ie their non-payment of rent). for more information, read how to terminate commercial leases.

you can then attempt to recover rent arrears using a procedure called commercial rent arrears recovery (crar). crar enables commercial landlords to recover rent arrears by taking control of the tenant's goods and selling them. for more information, read commercial rent arrears recovery (crar).

as an employer, there are several things you can do to support your staff during a cost of living crisis. these include:

• encouraging flexible working arrangements. by providing flexible working arrangements, such as remote work options or flexible schedules, you can help staff members to save money on commuting and childcare costs. it is a good idea to adopt a clear flexible working policy and a working from home policy, where relevant

• considering salary/wage increases. if feasible, consider increasing salaries/wages or offering bonuses to help offset the rising cost of living. you could also consider introducing a cost of living allowance, which is a supplement paid to staff to help them cover the increased cost of living

• consider providing benefits. consider offering additional benefits such as enhanced sick pay, enhanced pension contributions or other employee benefits that can help offset some of the financial strain

• provide mental health support. financial worries can be a significant source of stress and anxiety for staff members. consider providing support for their mental health, such as an employee assistance programme or funded access to mental health resources or counselling

regardless of circumstances, it’s a good idea for employers to monitor the cost of living situation and how it affects staff on an ongoing basis. you could also consider conducting an anonymised survey to better understand the financial challenges staff members are facing and what you can do to better support them.

lay-offs enable an employer to not provide work to their staff members temporarily. they are typically used as a response to a lack of available work and as an alternative to redundancies. short-time working is similar to lay-off, but rather than providing no work, the employer provides a reduced amount of work. 

before making any lay-offs, review affected staff members’ contracts to see whether you are allowed to make lay-offs. if a contract does not allow for lay-offs, you can consider using a change to employment terms letter to vary the contract to allow this. for more information on changing employment contracts, read changing employment terms.

employees are entitled to receive their full pay during lay-offs or short-time working unless the parties agree otherwise or the employee’s contract allows for unpaid or reduced pay lay-offs or short-time working. qualifying staff members who are laid-off or placed on short-time working without pay are entitled to receive statutory guarantee pay.

for more information, read lay-offs and short time working.

employers will need to consult with staff to obtain their express agreement to these measures where employment contracts do not contain any relevant contractual flexibility clauses or short-time working clauses.

you can consider using a change to employment terms letter to change an employee’s terms and conditions of employment (with their consent).

dismissing staff members in the uk can involve a complex and sensitive process that requires careful consideration of various factors. when dismissing a staff member, make sure that you comply with all relevant documents, including the staff member’s contract and your disciplinary procedure. it is crucial that all dismissals are treated fairly and transparently and that you follow a fair dismissal process. the exact process depends on the specifics of a situation. it may involve:

• conducting relevant meetings to discuss the situation

• issuing prior warnings to employees to allow them to improve their performance or behaviour

• issuing the right dismissal letter

• providing the correct notice period and allowing staff members to work their notice periods unless otherwise agreed (eg by making payments in lieu of notice or placing staff members on garden leave)

note that employees with more than 2 years of continuous service are protected by the rules on unfair dismissal. this means that you can only dismiss them if there is a fair reason for doing so. those with less than 2 years of service are not granted this protection apart from in certain circumstances that are deemed automatically unfair (eg dismissals because of pregnancy).

it is also essential that you do not unlawfully discriminate against any staff members when considering dismissals. to help with this, it is a good idea to implement an equal opportunities policy.

consider following our dismissal checklist as a guide to the dismissal process.

redundancy is a potentially fair reason for dismissal which should only be considered if your business will no longer carry on the business for which a particular employee was employed or no longer requires employees (or requires fewer employees) to carry out work of a particular type.

making redundancies should be a final option taken after alternatives (eg pay freezes or lay-offs) have been considered and/or implemented. if you decide to make redundancies it is crucial that you follow the correct procedure. this procedure depends on the size of your business, but will typically include:

• warning all potentially affected employees of the risk of redundancy using an at risk of redundancy letter

• consulting with affected employees about their possible redundancy before reaching final decisions. use a redundancy consultation letter to invite employees to such meetings

• choosing employees for redundancy carefully, fairly and rationally. this is particularly important if the redundancies involve employees who are pregnant or on maternity leave

• dismissing any affected employees using dismissal for redundancy letters

• where applicable, making the correct statutory redundancy payments

• allowing redundancy appeals and, where relevant, inviting employees to appeal hearings using invitation to a redundancy appeal meeting letters

to ensure that redundancies are handled fairly and transparently, you should adopt and follow a redundancy policy.

for more information, read redundancy and how to make someone redundant in a small business. if you have any questions, do not hesitate to ask a lawyer and consider making use of our redundancy advice service.

if you are self-employed (or otherwise owe money on self assessment), you may be able to set up a payment plan online to pay your income tax bill in instalments. this is known as the time to pay service and you can make use of it if you:

• have filed your latest self assessment

• owe less than £30,000 in income tax

• are within 60 days of the payment deadline, and

• do not have any other payment plans or debts with hmrc

if you have missed a payment date or cannot set up a payment plan online, you should contact hmrc directly.

if your company owes tax, you should contact hmrc as soon as possible to propose a payment plan for your tax bill. this plan should be realistic and affordable.

note that, before setting up a payment plan, the tax debt has to be reduced as much as possible. this can be done in a number of ways, for example, by releasing company assets like vehicles, stock and company shares.

hmrc may also request that company directors put personal funds into the business, accept lending and/or extend credit.

renegotiating business contracts (eg contracts with suppliers or commercial landlords) can be an effective way for a business to reduce expenses. while you will typically always be able to approach another party to renegotiate a contract’s terms, bear in mind that agreeing to such renegotiations is a decision for them to make. generally, other businesses are more likely to be willing to renegotiate contract terms if you have a good relationship with them (eg if you have always paid your rent on time or delivered goods on schedule). 

as a first step, you should review the business contracts you would like to renegotiate. see what they say and identify any areas where you may be able to negotiate better terms. look for opportunities to reduce costs, for example, by lowering prices, extending payment terms or renegotiating delivery schedules.

to negotiate effectively, you need to build a strong case for why you need better terms. gather data on your business’ performance, market trends and any external factors that may be impacting your finances. use this information to demonstrate why renegotiating your contracts is necessary for your business.

bear in mind that renegotiating contracts often involves compromise from both parties. be prepared to make concessions, such as agreeing to longer payment terms or committing to higher volumes in exchange for lower prices. communicate openly and honestly, and be respectful of the other party’s needs and concerns.

if the other party is happy to renegotiate the terms of a contract, make sure to record any such changes in writing. for more information, read varying a contract.

in some circumstances, ending your contractual relationship or transferring your contract to another party may be appropriate or necessary. you may, for example, be able to:

• assign a contract using a letter assigning a contract. by assigning a contract you only transfer the benefits of the contract to a new party

• novate a contract using a novation agreement. this ends your benefits and burdens under the contract whilst creating a new, otherwise identical contract with between a new party and the other original party to the contract

• end a contract using a letter ending a contract. this terminates the contract itself and should be considered if  there is no need for the contract to exist anymore or if the other party breached their contractual obligations

insolvency is a general term that can apply to both individuals and businesses. an individual or a business is considered insolvent when they are unable to pay their debts. 

if an individual (including a sole trader) is insolvent, they must apply for a private insolvency option. these include filing for bankruptcy or entering into an individual voluntary arrangement. the same applies to partners in partnerships. 

there are different options available for limited companies and llps. these include liquidation and administration.

for more information, read insolvency, insolvency in scotland and close a business.