Rishi Sunak’s debut budget speech on March 11th was delivered under the shadow of the threat posed by the developing COVID-19 coronavirus crisis as the impact of the global pandemic began to be felt by businesses up and down the country.
Labelled by some as a ‘coronavirus budget’ Sunak announced a raft of measures to help stabilise the economy by offering companies various lifelines as they battled against the escalating situation. These included help with emergency funding as well as business rates relief for small companies.
Following on just days from the budget, Rishi Sunak was once again back in the spotlight detailing further measures to help beleaguered businesses and he has promised to provide further help over the course of the coming days and weeks as the situation develops.
As businesses face unprecedented uncertainty over the coming months, here is what has been offered so far.
- Coronavirus Job Retention Scheme – The government have pledged to step in and help pay peoples wages via the Coronavirus Job Retention Scheme. This will be available to all companies of all sizes and will take the form of a non-repayable grant which will cover 80% of the wages of people who are not working up to £2,500 a month. Employers can top up this amount if they choose. The hope is that this will allow a company which has been forced to close, or which is otherwise experiencing financial distress, to retain their staff rather than laying them off. Claims can be backdated from March 1st and will be available for an initial three month period, however, Sunak has promised that this scheme will be extended if necessary and that there is no limit to the amount of funding which will be made available to cover this.
- Self-Employed Income Support Scheme – A more recent addition to Sunak’s business support package, this scheme offers a financial lifeline to the self-employed who have experienced a drop in trade as a direct result of the COVID-19 outbreak. Consisting of a taxable grant worth 80% of a sole traders average monthly profits up to a maximum of £2,500, this scheme has been designed to mirror the help already extended to salaried workers. To qualify, an individual must typically make more than half of their income from self-employment and only those earning less than £50,000 will be eligible for support. Average monthly profits are calculated based on the previous three years’ tax returns and only those with a tax return for 2018-19 will be eligible to prevent abuse of the system. However, this does mean that those new to self-employment will find themselves locked out of this scheme. The scheme will not be up and running until June, although payments will be backdated from March and paid as one single lump sum. While initially this scheme will run for three months, there is scope for this to be extended. Individuals can continue to work while receiving this grant.
- Government-backed loans – In an effort to keep businesses afloat during these challenging times, a pledge to provide government-backed loans has been made. Sunak declared that this would be open to “any business who needs access to cash.” While £330bn has so far been ring-fenced for this initiative, Sunak confirmed that this amount will be increased in line with demand.
- Coronavirus Business Interruption Loan Scheme (CBILS) – First announced at the budget, the CBILS will temporarily replace the current Enterprise Finance Guarantee Scheme and will operate in much the same way. CBILS was originally going to provide loans of up to £1.2m; however, this maximum loan amount has now been increased to £5m. No interest will be payable on this type of borrowing for the first twelve months, and a range of finance options including loans, as well as asset and invoice finance will be available. Borrowing through the CBILS will be available as of Monday 23rd March 2020.
- HMRC Time to Pay (TTP) Scheme Extended - Sunak has thrown a lifeline to those companies who fear being able to keep up with their obligations to HMRC during this time of upheaval. This will be done through an extension of the current Time to Pay (TTP) scheme which gives businesses additional breathing space when settling their tax bills including VAT, PAYE, and Corporation Tax. It is hoped that this will help to free up cash flow and help to keep money moving around the supply chain. There will be a dedicated helpline set up to help businesses discuss the possibility of setting such a payment plan up.
- VAT deferred - The next quarterly VAT payment will be deferred for businesses. This does not cancel the VAT due, but it does give businesses the ability to conserve some money in the short-term.
- Additional help for the self-employed and sole traders – The minimum income floor for accessing benefits, including universal credit, will be suspended. In real terms this means the self-employed will be able to claim universal credit at rate which is equivalent to SSP. This will be useful to those that do not qualify for the Self-Employed Income Support Scheme. Self-assessment payments will also be deferred to January 2021 in a further effort to help.
- Business rates relief - One of the major announcements during the budget was that for businesses in the retail, hospitality and leisure sectors, with a rateable value of less than £51,000, they will be fully exempt from business rates for this year. Sunak has now sweetened the deal further by providing a cash grant of up to £25,000 for those businesses. Furthermore the business rates holiday will now be extended to all businesses in the retail, hospitality or leisure sector, regardless of its rateable value.
- Small business grants – Smaller businesses, who would not stand to benefit from the business rates holiday, were instead promised a grant of £3,000 each in order to assist with cash flow. This has now been increased to £10,000 and will benefit 700,000 of the smallest businesses.
Homeowners were also offered some reprieve by way of a three month mortgage holiday for those experiencing financial difficulties as a result of COVID-19. However, these payment holidays are reserved for those with residential mortgages only and will not be extended to landlords with buy-to-let properties.
Sunak has promised help will also be given to employees and this will be detailed in a later announcement. There are also growing calls for the government to offer assistance to tenants who so far have been given no protection should they default on their rent due to financial distress directly related to the coronavirus situation.
This is a moving situation and we will update this page as and when further measures are announced by the government.