In a series of announcements, the UK government has set out packages to support public services, people and businesses, through the disruption caused by COVID-19 outbreak.
Primarily the support will be either delivered through:
- The banking system by offering financial schemes.
- The central and local tax systems in terms of tax deferral, employment support, business rates and cash grants.
- The benefit system for universal credit and statutory sick pay reimbursement to employers.
The support measures can be grouped into six main areas which will be summarised below.
1. Providing liquidity through financial systems
Coronavirus Business Interruption Loan Scheme (CBILS)
It aims to help smaller businesses affected by coronavirus to access bank lending and overdrafts if they need to. For loans up to £5 million, interest will be free for the first 12 months and there will be more than 40 accredited lenders.
COVID-19 Corporate Financing Facility (CCFF)
It aims to allow larger corporates to raise short-term finance through the issuance of commercial paper purchased by the Bank of England, with a minimum size of loan of one million pounds.
2. Supporting employers to protect jobs
Coronavirus Job Retention Scheme
All UK employers will be able to access support to continue paying part of their employee’s salary (80% and up to £2,500 per month) for those that would otherwise have been laid off, with what is called “furlough”. The scheme is backdated to 1 March and is open until June for now. More details on furlough here. Protection for the self-employed is announced separately.
3. Business Support through removal of fixed costs and provision of grants
Business rates holidays and cash grants for retail, hospitality and leisure businesses
The government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Also, there are potential cash-payment COVID-19 grants for some organisations up to £25,000. Some COVID-19 grants come from UK Government, some from devolved administrations and others from non-government bodies. Local Authorities will be contacting eligible businesses.
4. Further measures
There are further measures to support businesses, such as the Statutory Sick Pay rebate, small businesses grant funding, non-governmental COVID-19 schemes, and moratorium on lease on forfeiture of commercial leases for non-payment of rent until the end of June.
5. Cash Flow support through tax deferrals and management
Businesses will automatically have their VAT payments due in the next three months, deferred until the end of the financial year. No application needed to be made before the 20th of June.
Also, business in financial distress, and with outstanding tax liabilities, may also be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. There will be the option to defer July’s payment on account for all those due to pay then, not just the self-employed.
6. Benefits entitlements and welfare
The government has announced the updating and the removal of minimum income floor for Universal Credit, and the expansion of the eligibility of Statutory Sick Pay.