News & Insight

Covid-19 March 18, 2020
Whatever it takes – summary of finance and tax measures announced yesterday

Whatever it takes – summary of finance and tax measures announced yesterday

Less than a week had passed since the big-spending Spring Budget (we reported here) when the Chancellor of the Exchequer announced a £30 billion package – including £7 billion of financial support for businesses – to boost the economy and get the country through the coronavirus outbreak.

While this felt like generous support at the time, within just a few days it became clear that it was nowhere near enough.

Yesterday afternoon, the Chancellor announced further help for businesses which dwarfed the commitments made at the Spring Budget.

This included state loan guarantees worth £330bn (equivalent of 15% of GDP) along with a further £20bn of financial handouts (such as business rates relief and grant funding) to help struggling businesses cope with the economic fallout caused by the rapid spread of Covid-19.

Further measures will be announced as the situation develops.  For example, the government will liaise with airlines, airports and unions for industries hit hard by Covid-19.

“Whatever it takes.”

Set out below is a high-level summary of the measures (announced yesterday and at the Spring Budget) that we consider to be most relevant for businesses that are struggling to keep going.  Some of those measures were first announced at the Spring Budget and further extended yesterday.

In addition, we have briefly summarised further financial and tax measures announced at the Spring Budget, that are designed to support businesses and consumers and to stimulate the economy more generally.

Tax and financial measures to support businesses in distress

1. Business rates relief
What is being done
100% relief from business rates for businesses in England in the retail, leisure and hospitality sectors (such as shops, pubs, restaurants and theatres), for one year (starting on 1 April). In addition a fundamental review of business rates will be carried out.
When it is being done Who to contact/how to access
From 1 April 2020 for one year

Due to report back in autumn 2020

Local Authority (supported by the government)

 

2. Cash grants
What is being done
Businesses in England in the retail, leisure and hospitality sectors with a rateable value between £15,000 and £51,000 will be able to access cash grants between £10,000 and £25,000.

Small businesses in England that are eligible for small business rate relief or rural rate relief will be entitled to a one-off cash grant of £10,000.

When it is being done Who to contact/how to access
One-off government grant Not specifically announced (likely to be the relevant Local Authority, supported by the government)

Small businesses:Local Authority (supported by the government)

 

3. Business interruption loan scheme for small businesses
What is being done
A new temporary coronavirus business interruption loan scheme will be made available through the British Business Bank, allowing businesses to access loans of up to £5 million, with no interest due for the first 6 months.The government will guarantee 80% of each loan at no charge to businesses or banks, subject to a per-lender cap.  The business interruption loan scheme will temporarily replace the enterprise finance guarantee (EFG).  To qualify, a number of conditions must be met (including having a turnover of no more than £41 million per annum)
When it is being done Who to contact/how to access
Aimed to be available from the beginning of the week starting 23 March 2020 To be delivered through lenders accredited by the British Business Bank (which includes all of the major banks)

 

4. Loans for larger firms
What is being done
The Bank of England set up a new scheme to provide liquidity to large firms to help them bridge Coronavirus disruption to their cash flows through loans.
When it is being done Who to contact/how to access
Aimed to be available from the beginning of the week starting 23 March 2020 The Bank of England

 

5. Mortgage holiday
What is being done
The government has agreed with mortgage lenders that they will support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to 3 months.

 

6. Insurance cover
What is being done
The government has provided confirmation that government advice to avoid pubs, clubs and theatres etc. is sufficient for businesses to claim on their insurance where they have appropriate business interruption cover for pandemics in place.

 

7. Dedicated helpline for businesses seeking a deferral on tax liabilities
What is being done
Businesses with outstanding tax liabilities may be able to agree additional time to settle their tax affairs through HMRC’s ‘Time To Pay’ scheme, for which a dedicated helpline has been set up
When it is being done Who to contact/how to access
From 11 March 2020 Access HMRC helpline here.

 

8. Statutory sick pay (SSP) – funding employers with fewer than 250 employees for SSP paid for Covid-19 related sickness absence for up to 2 weeks.
What is being done
Small and medium-sized businesses with fewer than 250 employees will be able to reclaim up to two weeks’ worth of SSP paid for Covid-19 related sickness absence under the new eligibility criterial.  Business eligibility will be based on the number of employees as at 28 February 2020
When it is being done Who to contact/how to access
Eligible period for this scheme to commence from the day on which regulations extending SSP to self-isolators come into force Existing systems are not designed to facility such employer refunds for SSP.  The government will work with employers over the coming months to set up a repayment.

Other financial measures to support businesses and stimulate the economy

9. Interest rate cut
What is being done
Central bank interest rate cut from 0.75% to 0.25%
When it is being done Who to contact/how to access
With immediate effect (11 March 2020) N/A

 

10. Bank of England to additional liquidity to support banks in lending to small businesses
What is being done
Further Bank of England measures to respond to the economic shock of Covid19 are detailed here
When it is being done Who to contact/how to access
With immediate effect (11 March 2020) N/A

 

11. UK banking sector support
What is being done
The UK banking sector has confirmed that it will support consumers through overdrafts and loan and mortgage repayment relief where necessary, through trade body UK Finance
When it is being done Who to contact/how to access
With immediate effect (11 March 2020) UK Finance (the collective voice for the banking and finance industry)

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This update was researched and prepared by Annette Beresford with input from Henry Humphreys and Nick Westoll.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website. None of the above constitutes legal advice. None of the above should be relied upon. Always seek your own independent professional advice.

Humphreys Law

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