On Friday the Chancellor announced a series of new “unprecedented measures, for unprecedented times”, building on existing announcements by dramatically expanding the government support to the economy in response to the rapidly evolving COVID-19 disruption. These measures are:
- Job Retention Scheme to pay 80% of salaries of existing employees if kept employed.
- Increasing the business interruption loan scheme interest free period to 12 months.
- Deferring the next quarter of VAT payments to the end of the financial year.
- Substantial extensions of Universal Credit.
Coronavirus Job Retention Scheme
Financially the most significant measure, this allows employers to contact HMRC for a grant to cover 80% of the salary or wages of retained workers up to a total of £2,500 a month, backdated to March 1st. To qualify, the retained workers must be not working, furloughed, and kept on the payroll.
The scheme will initially be open for three months and may be extended if necessary, with no limit on the total funding available. The government is aiming to have the scheme in place and payments flowing before the end of April.
We will be monitoring to see whether this will be extended to the self-employed and/or to cover the lost wages of workers who are kept in work but suffer reductions in hours.
Coronavirus Business Interruption Loan Scheme:
The “interest free” period of the Business Interruption Loan Scheme is extended from 6 months up to 12 months, and these loans will be available starting Monday 23 March. As already announced, the scheme is available to most SMEs with annual turnover up to £45 million for qualifying loans up to £5 million, and includes a government guarantee of 80% of the loan value.
The government is deferring the next quarter of VAT payments, so that no business will pay any VAT from now until the end of June, and will have until the end of the financial year to repay those bills.
Social Safety Net / Self-employed Assistance
The government is:
- For the next 12 months, increasing the Universal Credit standard allowance and the Working Tax Credit basic element, by £1,000 a year.
- For self-employed people:
- suspending the minimum income floor for everyone affected by the economic impacts of coronavirus, allowing them to access, in full, Universal Credit at a rate equivalent to Statutory Sick Pay for employees.
- Deferring the next self-assessment payments until January 2021.
- For renters, increasing the generosity of housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30% of the local market rent.
Other previously announced measures can be accessed at: