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Coronavirus: What does the chancellor’s support mean for businesses and employees?
The Chancellor Rishi Sunak announced an unprecedented package of measures on Friday to support businesses and employers coping with the economic shock of coronavirus.
What is available to companies and employees? How do they access this support? And where are the gaps in provision?
Coronavirus business interruption loan scheme
- Focused on smaller businesses with a revenue of up to £45m.
- Loans available from tomorrow of up to £5m administered by the British Business Bank.
- The government will cover the first 12 months of interest payments and will provide lenders with a guarantee of 80 per cent on each loan.
Covid-19 corporate financing facility
- The Bank of England will buy short term debt from larger companies.
- It will also support corporate finance markets overall and ease the supply of credit to all firms.
- Chris Sanger, EY’s head of tax policy, said: “It is trying to provide funding where the market may be wary of providing financing and seeking to provide it at the same rates that would have been applicable prior to the covid-19 crisis.”
Coronavirus job retention scheme
- The chancellor said the government would pay 80 per cent of wages up to £2,500 a month for employees who would otherwise have been made redundant.
- Employers will select workers to be furloughed. They will be kept on the company payroll but paid by HMRC.
- Furloughed employees will not be allowed to do any work.
- All UK employers are eligible for this programme.
- Thinktank the Resolution Foundation estimated that if the scheme supported 1m workers for the three-month period initially suggested by Sunak it would cost £4.2bn.
Tax and rates deferrals
- The chancellor said VAT payments would be deferred for three months to help support businesses’ cashflow.
- Income tax payments for the self-employed due on 31 July will be deferred until January 2021.
- Businesses in the retail, hospitality and leisure sectors have been given a business rates holiday for 2020 and 2021.
- Businesses in those sectors can also apply for a grant of up to £25,000 per property.
- Any business or individual worried about their tax bill may be able to receive help from HMRC through its Time to Pay scheme.
The self-employed and coronavirus
- The measures announced by the chancellor have not assuaged the worries of the UK’s 5m self-employed.
- Sanger said it was more difficult for the government to directly support the self-employed but said expected further measures to be rolled out to support them.
- Housing secretary Robert Jenrick today told Sky News: “It is more complicated for the self-employed than it is for employees…but if we need to do more, we will do it and the chancellor is keeping this under review.”