On 17 March 2020 the Chancellor announced further measures (following those revealed earlier on in his March 2020 budget) including unlimited loans and guarantees to support firms and help them manage cashflows through this unprecedented period of peacetime disruption. He will make available an initial £330 billion of guarantees - equivalent to 15% of UK GDP.
To ensure that businesses have access to the funds they need to navigate the COVID-19 pandemic, the government will:
- provide support for liquidity amongst large firms, with a major new scheme being launched by the Bank of England to help them bridge Coronavirus disruption to their cash flows through loans;
- increase the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2 million to £5 million, and ensuring businesses can access the first six months of that finance interest free, as government will cover the first six months of interest payments;
- include new legal powers in the COVID-19 Bill enabling the government to offer whatever further financial support it considers necessary to businesses.
Further business rates support and grant funding is promised in order to help the most-affected firms manage their cashflow. This will see additional £25,000 grants provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.
Additional measures available
This update followed the March 2020 budget in which the Chancellor announced a multi-billion pound package of measures to support public services, individuals and businesses through the disruption caused by COVID-19. The three-point plan had the following key objectives:
- To support public services. The government will provide any extra resources needed by the NHS and other public services to tackle the virus, including funding further research into prevention and limiting transmission.
- To support people affected by COVID-19. Statutory Sick Pay (SSP) will now be available for eligible individuals diagnosed with COVID-19 or those who are unable to work because they are self-isolating in line with Government advice. This is in addition to the change announced by the Prime Minister that SSP will be payable from day one instead of day one for affected individuals. Read the update from our employment team to find out more about the practical steps you should be considering to manage the special circumstances the Coronavirus has created.
- To support businesses experiencing increases in costs or financial disruptions. Small and medium-sized businesses will be able to reclaim SSP paid for sickness absence due to COVID-19.
The Business Rates retail discount will be increased to 100% for one year and extended to the leisure and hospitality sectors.
Bank loans and support from HMRC
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, is promised in a matter of weeks to help businesses access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to Small and medium-sized enterprises (SMEs). The government will not charge businesses or banks for this guarantee.
All businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC's Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. HMRC's new dedicated COVID-19 helpline was launched on 11 March 2020 to offer advice and support.
To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms and individuals when needed. Businesses concerned about being able to pay tax due to COVID-19 should call HMRC's dedicated helpline (+44 (0)800 0159 559).
Please get in touch if you would like to discuss any of the issues raised in this insight.