Ryecroft Glenton update on the latest financial measures introduced by the Government to support businesses and individuals affected by the Coronavirus COVID-19

Chancellor Rishi Sunak joined the Prime Minister last night to overhaul and enhance his £30bn Coronavirus support package announced as part of last week’s Budget.

Last night’s “whatever it takes” response to the economic impact of Coronavirus was followed up with welcome support to individuals working in the contractor market, with a 12-month delay to the IR35 off-payroll rules for private sector engagers, which will no doubt help those sectors affected maintain some level of stability.

The biggest single element in the Chancellor’s plan, however, is a package of £330bn in bank loan guarantees, which will help businesses of all sizes manage cashflow during the pandemic.  Any business that needs access to cash to pay rent, salaries, suppliers, or to purchase stock will be able to access a Government-backed loan on attractive terms, delivered through:

  • Liquidity support for large businesses, with a new loan scheme from the Bank of England; and
  • For small and medium-sized businesses, an increase to the Business Interruption Loan Scheme announced at last week’s Budget from £1.2m to £5m of loans, with no interest due for the first six months.

These loan schemes should be in place by the beginning of next week, with full information on eligibility and the application process to be found on the British Business Bank website.

Mr Sunak went on to extend the business rates holiday for all businesses in the retail, hospitality and leisure sector for 12 months.  In last week’s Budget, the Chancellor’s initial business rates holiday extended to businesses in the retail, leisure and hospitality sector, but subject to those businesses occupying premises with a rateable value of less than £51,000.  This new universal measure goes further and applies to all businesses in the retail, hospitality and leisure sector, irrespective of the rateable value of their premises, “giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months”.

Mr Sunak also announced additional grant funding for retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000.  These grants will be worth up to £25,000 and are to be administered by the relevant local authority.  To request a grant, contact the relevant local authority who should have guidance from the Government by 20 March.

In another adjustment to last week’s Budget, the Chancellor enhanced the small business rate relief grant of £3,000, increasing it to £10,000.  This applies for all businesses regardless of sector that currently benefit from small business rates relief [or rural rate relief].  Eligible businesses will be contacted by their local authority – they do not need to apply for their grants – and the funding will be provided to local authorities in early April. 

The Chancellor also advised that mortgage lenders have agreed to support customers struggling as a result of COVID-19 with a payment holiday of up to three months.

In terms of how to access this, borrowers need to get in touch with their lenders;  lenders are offering customers who are up-to-date with their mortgage payments – and who are impacted by coronavirus – the ability to self-certify.  Customers who believe they may be impacted, either directly or indirectly, should contact their lender as soon as possible. There will be a fast-track system for approval, but not everyone will be granted a payment holiday; there will be other forms of forbearance.  The unpaid interest will still be recovered later, but individual credit ratings will not be affected.  “Firms will help customers the best way for the individual, but an automatic payment holiday may not always be the most suitable approach and may not be required by all customers,” said UK Finance. 

While a person is taking a payment holiday, the interest that would have been paid will still rack up, and the capital sum of the loan remains.

These new measures announced last night are on top of those publicised last week, which include:

  • Extended statutory sick pay entitlement from day one, which will be refunded in full by the Government;
  • Extended time to pay arrangements allowing businesses and the self-employed to defer tax payments; and
  • A £500m hardship fund for local authorities to distribute to vulnerable people in their areas.

The Government’s guidance on Covid-19 support for businesses can be found here, and contains further information on the above.

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