On March 11th, Rishi Sunak delivered his debut budget speech, this was presented under the threat of COVID-19 and the developing crisis influencing businesses. 

In the speech, which has been dubbed by some as the “coronavirus budget”, Sunak presented multiple measures to assist in stabilising the economy. There were various options available to assist struggling companies during this tough situation, these include emergency funding and business rates relief for smaller companies.

Days after the budget, Sunak announced further measures to help struggling business and promised further help will outlined in the next few days and weeks as the COVID-19 situation develops.

While companies face uncertainty over the next few months, here is what the government has offered so far:

• Coronavirus Job Retention Scheme – The government vowed to help pay peoples wages through the Coronavirus Job Retention Scheme, this is available for all companies, regardless of size and is a non-repayable grant. This covers 80% of the wages of those who ae not working, up to £2,500 a month, should employers wish to top this up, they are able to. The aim is that this will allow businesses that have been forced to close or are facing financial difficulties due to the coronavirus can avoid laying off their staff and are able to retain them. These claims can be backdated to 1st March, initially this scheme was for a 3 month period, however, this scheme has now been extended to the end of October, however, as of the end of July employers will be expected to contribute to these payments.

Self-Employed Income Support Scheme (SEISS) – The Self-Employed Income Support Scheme offers financial support to the self-employed.  This is a taxable grant worth 80% of the sole traders average monthly profits, up to £2,500, this has been designed to be similar to the help available to salaried workers. To access this grant, the individual must make more than half of their income through self-employment and only those with earnings below £50,000 will be eligible for this scheme. The average monthly profits are calculated based on the last 3 years tax returns and only those with 2018-2019 tax returns are eligible, this is a preventative measure to avoid abusing the system. This does however mean that those new to self-employment will be unable to access this scheme. Whilst payments will be backdated to March, the scheme is not up and running until June – this will be paid as a single lump sum and individuals can still work while receiving this grant. This scheme was initially due to run for 3 months, however this is now set to be extended. Those who are eligible for this scheme will be contacted by HMRC, however you can check your eligibility prior to this by entering your Unique Taxpayer Reference (UTR) on the government website.

Government-backed loans – To help businesses survive during these difficult times, the government pledged to provide government backed loans. Rishi Sunak stated that these loans would be available to “any business who needs access to cash”, £330bn has so far been set aside for this initiative, it has also been confirmed that this amount will be increased in line with demand.

• Coronavirus Business Interruption Loan Scheme (CBILS) – Initially announced at the budget, the Coronavirus Business Interruption Loan Scheme will temporarily replace the existing Enterprise Finance Guarantee Scheme, the CBILS will operate in much the same way. The CBILS was initially set to provide loans of up to £1.2M, this has now been increased to £5M., there will be no interest on this for the first 12 months. A range of finance options, including loans and asset and invoice finance will be available. Banks will not be able to request personal guarantees for any loan under £250,000, instead, the government will provide security of 80% should the bank suffer a loss. Borrowing through the CBILS opened as of March 23rd 2020.

Bounce Back Loans – The UK’s small businesses will have access to ‘bounce back loans’ backed by the government. These are for a maximum of £50,000 and companies can apply for loans of up to 25% of their turnover. There is no payable interest for the first 12 months and a 2.5% interest rate following this. Sunak promised a simple and fast process which will give companies access to this finance within 24 hours of applying. Applications have been open since 4th May.

• HMRC Time to Pay (TTP) Scheme Extended – To assist companies that are worrying about keeping up with HMRC commitments during this difficult time the government has created several lifelines. These include, an extension on the Time to Pay (TTP) scheme, allowing companies extra time when settling tax bills including PAYE, VAT and Corporation Tax. The hope is that this will free up cash and allow businesses to keep money moving and keep the supply chain going. A dedicated helpline has also been set up to allow companies to discuss setting up a payment plan

VAT deferred – Businesses will have the option to defer the next quarterly VAT payment, this does not cancel any VAT due, however is does allow businesses to save money in the short term.

Additional help for the self-employed and sole traders –  The government has suspended the minimum income floor for accessing benefits, this includes universal credit. This allows the self-employed to claim universal credit at a rate which is equivalent to SSP. This is helpful for those who did not qualify for the Self-Employed Income Support Scheme, self-assessment payments are also deferred to January 2021.

• Business rates relief – A major announcement from the budget was that businesses in retail, hospitality and leisure sectors that have a rateable value of less than £51,000 will be fully exempt from business rates this year. Further to this, Sunak has announced that a cash grant of up to £25,000 is also available for these businesses. This business rates holiday scheme has now been extended to all retail, hospitality and leisure sector businesses regardless of its rateable value.

Small business grants –  For smaller businesses that would not benefit from a business rates holiday, they have instead been promised a grant of £3,000 to assist with cash flow. This has been increased to £10,000 and will help 70,000 of the smallest businesses.

Homeowners have also been offered form relief, this is in the form of a three month mortgage holiday for those who are facing financial difficulty due to Covid-19, however interest will continue to be levied during this period. For those who are in rented properties, there has been a blanket bank on evictions for three months should a tenant be unable to pay rent on time. Following this three month period, tenants will be encouraged to set up an arrangement with their landlords to make up missed payments through reasonable payment plans.