Unprecedented Economic Intervention Announced By the Chancellor to Help UK Businesses – The Latest Support Announced
We are in unprecedented times but the announcement this evening by the UK Chancellor included unprecedented financial support aimed at easing cash flow, supporting jobs and providing further support to UK businesses. The two key announcements were that (1) the UK Government will pay 80% of employees wages; and (2) the Coronavirus Business Interruption loan will be available from Monday and will now be interest free for 12 months.
This announcement comes along side an announcement from the Prime Minister that as soon as reasonably possible from tonight cafes, bars restaurants, clubs, cinemas, gyms and leisure centres are to close. Although restaurants/cafes can still provide takeaways.
One of the immediate pressures on cash flow is paying the wages. With reduced demand, restrictions on movement of people and supply chain issues there has already been a downturn in the market. This in turn is putting intense pressure on liquidity and concern about how (if) the business can pay employee wages. In some cases, employees have already lost their jobs.
In an effort to encourage businesses to retain employees and also to ensure that employees can continue to pay their rent and mortgagees the Government announced tonight a job retention scheme.
What support is on offer to pay wages?
Any business can apply to HMRC for a grant to cover the wages of retained employees.
The grant will cover up to 80% of wages. There is no limit on funding or the number of employees covered.
It will be backdated to 1 March 2020 and will initially be available for 3 months and extended if necessary beyond then.
It is hoped that the grant will be paid in weeks, and at the latest before the end of April
What about those businesses hurting now?
The Chancellor recognised that many businesses are in distress now and announced that the Coronavirus Business Interruption Loan will be available on Monday. It will also now be interest free for 12 months.
See our guide setting out all measures available prior to today’s announcement. We will update this with the detail from today’s announcement as soon as this is available.
Other cash flow measures
The Chancellor also announced that payment of the next quarter’s VAT would be deferred and businesses have until the end of the year to pay.
In addition, further measures for credit will be announced next week for larger and medium sized businesses.
These measures are temporary but designed to help cash flow, businesses stay afloat and ensure that once Covid-19 has been beaten that the UK economy will bounce back.
Over the weekend there will be an advertising campaign to announce what support is available. The Chancellor advised businesses to look carefully at that before laying anyone off.
Alongside that, businesses must also take care to ensure that the support on offer is the right support for the business at this time and involve their professional advisors to help make that decision who can also assist in obtaining that support.