Covid-19 Economic Stimulus Measures: Just what the Doctor Ordered?
The coronavirus epidemic is threatening to cause a global economic shock, the like of which has not been seen in modern times. The response from governments across the world has been unprecedented to meet this challenge. With Germany planning to take equity stakes in businesses and France looking to nationalise businesses, what is the UK government planning by way of support for businesses and economic stimulus?
This Q&A details the measures that are currently available or being established which could help mitigate the economic impact of the Covid-19 virus on you and your business, including links to source material and a link to our Covid-19 related guidance to assist you in considering how these measures can assist you and your business.
Since the announcement of the first measures in the budget on 11/3/20, the situation has continued to evolve. You can follow the latest government guidance for employees, employers and businesses here.
You can access our extensive guidance here, which addresses the evolving range of legal issues that you may need to consider as we all navigate this unprecedented challenge to keep ourselves healthy and businesses trading.
What Support is the government providing to businesses?
- If your business has up to 250 employees, you may be able to reclaim up to 2 weeks of statutory sick pay and expenditure per eligible employee who has been off work due to Covid-19 (including in self isolation). The repayment mechanism is to be set up over the coming months. Furthermore, the Coronavirus Bill (please see below) will also facilitate the disapplication of S.155(1) Social Security Contributions and Benefits Act 1992 in order that statutory sick pay is available from the first day of absence. - Link
- Coronavirus Job Retention Scheme package which includes the government paying up to 80% of workers’ wages, if they are placed on the scheme, of up to £2,500 per worker per month, backdated to 1st March and open for three months initially. HMRC are presently setting up a reimbursement system - Link
- Business-rates holiday for retail, hospitality and leisure businesses in England for 2020-21 tax year and grants of £25,000 to businesses in those sectors operating in premises with a rateable value between £15,000 and £51,000. You do not need to do anything; your local authority will inform you if either of these measures apply to you. - Link
- Business-rates holiday for nurseries in England for the 2020-21 tax year. You do not need to do anything; your local authority will inform you if this measure applies to you. - Link
- Additional funding for local authorities to provide a £10,000 grant to businesses that get small business rate relief, tapered relief or rural rate relief (around 700,000 businesses could benefit). You do not need to do anything; your local authority will inform you if this measure applies to you. - Link
- Coronavirus business interruption loan scheme through British Business Bank to support businesses with an annual turnover of under £45 million in eligible sectors with an 80%-government-backed loan of up to £5,000,000. The scheme has no lending charge and the government will cover the first six months of interest. The scheme is now available and is administered through participating banks. - Link
- Government-backed lending facility for large companies to cope with short-term cash-flow issues. The Bank of England’s Covid Corporate Financing Facility is administered through banks and will see the Facility purchase short-term commercial paper to the value of at least £1 million from companies that make a ‘material contribution’ to the UK economy and that were in good financial health prior to the economic shock. The scheme is now available. - Link
- Businesses in financial distress and with outstanding tax liabilities may be eligible for support through HMRC’s ‘Time to Pay’ service, which gives extra time to pay tax in instalments agreed on a case-by-case basis. The scheme is now available and HMRC have set up a coronavirus helpline - Link
- Deferring VAT payments for three months from 20/3/20 to 30/6/20. This scheme is automatically in place for all businesses and you do not need to make an application. - Link
- Relaxation of planning regulations to allow pubs and restaurants to provide takeaways without a planning application. This measure is set to be implemented by legislation soon. Businesses will need to inform their local authority of the beginning and end of their use of the measure. - Link
- Support for businesses trading internationally including a Department of International Trade dedicated email address for covid-19-related queries and information on access to existing UK Export Finance support. - Link
- Relaxation of limits on driving hours and daily rest requirements for all businesses until 21/4/20. The government has introduced this measure pursuant to pursuant to Article 14(2) of Regulation (EC) No 561/2006 -Link
Industry specific support
- Specific support package for air travel industry under development.
What Support is the government providing to the Self Employed?
- Self-employed people in financial distress and with outstanding tax liabilities may be eligible for support through HMRC’s ‘Time to Pay’ service, which gives extra time to pay tax in instalments agreed on a case-by-case basis. - Link
- Deferring income-tax payments so that payments due on 31/7/20 are now due on 31/1/21. This scheme is automatically in place for all self-employed taxpayers and you do not need to make an application. - Link
What Other Support is the government providing?
- Three-month mortgage holiday for those affected by the virus, including for buy-to-let landlords whose tenants cannot pay rent. This holiday will not affect borrowers’ credit ratings but is not automatic and each bank will have to approve each application through a fast-tracked process. This measure is available now and administered through banks.
- Suspension of eviction proceedings and restraint of new proceedings for three months. This measure will be implemented through legislation which has not yet been introduced to Parliament - Link
- Interest rates cut to 0.1%. - Link
- Bank of England to increase holdings of corporate and UK-government bonds by £200bn. - Link
We stand ready to support you and your business through the Covid-19 crisis, please contact us and we will be pleased to help you navigate these difficult times.