On 11 March 2020, the Chancellor, Rishi Sunak, announced a £30billion package of measures aimed to boost the UK economy and allow it to ride the temporary recession expected because of the coronavirus outbreak. Earlier on the same day, the Bank of England announced an emergency interest rate cut, from 0.75% to 0.25%, aimed at allowing banks to lend more to business and bringing the cost of borrowing back to a record low.
The aim of both the budget and rates cut is clear – the combination is aimed at helping small and medium businesses with cashflow at a time when they are likely to be facing reduced demand, reduced profits and increased costs from staff absence.
Specifically, the measures include:
- Entitlement to statutory sick pay (SSP) for anyone advised to self-isolate, even if they have not yet presented coronavirus symptoms.
- Self-employed workers who are not eligible for SSP can claim contributory Employment Support Allowance which will become available from day one.
- Local councils will have access to a £500 million hardship fund to assist the most vulnerable.
- Firms with less than 250 staff will be refunded sick pay payments for two weeks.
- Small firms will gain access to a “temporary Coronavirus business interruption” loan scheme of up to £1.2 million.
- Business rates will be abolished for businesses in the retail, leisure and hospitality sectors in England with a rateable value below £51,000.
- The tax threshold for National Insurance Contributions will increase from £8,632 to £9,500 (effectively removing 500,000 employees from NICs altogether).
- The system for high street business rates shall be reviewed later this year; and,
- A £3,000 cash grant for small businesses not eligible for business rates exemption, costing £1 billion in total.
The implications of the budget in the short-term are clear – businesses will be supported so that the economy can keep going. Employees will be encouraged to stay at home if they feel unwell and follow medical advice, with some reassurance that smaller employers will be reimbursed. However, in the long-term, the government expects to borrow nearly £100 billion more by mid-2024 than it expected to previously. The UK economy and business have a lot to face in the longer-term – the coronavirus is likely to pass, but Brexit negotiations and trade deals with the European Union still cause further uncertainty to come.
Now is the time for businesses to prepare – taking full advantage of the Chancellor’s measures and putting policies and procedures in place so that it can continue to function as well as possible. If you want advice on how you can prepare or the implications for your business, please get in touch with our expert team of lawyers today on 0203 146 3549 / e:mail: [email protected].
All our articles are intended for informational purposes only and do not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information provided.