Government to pay wages and offers further support to businesses
To support businesses, the government has unveiled new financial measures to help shore up the economy during the coronavirus outbreak.
Chancellor Rishi Sunak announced his economic aid package for all businesses. As it stands, the government is offering £330bn in support – equivalent to 15% of the UK's GDP.
The Coronavirus job retention scheme:
The government will step in and pay wages in an effort to protect people’s jobs. Any employer is eligible for the scheme. Employers can contact HMRC to apply for a grant to cover most of the wages of people who aren’t working but are furloughed and kept on payroll.
The grant will cover 80% of their salary and offer retained workers up to £2,500 a month – and will be backdated to 1 March. Employers can top-up salaries if they wish.
There is no limit on funding and it’s open for at least three months.
The Business Interruption Loan Scheme
The scheme announced in the 2020 budget is designed to support businesses that will need access to loans and overdraft. This will be available as of Monday, 23 March.
The maximum value of these loans will be extended from £1.2m per business up to £5m per business, with no interest for 12 months.
The scheme provides guarantees of 80% on each loan to help encourage lenders to continue to finance SMEs.
Tax system and cash flow
The Chancellor also announced that he is deferring the next quarter of VAT payments. Businesses now have until the end of year to pay them. This is equivalent to 30bn in cash to businesses.
Universal credit standard allowance
This has now increased by £1,000 a year for the next 12 months. The government has also increased the working tax credit basic element by the same amount.
The Self-employed Income Support Scheme
The scheme will pay self-employed people a taxable grant worth 80% of their average monthly profits over the last three years, capped at £2,500 per month.
It’s open for at least three months and is the equivalent to what is available to people in full-time employment.
If you’re eligible, you will be able to claim these grants and continue to do business.
The funds will be available from June at the earliest.
To be eligible, you’ll need to have trading profits that don’t exceed £50,000 and earn most of your income through self employment.
To avoid fraud, it's only available to people who are already self-employed and have filed a tax return in 2019.
If you’ve not filed your tax return yet, you’ll be able to do so in the next four weeks and still qualify.
If you’re eligible, HMRC will contact you directly to fill out a simple online form.
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