Coronavirus - new package of financial measures announced

This afternoon (Friday 20 March 2020), Prime Minister Boris Johnson provided clarity around measures designed to slow the spread of coronavirus. He was joined by Chancellor Rishi Sunak who announced an unprecedented package of financial measures to ease the economic impact of coronavirus in the UK.

These measures are designed to protect the financial security of the British population and ensure that businesses can try and retain staff during the crisis – safeguarding millions of jobs. The logic being that once the peak of the pandemic is over, businesses can re-open and staff can return to work. 

What were the key announcements? 

Pubs, clubs, restaurants – the hospitality & leisure sector:

Cafes, pubs, bars and restaurants are to close tonight, or as soon as they practically can this evening. They will however be able to provide takeaway food services. 
Theatres, cinemas, gyms, shopping malls are to follow suit.
These measures will be reviewed monthly.  

Economic measures for employers and employees

  • Coronavirus Job Retention Scheme: The UK Government will pay wages through the Coronavirus Job Retention Scheme – every employer in the country will be eligible to participate in the scheme. Companies are advised to contact HMRC and apply for a grant to cover the wages for people who are in furlough (those who have been sent home from work due to the coronavirus outbreak as long as they are brought back into work). The amount available is 80% of an employee’s salary up to a maximum of £2,500 per month, per employee. It can also be backdated to March 1 and will be open initially for three months. HMRC are working hard to get this up and running. It is thought that the first grants will be paid in the coming weeks and fully set up by the end of April. 
  • Bridging loan scheme: Further to the Bridging Loan announcements earlier this week, the Government are reviewing an extension of the scheme to include larger and medium-sized businesses. We expect further announcements on the details next week.
  • Coronavirus Business Interruption Loan Scheme (BILS):This will now be interest free for 12 months, instead of the six months as previously announced. Loans will be available from Monday.
  • Next quarterly VAT payment deferred: The next quarterly VAT payment due by businesses is to be deferred. Payments are deferred from now until end of June and companies will have until the end of the financial year to pay any deferred VAT. This is a direct injection of £30 bn of cash to employers, equivalent to 1.5% of GDP.
  • Income tax payment on account due 31 July 2020 deferred: To assist the self-employed the 31 July 2020 Income Tax Payment on Account is being deferred and is to be paid on 31 January 2021.
  • How to apply: There will be a nationwide advertising campaign from Monday to communicate the measures and how to apply. The Chancellor made a plea to all business to review all options before considering making anyone redundant.  

Personal finance measures:

  • Universal Credit standard allowance increasing by £1000 for the next 12 months
  • Working Tax credit basic element to be increased by £1000 for the next 12 months
  • Suspension of the minimum income floor, meaning the self-employed can access, in full, Universal Credit at a rate equivalent to SSP
  • Extra £7bn pumped into the welfare system in total
  • £1bn of support for tenants so that the local housing allowance will cover at least 30% of market rents in local areas

There are various details relating to today’s announcements that require to be clarified. Our advisers are reviewing these measures in detail and will continue to provide updates through our dedicated Coronavirus Hub

If you have any questions or concerns during this challenging time, please speak to your usual Johnston Carmichael adviser or another member of the team.