Out-Law News | 11 Mar 2020 | 6:49 pm | 3 min. read
The measures include expanded business rates reliefs; a business interruption loan scheme and grant scheme for small businesses; an extension of statutory sick pay (SSP) to employees advised to self-isolate or caring for others who are self-isolating; and a dedicated helpline for businesses seeking a deferral on tax liabilities. The government will also refund employers with fewer than 250 employees up to two weeks of SSP for each affected employee.
The government announcements come shortly after the Bank of England announced it was cutting the central bank interest rate from 0.75% to 0.25% with immediate effect, as well as providing additional liquidity to support banks in lending to small businesses. The UK banking sector has also confirmed that it will support consumers through overdrafts and loan and mortgage repayment relief where necessary, through trade body UK Finance.
Chancellor Rishi Sunak said that the outbreak would have a "significant" but "temporary" impact on the UK economy, driven by employee sickness, supply chain disruption and reduced consumer spending.
Partner, Head of Retail & Consumer
On the basis the coronavirus is not a long term issue for retail and restaurant businesses, it is crucial that they have the liquidity to see them through the worst.
"The right immediate policy response is to provide security and support for those who get sick or can't work through funding our public services, and a strengthened safety net," he said. "And on the supply side, the right response is to provide a bridge for businesses, to ensure that what is a temporary impact on our productive capacity does not become permanent."
The Budget document states that the government will provide support "for as long as it is needed, based on the latest scientific evidence". The devolved governments of Northern Ireland, Scotland and Wales will receive a proportional share of any additional funding to provide support in their own areas where measures do not apply UK-wide.
The measures announced include expanding the business rates retail discount scheme in England to the leisure and hospitality sectors, and increasing the discount from the 50% planned for 2020-21 to 100% for one year. A planned rates discount for pubs will be increased to £5,000. Businesses that received the retail discount in 2019/20 will be rebilled by their local authority as soon as possible, but those newly eligible may need to apply to their local authority in order to receive the discount.
Small businesses in England that already pay little or no business rates because they receive small business rate relief or rural rate relief will be entitled to a one-off grant of £3,000 to help meet their ongoing business costs. The grant will be provided by local authorities, which will receive a share of an additional £2.2 billion in government funding to provide this support.
Retail and consumer expert Tom Leman of Pinsent Masons said that the announcement would be "extremely welcome news" for small to medium sized retailers and restaurants.
"On the basis the coronavirus is not a long term issue for these businesses, it is crucial that they have the liquidity to see them through the worst," he said. "This will definitely help the cause and hopefully see many of them come out the other side ready to benefit from the increased spending power prompted by the money people are currently saving on their discretionary spend."
A new temporary coronavirus business interruption loan scheme will be made available through the British Business Bank in the next couple of weeks, allowing businesses to access loans of up to £1.2 million. The government will guarantee 80% of each loan at no charge to businesses or banks, subject to a per-lender cap. Businesses with outstanding tax liabilities may be able to agree additional time to settle their tax affairs through HMRC's 'Time To Pay' scheme, for which a dedicated helpline has been set up.
Tackling the short term impact and addressing a shortfall in liquidity is what many SMEs require if they are going to weather the storm created by coronavirus.
The government has already announced that it will make SSP available to individuals diagnosed with coronavirus from the first day of leave rather than the fourth day, subject to legislation. It has now announced that this will be extended to those who are unable to work because they are self-isolating in line with government advice. For self-employed people and others who are not eligible for SSP, the government intends to relax the rules on claiming certain benefits for those who are unable to work due to a coronavirus diagnosis or self-isolation.
Planned legislation will also allow small and medium-sized businesses with fewer than 250 employees to reclaim up to two weeks worth of SSP paid for sickness absence under the new eligibility criteria. Business eligibility will be based on the number of people they employed as of 28 February 2020.
Commercial law expert Clare Francis of Pinsent Masons said: "Businesses grappling with the impact of coronavirus may see the announcements as positive, but the lack of immediate cash relief will leave many without the emergency assistance they need".
"Tackling the short term impact and addressing a shortfall in liquidity is what many SMEs require if they are going to weather the storm created by coronavirus," she said.