To soften the economic impact of the COVID-19 pandemic, the British government has announced that a £350 billion package of loans and grants will be available to British businesses. These measures are being taken to divert a possible economic emergency resulting from the enforced lockdown of large parts of the British economy.
Most of the package, £330 billion, will be provided by way of state-backed loans. The remaining £20 billion will be provided by tax breaks and other grants including:
- cash grants worth £25,000, which will be available to businesses operating in the worst hit sectors, namely retail, leisure and hospitality;
- cash grants of £10,000, which will be available for the UK’s 700,000 smallest businesses; and
- scrapping business rates this year for all businesses based in England in the retail, leisure and hospitality sectors.
The terms on which the government-backed loans will be provided are not yet known. They are aimed at allowing firms to carry out fundamental day-to-day operations such as paying wages, buying stock and paying rent. For bigger businesses, the loans will be available via the Bank of England. Smaller enterprises may seek business interruption loans of up to £5 million each with no interest payable in the first six months.
The above measures are in addition to other support measures announced earlier, which include:
- deferring VAT payments for all UK businesses for three months, commencing from 20 March 2020 — VAT refunds and reclaims will be paid by the British government as normal;
- enabling small- and medium-sized businesses/employers (those with fewer than 250 employees) to reclaim up to two weeks of statutory sick pay (SSP) paid to each employee for sickness absence due to COVID-19 — the mechanism to claim the SSP refund will be put in place by the government in the coming weeks;
- deferring income tax payments for all self-employed individuals — all self-assessment income tax payments due on 31 July 2020 will be deferred until 31 January 2021;
- providing a mechanism for businesses and self-employed people in financial distress, and with outstanding tax liabilities, to receive support with their tax affairs through HM Revenue and Customs’ time-to-pay service — each business applying for support will be assessed on a case-by-case basis and the support will be tailored to individual circumstances and liabilities; and
- certain employment-related interventions the UK government has announced.
McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial COVID-19-related business and legal issues.