Michael Lansdell explains the government's plan for financial support.
One of the themes of the March budget was encouraging business growth. The Office for Budget Responsibility (OBR) expects the UK’s economy will recover quickly once the remaining covid restrictions are finally lifted, hence the government’s readiness to extend its support it for people and businesses.
Support for people
The coronavirus job retention scheme (CJRS) will continue in full until the end of June 2021, after which the percentage amount of a furloughed employee’s salary covered by the government will gradually reduce. Until June 30, 80 per cent of an employee’s salary will be paid under the scheme, falling to 70 per cent in July and 60 per cent in August and September.
For those who are self-employed, a fourth grant, worth 80 per cent of three months’ average profits, was made available from April, under the self-employed income support scheme (SEISS). This grant, covering the period February 1 to April 30, 2021, was open to anyone who first became self-employed in the 2019/20 tax year, if they submitted a tax return by March 2, 2021.
From late July, self-employed people will be able to apply for a fifth grant, covering the period May 1 to September 30, 2021. This will again be worth 80 per cent of three months’ average profits, where turnover has fallen by at least 30 per cent, capped at £7,500. If the fall in turnover is less, the grant will be limited to 30 per cent of profits, capped at £2,850. Like the CJRS, it is widely assumed that the SEISS will end on September 30.
Support for businesses
The 100 per cent relief for business rates for eligible retail, hospitality and leisure properties in England will remain in place until June 30, followed by a reduced relief until March 31, 2022. For support in other sectors, a business rates relief fund of £1.5bn was also announced in March. To decide how this will be distributed, the government will use official data to see to what extent each sector was affected by the pandemic. This fund covers England; the governments in Scotland, Wales and Northern Ireland announced similar measures.
Also featured in the budget was the extension of the reduced VAT rate of five per cent for hospitality, holiday accommodation and attractions, to September 30, 2021. This will be replaced by a new reduced rate of 12.5 per cent, covering the period October 1, 2021, to March 31, 2022.
The ban on commercial evictions will remain in place until June 30, 2021.
Schemes for growth
These include a recovery loan scheme, to help businesses grow and invest. Under the scheme, the government will guarantee 80 per cent of the finance to the lender. Loans and overdrafts are available; businesses trading in the UK are eligible to apply if they can meet certain criteria. This scheme will be open until December 31, 2021.
Two further schemes include:
Help to Grow: Management
- This will give SMES the tools they need to grow their businesses and improve management skills.
Help to Grow: Digital
- This will combine a voucher, covering up to half the costs of approve software (capped at £5,000), with free online advice.
Businesses must have been operating for more than a year, and have between five and 249 employees. If you are interested in any of these schemes or want support with optimising your business’s finance to encourage growth, contact the team at Figurit today on 020 7376 933.