Further measures to support for businesses’ cash announced in the Government’ Winter Economy Plan…
Since March the Government has implemented a series of measures to reduce pressure on business finances, allowing firms to manage their costs over a period of reduced demand, and protect jobs. As part of this the Government has spent over £13 billion in business and sector‑specific grants.
The Chancellor of the Exchequer presented our Winter Economy Plan to Parliament on Thursday 24 September 2020 to outline how the Government will support jobs and the economy over the coming months.
Extending the temporary VAT reduced rate for hospitality and tourism
To continue supporting the cashflow and viability of over 150,000 UK businesses22 and to protect 2.4 million jobs,23 the government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.
Extension of access to finance schemes
Over 1 million businesses across the United Kingdom have already benefitted from over £57 billion through our business loan schemes. But we are giving them even more access to support by extending the deadline for new applications until the end of November for the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS), and the Future Fund. Along with our Bounce Back Loans, this means all four loan schemes will now expire at the end of November. We will work with businesses and lenders to introduce a new loan guarantee scheme from January 2021.
Support also continues through the COVID-19 Corporate Financing Facility which will remain open until 22 March 2021. Where a company has exhausted all other options, and is of strategic importance to the UK, the government may also consider providing bespoke financial support.
Pay as you Grow
The Government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). These changes will provide greater flexibility to repay these loans over a longer period and in a way that better suits businesses’ individual circumstances.
CBILS loan extension – The Government intends to allow CBILS lenders to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.
VAT deferral ‘New Payment Scheme’
The Government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Over half a million businesses deferred VAT payments,28 a cash injection of £30 billion into the UK economy when it needed it most. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
Previous measures already announced...
The Government has unveiled an unprecedented package of financial measures to shore up the economy against the coronavirus impact.
It includes £330bn in loans, £20bn in other aid, a business rates holiday, and grants for retailers and pubs.
To ensure that businesses have access to the funds they need, the Government is providing:
- support for liquidity amongst large firms, with a major new scheme being launched by the Bank of England to help them bridge Coronavirus disruption to their cash flows through loans
- increasing the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2 million to £5 million, and ensuring businesses can access the first 6 months of that finance interest free, as Government will cover the first 6 months of interest payments
- including new legal powers in the Covid Bill enabling the Government to offer whatever further financial support we think necessary to businesses
Providing £20 billion of business rates support and grant funding to help the most-affected firms manage their cashflow through this period by:
- giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months
- increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000
- providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000
- remove the requirement for planning permission for pubs and restaurants to provide takeaways.
The help announced is not for just business, additionally the Government announced that people experiencing financial difficulty as a result of Covid-19 can get a Mortgage Holiday of up to 3 months.
More information about business relief can be found here.
Or contact the Business Support Helpline for free advice.
Business Support Helpline (England)
Telephone: 0300 456 3565
Monday to Friday, 9am to 6pm