The Chancellor opened his Statement by addressing current Covid-19 concerns. He said that there is likely to be a temporary disruption to the economy, but the government will do whatever it takes to support it. On the supply side, the government anticipates that up to a fifth of the working age population could need to be off work at any one time. Business supply chains are currently being disrupted around the globe. The combination of these factors will mean that for a period, UK productive capacity will shrink. There will also be an impact on the demand side of the economy, through a reduction in consumer spending. The Chancellor went on to outline a comprehensive set of measures to support business and households through the coronavirus crisis with business rate relief, time to pay tax deferrals and underwriting the cost of statutory sick pay for smaller businesses. HMRC have also set up a dedicated phone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to Covid-19.
Statutory Sick Pay was one of the focal points relevant to Covid-19. The new pledge is to refund the cost of providing SSP to any businesses impacted by the coronavirus with fewer than 250 employees. Any employees unable to work for up to 14 days would be entitled to the statutory payment from day one without any waiting days (previously three) and the full amount would be claimed by the employer from HMRC.
Business rates will also be abolished for a year for businesses in heavily hit sectors that have been impacted by the virus. This relief will apply to properties with rateable value of up to £51,000. A £1 billion fund has also been dedicated for a cash grant of up to £3,000 for businesses not eligible for the business rates exemption but are heavily impacted.
Mr Sunak spoke of the introduction of a Temporary Covid-19 Business Interruption Loans Scheme that would allow small and medium businesses to obtain a loan up to £1.2m in order to operate through the disruption caused by the coronavirus. The government will offer loans covering up to 80% of losses with no fees, so banks can lend with confidence.
In relation to tax the Chancellor set out several measures designed specifically to help businesses, including enhancements to certain capital allowances and research and development rules.
Although the personal tax allowance will remain at its current level of £12,500 for 2020/21, the threshold for employees National Insurance Contributions (NICs) will rise to £9,500 in April 2020, which is significantly higher than the employers’ threshold which increases to only £8,788.
The maximum Employment Allowance that may be claimed by eligible employers will rise by £1,000 to £4,000 from April 2020.
