The Government has announced ‘unprecedented’ measures for businesses to support them in these difficult economic times.
Those measures include:
- Postponing payment of VAT bills until January 2021
- £25,000 grants available to retail, hospitality and leisure businesses with smaller premises
- Small Business Rate Relief one-off grant of £10,000
- Business rates reduced to 0% for retail, leisure and hospitality businesses
- For businesses with a turnover of up to £41 million business interruption loans of up to £5 million
- Refunds on statutory sick pay paid to employees.
With a minimum of 600,000 small businesses forecast to fail in 2020, these measures are deemed insufficient by those representing them.
Under the current measures in place, the majority of those running small businesses will be reliant upon Universal Credit if their businesses are not viable during the Coronavirus restrictions. Those who have money saved ready to meet their VAT bills or to make mortgage lump sum payments are penalised when applying for Universal Credit, as the system was not designed for business owners.
Some groups representing the self-employed are calling for a £15 billion Temporary Income Protection Fund. The Fund would pay the self-employed a monthly income between a base level of the Real Living Wage (potentially adjusted upwards for London applicants) and their average existing earnings over the past three years, capped at average UK earnings after tax.
There is real concern amongst those representing the self-employed and small business owners that deferral of tax payments will simply lead to many being forced to use up their savings for living expenses. With the additional potential burden of repaying government loans, it will take longer than the six months between the expiry of the current measures and payment of tax in January 2021 for the self-employed to get back on their feet. Therefore, deferring payments may actually be creating a financial crisis.
During these unprecedented times, the Government is having to roll out measures rapidly and then fill in the gaps once they become apparent. It is hoped that tonight’s press briefing will bring more measures to support the self-employed. Those measures, enabling them to support their families whilst complying with the Government’s requirements for social distancing and avoiding unnecessary journeys, would seem to make financial and practical sense for wider society.
How Blaser Mills Law can help your business
We have been and continue to advise businesses on the implications of Covid-19 on the day to day running of their business. If you would like a video call with one of our expert lawyers please contact Emma Banister Dean, Senior Associate, on 01494 478623 or at email@example.com