The UK Government has been supporting UK businesses throughout the time of the pandemic. I would like to bring you up to date with the general situation in the UK, and the extent to which the Government has been trying to help the economy.
We are still in lock down here, but at least we have the benefit of coming into Summer. Lockdown in the UK has not been as severe as it has been in many countries, and during this month, June, the restrictions are slowing being eased and schools have also re-opened for some year groups.
There is a slow return to workplace beginning, but the advice is still to work from home if you can. Building sites are back at work and the amount of public transport is increasing. Prime Minister has announced plans to allow pubs, restaurants, museums, cinemas and hotels to reopen from 4 July in England.
The UK Government has put in place a number of schemes to help the economy and businesses struggling to survive.
Grants to small businesses
A cash grant of GBP 10,000 has been paid to all businesses in small offices and factories. Hospitality industry received a cash grant of GBP 50,000 and an exemption from local property taxes for one year.
Help with staff costs
The Government’s Coronavirus Job Retention Scheme will remain open until the end of October. Furloughed workers across UK will continue to receive 80% of their current salary, up to GBP 2,500. From August new flexibility will be introduced to get employees back to work and boost economy. The companies can take staff back part-time if they wish, with employers being asked to pay a percentage towards the salaries of their furloughed staff. The Government will pay 80% for the hours they are still not working. Companies can increase the salary to the full amount, but they do not have to.
Until the end of August the Government is also paying all the company Social Cost for the staff and the compulsory Pension Contributions.
Starting in September this help with staff costs will reduce to 70%, in October to 60% and the scheme ends at the beginning of November.
Self Employed
There is a similar scheme for self-employed people.
The scheme currently allows to claim a taxable grant worth 80% of person’s average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at GBP 7,500 in total.
Help with tax payments
Every business has been able to delay their VAT payment due between March and May until the end of March 2021.
Financial support
The Government has put in place a number of loan schemes.
For loans up to GBP 50,000 the Government gives a 100% guarantee to the lender and pays the interest for the first year. The interest rate on these is set at 2.5% per year over 6 years.
For loans between GBP 50,001 and GBP 250,000 the Government gives an 80% guarantee to the lender, and pays the interest costs for the first year. The lender cannot take a personal guarantee for the loan, but it can ask for other security. There is a maximum interest rate of 8.9%
Loans up to GBP 4 million are also available, but on more commercial terms. However, the Government guarantee of 80% is still available.
There are larger loans available to bigger businesses.
The cost
The cost of the help with staff costs alone is currently GBP 14 billion per month, approximately the same as it costs each month to run the state provided Health Service.
Clearly there needs to be a reduction in Covid 19 related spending. From the way this is being managed I suggest that the Government believes that the UK economy will be self-supporting by the beginning of November, with the last remaining affected sectors of the hospitality sector covering restaurants, bars and hotels being operational again to a limited extent by July or August.
The future
Now that all the shops are reopening in the UK, businesses are restarting and the economy is opening again, it is the time for foreign owned business to take advantage of the friendly tax regime and low bureaucracy in what is still the 6th largest economy in the world.
And EBS is available to guide you through the process.
