Chancellor of the Exchequer Rishi Sunak pledged to do “whatever it takes” to support the United Kingdom’s economy in the face of the coronavirus outbreak.
HM Revenue & Customs will provide advice and support via a new, dedicated COVID-19 help line, Sunak announced as he presented his first budget statement March 11. “There is likely to be a temporary disruption to our economy. On the supply side, up to a fifth of the working-age population could need to be off work at any one time, and business supply chains are being disrupted around the globe,” he said.
In a statement to the House of Commons later, Health Secretary Matt Hancock noted that the World Health Organization said the outbreak could now be characterized as a pandemic. Parliament may need to function differently but will remain open, and emergency measures will be set out in a bill presented the week of March 16, Hancock said.
A £12 billion package of measures will provide “any extra resources needed” by the National Health Service, support people affected by the virus, and support businesses experiencing increased costs or “financial disruptions,” HM Treasury said following Sunak’s speech.
The government will also change pensions tax relief rules “to ensure that NHS staff across the U.K., including senior doctors whose income is less than £200,000, can work additional hours for the NHS without their annual allowance being reduced,” Treasury said.
Statutory sick pay will be available for eligible individuals who are either diagnosed with COVID-19 or are unable to work because they are self-isolating in line with government advice. “Those who are not eligible for statutory sick pay — for example, the self-employed or people earning below the lower earnings limit of £118 per week — can now more easily make a claim for universal credit or contributory employment and support allowance,” Treasury said.
For the duration of the outbreak, the universal credit minimum income floor will be temporarily relaxed for those who have COVID-19 or are self-isolating according to government advice, Treasury added.
In addition, the government will legislate to allow small and medium-size businesses and employers to reclaim up to two weeks of statutory sick pay because of COVID-19. Employers with fewer than 250 employees will be eligible.
The government will increase the business rates retail discount to 100 percent for one year, expand the discount to the leisure and hospitality sectors, and increase the planned rates discount for pubs to £5,000. “Taken together with existing small-business rate relief (which provides full relief for businesses using a single property with a rateable value of £12,000 or less), an estimated 900,000 properties, or 45 percent of all properties in England, will receive 100 percent business rates relief in 2020-2021,” Treasury said. One-off grants of £3,000 will benefit around 700,000 business that already pay little or no business rates.
“All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities,” Treasury added. “To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms and individuals when needed.” The help line number is 0800 0159 559.
“Today’s measures will help shore up confidence in the short term, and industry will be reassured that the government will do whatever it takes to keep the economy moving. If the situation worsens, however, we need to think the unthinkable and look at ways in which employers, government, and trade unions could cooperate on measures such as short-term working patterns to keep key skills, and grants or other financial support for firms who lose orders,” said Stephen Phipson, chief executive of the manufacturer’s organization Make UK. “Industry stands ready to work with government and the trade unions to this end,” he said.
National Insurance Contributions Reduced
The government confirmed that it will increase the employment allowance against employers' National Insurance contributions (NICs) to £4,000 to “help small businesses take on extra staff to fulfill their potential and boost employment.”
Higher National Insurance thresholds starting in April will benefit around 31 million people, Treasury said. The primary threshold and the lower profits limit, for employees and the self-employed, respectively, will be increased to £9,500. “This is the first step in meeting the government’s ambition to increase these thresholds to £12,500, which would save a typical employee over £450 per year,” it added.
The full benefit of the increase will not be seen by all lower-paid workers, said Victoria Todd, head of the Low Incomes Tax Reform Group. “The lowest-paid, earning below the existing threshold of £8,632, do not pay NICs at the moment, so the increased starting point makes no difference to them,” she said. “Also, workers who pay NICs but claim universal credit may see an extra £100 in their wage packet over the year, but their universal credit payment will reduce by £63, leaving them only £37 better off. Increasing the work allowances in universal credit would be another way of helping those on the lowest incomes.”