A new world – the COVID-19 pandemic
The spread of the Covid-19 coronavirus has changed the outlook for everyone
The Budget on 11 March was overshadowed by the mounting impact of the virus. The Chancellor has already announced two rounds of measures to support the UK economy in addition to the Budget. Together they dwarf the £12 billion expenditure promised in the Budget. The running figure (as at 20 March) now totals over £60 billion, with a further £330 billion of loan guarantees for businesses, large and small. Mr Sunak’s actions include:
- A subsidy to employers of 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month, to encourage the retention of employees who might otherwise be laid off.
- Waiving 2020/21 business rates for all businesses in the retail, leisure and hospitality sectors.
- Providing grants of up to £25,000 for businesses that qualify for the Business Rates Retail Discount.
- Delaying the introduction of private sector off-payroll working rules (IR35) for a year to April 2021.
- Deferring the next quarterly VAT instalment to the end of the financial year.
Market volatility has rocked many formerly solid sectors but this is not a repeat of 2008. The government has made sure that the banks are in a much stronger financial position than they were at that time. What Covid-19 represents is a left field shock to the entire global economy that looks certain to lead to a recession.
If there is a lesson to learn from 2008, it is that markets can overreact and, although it seems impossible at the time, economies do recover. For now, the focus is on people, their lives and livelihoods.
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The information in this article does not constitute advice and should be used for informational purposes only. This content has been provided to Helm Godfrey by Taxbriefs.