The UK Government has implemented a full range of support measures for businesses and individuals across the country. The coronavirus jobs bailout could cost the Treasury £40bn every three nths according to a thinktank. Express.co.uk spoke to a financial expert about the biggest gaps in the Government support packages.
The British Government has made a raft of financial support available to people during the COVID-19 crisis.
These packages include the Coronavirus Job Retention Scheme, Statutory Sick Pay, VAT payment deferrals and business rates relief.
In recent weeks, the UK has received around 1.4m new benefit claims for welfare payments including Universal Credit, Jobseekers’ Allowance or Employment Support Allowance.
Work and Pensions Secretary Therese Coffey told the BBC: “For those people that don’t want to wait the amount of time that we would normally pay Universal Credit, they’ve been able to get an advance.
“About 1.4m people have claimed UC and about 200,000 have claimed other, more historic benefits like Job Seekers Allowance or Employment Support Allowance.
“Everyone who is eligible should be able to get that support.”
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In addition, more than four million jobs have been saved in the UK as a result of the new Government scheme according to Chancellor of the Exchequer Rishi Sunak.
Employers can furlough workers and seek a grant from the Government to cover 80 percent of the salaries of workers, up to £2,500 a month.
On Monday Mr Sunak said: “I am determined to make sure as many people as possible return to work after this crisis,” Sunak said during a Parliamentary update on the economy on Monday.
“I want to make sure that as we emerge from this crisis, we can bounce back to the lives we once knew.”
He added: “While our interventions have saved millions of jobs and businesses, we can’t save every job and every business.”
You can find out which support you might be entitled to here.
Nicky Goringe Larkin, managing director of Goringe Accountants said the Government’s schemes are “incredibly generous” but do have gaps in support.
She said: “Overall, the Government’s coronavirus support packages are incredibly generous but there are many gaps preventing certain groups of people benefiting from the packages such as company owner directors that pay themselves a low salary topped up by dividends.”
Ms Larkin added: “Those recently self-employed aren’t eligible either for the COVID-19 self-employment income support scheme as you need to have been trading in the tax year 2019 to 2020.
“And company owner directors that pay themselves a low salary topped up by dividends, will get virtually nothing through the 80 percent job retention scheme, plus of course, they can’t work and run their business if they’re furloughed.”
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The Government has been criticised for not acting swiftly enough in providing funds.
Ms Larkin said: “The financial measures were announced very swiftly by the Chancellor but the speed at which they’ve been implemented has varied considerably.
“Access to business grants and business rates holiday has been very quick while the employee retention scheme has been pretty swift with the application portal to open April.
“But it’s disappointing how slow much-needed funds are being made available for the self-employed with June looking like the earliest.
“It’s also appalling that just around 2,000 of the 300,000 businesses applying for the Business Interruption Loan Scheme have been granted these much-needed funds, due to the poor qualifying structure and application process excluding viable businesses.
“Businesses that have a solid pipeline of work are being excluded for poor historical results.
“The Government should be looking forwards not backwards, looking at the current and future growth of a business when securing against loans.”
The financial expert added an overhaul of the Business Interruption Loan Scheme is needed.
Currently, the scheme helps small and medium-sized businesses, with a turnover up to £45m, affected by COVID-19 access finance up to £5m.
These eligible businesses can access loans, overdrafts, invoice finance and asset finance up to £5m for up to six years.
The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees.
Ms Larkin said: “There needs to be an overhaul of the entire Business Interruption Loan Scheme, which is currently excluding viable businesses.
“Businesses should be able to borrow against their order book and contracted pipeline and not rejected for their historical sales results.”
Once the crisis has passed, there is likely to be a long-term effect on the economy.
Taxes will rise dramatically to cover this expenditure likely hitting consumers, businesses and investors according to the financial expert.
Ms Larkin said: “Taxes will not only rise but they will rise across a variety of them to repay the spending most likely to come from areas such as corporation taxes, higher dividend tax and capital gain tax.”
She added: “It’s also increasing the impact of taxes going up in the future to repay these schemes.
“There should be a voluntary opt-out of coronavirus grants and reliefs for businesses that are either doing well in the current climate or are cash-rich so don’t need them.”
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