Aga Khan Economic Planning Board for the United Kingdom
Summary of Government and Bank of England Support
(Last Updated: 31 March 2020)
The UK government and Bank of England have unveiled a number of support measures to mitigate the economic impact from the spread of COVID-19 and encourage longer-term investments. Below is a summary of the announced measures:
COVID-19 immediate support
• Any employee asked to self-isolate will be entitled to statutory sick pay from day one; sick notes available by contacting NHS 111 (Any medical information on the virus, please visit
• Self-employed workers will be eligible to claim contributory Employment Support Allowance from day one and may be entitled to a grant payable in June
• Temporary removal of minimum floor for universal credit
• Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks
• Mortgage lenders will offer a three month mortgage payment holiday to those struggling to pay
• Small firms will be able to access “business interruption” loans of up to £1.2m
• Business rates in England will be abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51,000
• Firms that are currently eligible for small business rate relief will be entitled to a cash grant of £3,000
• In addition, the welfare system will be strengthened, including increasing Universal Credit by £1,000 a year and the Working Tax Credit by £1,000
• An extra £1bn of support for renters through housing benefit and universal credit so the local housing allowance will cover at least 30% of market rents in a local area
• If you would like more details please visit: https://www.gov.uk/government/publications/support-for-those-affected-by...
Personal Finance and Employment
• The income threshold at which National Insurance becomes payable rises from £8,632 to £9,500 or from £166 to £183 per week
• The annual amount parents can save tax-free in Child Trust Funds and Junior ISAs rises to £9,000 per year from £4,368
• Pension taper thresholds increased by £90,000
• Immigration health surcharge being increased to £624, students / youth rate of £470
• Increase to national living wage of 6.2% to £8.72; targeted to hit £10.50 by 2024
• Freeze on fuel duty
• Reduction in maximum rate at which deductions for debt repayment can be made from a Universal Credit award from 30% to 25% of the standard allowance and claimants have up to 24 months to repay advances
• 2% surcharge on non-UK property buyers
If you would like more details on the Government support for businesses for COVID-19 please visit:
Please find below a summary of support for businesses for COVID-19, provided by an external source. For further information, please visit https://www.sterlingrees.com/covid-19/
• The Chancellor announced on 17 March 2020 that business rates for retail, leisure and hospitality business, irrespective of rateable value ,have been suspended for a year with effect from April 2020.
• A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
• The government will provide additional funding to support small businesses that already pay little or no business rates, a one-off grant of £10,000 to help meet their ongoing business costs.
• Time to Pay service - All businesses and self-employed people in financial distress may be eligible to receive support with their tax on a case-by-case basis and are tailored to individual circumstances and liabilities
• Value-added tax - Businesses will be allowed to defer the next quarter of VAT payments until the end of the year.
• Entrepreneurs’ Relief - the lifetime limit on gains eligible for relief reduced to £1 million (from £10 million) effective immediately
• Capital allowances
o Structures & Building allowance (SBA) - the rate of relief for SBA will increase from 2% to 3%. The change will take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax.
o Capital Allowances for Business Cars - from April 2021 the first year allowance on zero emission vehicles will be extended, and writing down allowance of 18% will apply to cars with emissions up to 50g/km.
• Employment Allowance - the increase in the Employment Allowance from £3,000 to £4,000 from April 2020 for Employer National Insurance Contributions.
• Corporation tax rate - to remain at 19% in 2020
• Businesses will benefit from higher rates of tax credit for R&D activity
• Manufacturers and importers whose products have less than 30% recyclable material will be charged £200 per tonne
Job Retention Scheme
• Any employer will be eligible to collect 80% of the wages up to a cap of £2,500 per month for all employees put on furlough. Payments will be backdated to March 1st, last for a minimum of 3 months, and paid ‘within weeks’
• If you would like more details on the Job protection scheme please visit: https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/
Coronavirus Business Interruption Loan Scheme (SMEs)
• The government will provide lenders with a guarantee of 80% to provide finance to SMEs support loans of up to £5 million in value.
• Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
COVID-19 Corporate Financing Facility (Larger Firms)
• Bank of England will buy short term debt from larger companies if it has been affected by a short-term funding squeeze
If you would like more details on the Budget 2020 please visit: https://www.gov.uk/government/publications/budget-2020-documents
Support for Self-Employed
Self-employed workers/partnerships may be able to apply for a taxable grant worth 80% of their profits (up to a cap of £2,500 a month) for an initial three months to help them cope with the financial impact of COVID-19. Applicants should note:
• HMRC will reach out and ask you to complete a form
• If you are eligible, support will be paid as a cash lump-sum in early June, straight into your bank account
• HMRC will calculate the amount paid based on your last three years of annual earnings
• Applicants must have at least one year of self-employed earnings
• Applicants must have submitted their tax return for the 2018-19 tax year
• The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19
• To qualify, more than half of your income in these periods must come from self-employment
• Whatever cash support you receive will be taxable
• You will be able to continue working as well as receive this taxable grant
• The cash support will be from 1 March for 3 months (may be extended)
The government has also given the self-employed longer to pay their income tax, extending payments due in July 2020 under self-assessment to January 2021.
If you would like more details on the income support scheme for self-employed please visit:
Bank of England Interest Rate Cut
The Bank of England cut interest rates again on 19 March 2020 to 0.1% in an emergency move as it tries to support the UK economy in the face of the COVID-19 pandemic. Interest rates are now at the lowest level ever in the Bank's 325-year history.
• Homeowners with a base-rate linked mortgage should expect to pay less interest each month
• Savers will continue to incur low interest rates on savings products, such as ISAs and term deposits
The move has also seen Pound Sterling fall to its lowest rate against the Dollar since 1985. In the short term, imported goods and foreign currencies will be more expensive for UK citizens; in the long term, consumer prices may incur inflation.