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Summary
- Small businesses in the UK are seeking additional support from the government to run their businesses.
- Some changes will occur in the furlough scheme from 1 July, and most of the UK small businesses are left with no cash to keep up with those changes.
The small firms in the UK are looking for additional support to keep their businesses going on as the Boris Johnson government has postponed unlocking the remaining pandemic restrictions by a month, which were due to open on 21 June. The new unlocking date is expected to be 19 July in England. However, it may get delayed further depending on the Covid-19 situation at that time.
As per the Federation for Small Business (FSB), the small firms are facing financial difficulties in bridging these 18-day extended lockdown period gap and delays in easing restrictions have put more pressure on the already struggling firms.
However, according to a government spokesperson, there would be substantial support from the government side, and the government will continue the furlough scheme with some changes from July.
Launched in April 2020, since the first lockdown was imposed, the furlough scheme is a UK government’s response to the damage that the coronavirus pandemic has caused. The scheme aims to minimise the financial implications of Covid-19 by reducing unemployment and related costs through two schemes: Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS).
What will change from 1 July?
- The employers contribute 5% of the wage expenses amount for furloughed staff through national insurance and pension, which will rise to 14%.
- For retailers and hospitality firms, business rate exemptions will end.
- Payment of deferred VAT bills will also start for the firms.
- At the same time, repayments on more than £45 billion in emergency bounce-back loans will soon be due.
Cause of Concern
Mike Cherry, the National Chairman of FSB, has said that some of the UK’s most fragile businesses could not hold on further as they are left with no cash. The changes in the furlough scheme from 1 July will add up to their burden, which will further increase their costs. However, their revenues will not increase, as the easing of further restriction has been delayed. This might lead to disruption in trading or job losses. Therefore, the Boris Johnson government should extend the support such as full furlough and full business rates relief.
According to government sources, the furlough scheme is one of the most generous schemes globally, which will be in place until September 2021. The scheme has provided £65 billion of support and protected 11.5 million jobs. While business will pay 10% of the workers’ wages in July, 70% will continue to be paid by the government.
Besides this, if required, businesses can also seek additional support, including restart grants worth up to £18,000 per business, and relief for both cuts to VAT and business rates are available until March 2022.
However, businesses are looking for more support to meet their day-to-day expenses as the pandemic continues to havoc with no or limited source of revenue streams.
