Government urged to extend vital business support measures ahead of 1 July

Since delaying the unlock date, the government has announced three measures to help firms – extensions to an eviction moratorium and suspension of wrongful trading rules for directors, as well as renewed efforts to release circa £1 billion of restart cash grants held up in local authorities – but has not announced any fresh funding for firms.   

As such, with several measures due to end this Thursday, the FSB has sought urgent government intervention.

Namely, on 1 July, the minimum 5 per cent of wage costs that employers contribute for furloughed staff through national insurance and pension contributions will rise to 14 per cent as the government begins to wind down the Job Retention Scheme. Firms will also have to start paying any VAT deferred from last year, and those in the retail, leisure and hospitality sectors will lose business rates exemptions.

This coming Thursday will also see a new VAT One Stop Shop (OSS) for small UK exporters to the EU launched and the full wind down of import easements installed for six months after the EU-UK transition period ended.   

FSB’s recommendations come as repayments on more than £45 billion of emergency bounce back loans start to fall due.

National chairman Mike Cherry reminded the government of the commitment it made last year.

"Last year the government told us that it would do 'whatever it takes' to help the 5.9 million sole traders and small businesses on which our recovery will depend,” said Mr Cherry.

“The Treasury committed to evolving support measures to ensure they were adequate in the face of what firms were up against.

“But now – after a crushing delay to the reopening road map – the new support measures are limited to those which do not cost the Treasury a penny.”

He believes that unless the government acts now, it risks a serious economic flashpoint this Thursday.

“At the very least, HMRC should take a safe harbour approach when they are faced with a small business that has made a mistake or has no cash left – Time To Pay should be promoted and encouraged,” Mr Cherry said.

“As well as revising support measure deadlines and extending access to, and awareness of, the SME Brexit Support fund, we’re recommending the government look again at our proposal to give those struggling with emergency loans the option to swap that debt for employee equity.

“Doing so would protect the futures of viable firms, and the staff they employ, whilst helping to close our persistent productivity gap.”