On Thursday, UK government Covid measures including full furlough support and VAT deferral come to an end. Repayments on more than £45 billion of emergency “bounce back” loans also start to fall due.
This week will also see a new VAT scheme for small exporters launch and import easements, which were put in place for six months after the EU-UK transition period ended, will also wind down.
The Federation of Small Businesses (FSB) - the UK’s largest business group - is now calling on the UK government to extend the deadlines for support schemes and access to the SME Brexit Support Fund to help firms given that full reopening of the economy has been delayed.
The FSB said that since delays to the reopening roadmap, the UK government has announced three measures to help firms including extensions to an eviction moratorium and suspension of wrongful trading rules for directors, as well as renewed efforts to release some £1bn of restart cash grants held up in local authorities. However, it has not announced any fresh funding for firms.
FSB national chairman Mike Cherry said: “Last year the UK 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.
“The Treasury committed to evolving support measures to ensure they were adequate in the face of what firms were up against.”
Cherry said despite delays to the reopening road map across the UK, the new support measures are “limited to those which do not cost the Treasury a penny”.
“As a small business owner, I understand the importance of being careful with what I spend. But failing to review support deadlines that were designed with a June unlock date in mind is a false economy.
“Unless the UK government acts now, it risks a serious economic flashpoint this Thursday – a moment at which financial support starts to wind down, further trade changes take effect and repayments on emergency loans start to fall due. 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.
“As well as revising support measure deadlines, we’re recommending the UK 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.”
On Thursday, 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 Job Retention Scheme starts to wind down.