The spread of coronavirus (COVID-19) has changed the outlook for everyone and stymied the world economy. We know it’s a worrying time for everyone who is looking to safeguard their livelihoods and financial futures.
After the stresses of 2019, we all hoped a new year would bring calmer waters. Trade tensions between the US and China had begun to thaw and Brexit was formalised. But we are now in uncharted waters with the unprecedented spread of the COVID-19 coronavirus all over the world.
The Chancellor has already announced two rounds of measures to support the UK economy in addition to the Budget. Together they dwarf the £12 billion expenditure promised in the Budget. The running figure (as at 20 March) now totals over £60 billion, with a further £330 billion of loan guarantees for businesses, large and small. Mr Sunak’s actions include:
- A subsidy to employers of 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month, to encourage the retention of employees who might otherwise be laid off.
- Extension of the interest free business loan scheme to 12 months.
- Waiving 2020/21 business rates for all businesses in the retail, leisure and hospitality sectors.
- Providing grants of up to £25,000 for businesses that qualify for the Business Rates Retail Discount.
- Delaying the introduction of private sector off-payroll working rules (IR35) for a year to April 2021.
- Deferring the next quarterly VAT installment to the end of the financial year.
- Delaying self-employed people’s July self-assessment payment until January 2021.
Market volatility has rocked many formerly solid sectors and the epidemic has had wide-ranging effects on all parts of the economy, from air travel to pubs to car manufacturing. This is not a repeat of 2008: for a start, regulators and governments have made sure that the banks are in a much stronger financial position than they were at that time. What COVID-19 represents is a left field shock to the entire global economy that looks certain to lead to a recession. If there is a lesson to learn from 2008, it is that markets can overreact and, although it seems impossible at the time, economies do recover. For now, the focus is on people, their lives and livelihoods.
Get in touch if you’d like some independent, impartial advice on your existing investments and financial products.
Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances.
The Financial Conduct Authority does not regulate tax advice.
Tax laws can change.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.