Rishi Sunak examining plans for a £3billion scheme to help a MILLION small business owners including plumbers, electricians and musicians unable to get furlough cash or company loans
- The Chancellor is looking at proposals for a Directors Income Support Scheme
- Would pay sole directors up to 80 per cent of lost profits for three months
- Will pay up to £7,500 targeting those earning less than £50,000 a year
Rishi Sunak is examining plans for a £3billion scheme to help a million small business owners who have fallen between the cracks of other coronavirus help programmes.
The Chancellor is looking at proposals for a Directors Income Support Scheme that would pay sole directors up to 80 per cent of lost profits for three months, up to a ceiling of £7,500.
The scheme, targeting those earning less than £50,000 a year, would help entrepreneurs as well as plumbers, engineers and musicians.
Known as the #forgottenltd they pay themselves through dividends rather than a salary – a tax move that is legally allowed.
But it has left them unable to claim furlough or business loans.
A source told the Sun that the Treasury was examining a plan put forward by the Federation of Small Businesses, the Forgotten Ltd campaign, former Office for Tax Simplification adviser Rebecca Seeley-Harris and the Association of Chartered Certified Accountants (ACCA).
‘It’s under active consideration,’ they said.
Lib Dem MP Tim Farron said it was ‘encouraging news’, but added: ‘After 10 months of broken promises it’s vital the Chancellor now delivers.
‘The small business owners that make up the #ForgottenLtd and all of the three million #excluded are crucial to our economic recovery. We won’t stop fighting until they are ALL supported.’
The Chancellor is looking at proposals for a Directors Income Support Scheme that would pay sole directors up to 80 per cent of lost profits for three months, up to a ceiling of £7,500
Coronavirus is thought to have inflicted the worst hit to GDP since the Great Frost of 1709
Lib Dem MP Tim Farron said it was ‘encouraging news’, but added: ‘After 10 months of broken promises it’s vital the Chancellor now delivers.’
An estimated three million people have been unable to claim business loans and grands or employee furlough payments since last March.
They include: people who were unemployed, between jobs or about to start a new job when the first furlough came in on March 19 last year; the newly self-employed and new businesses; the self-employed with either low profits; those in less than 50 per cent self-employment and those on parental leave.
Earlier this week Mr Sunak today hinted furlough could be extended again as he announced another £4.6billion of bailouts for lockdown-stricken businesses – with economists warning of the ‘colossal’ hit from the surging pandemic.
The Chancellor declared that venues hammered by Boris Johnson’s dramatic decision will get one-off grants of up to £9,000 to keep them afloat over the next seven weeks.
Some 600,000 premises across the UK are set to receive the cash, while another £594million is being pumped into a ‘discretionary fund’ to support other firms affected.
Despite the running costs of the coronavirus response spiking above £300billion, Mr Sunak also pointedly refused to rule out keeping the massive furlough scheme beyond the end of April, merely saying he would ‘take stock’ at the Budget in March.
However, businesses warned that the package is not enough, amid pressure for VAT and rates relief to be kept in place to stop a wave of bankruptcies.
The latest huge intervention came amid fears that the lockdown will slash GDP by up to 10 per cent in every month it is imposed – although the respected IFS think-tank said this morning that the impact might be lower as businesses have adapted since the first squeeze in March.
It will also raise alarm at the state of the government’s finances, with IFS director Paul Johnson saying the scale of the economic damage was the worst ‘in the whole of history’. Public sector borrowing could hit £400billion this year, with Mr Sunak already having warned of a reckoning later to balance the books.