Chancellor Rishi Sunak has pledged an additional £12.5m to HMRC to begin work "immediately" on implementing breathing space.
Breathing space is set to be introduced from 2021 and will provide those in problem debt 60 days’ protection from enforcement action by their creditors and the charging of further interest and fees on their debts, including debts owed to central and local government.
There will also be additional compliance resources for HMRC, with the government confirming investment in extra compliance officers and new technology for HMRC. This investment is forecast to bring in £4.4bn of tax revenue up to 2024/25 through increased compliance activity and expanding its debt collection capabilities.
The budget also confirmed an increase in the repayment period for Universal Credit advances and reduction in the maximum debt deduction cap on the Universal Credit standard allowance. From October 2021, the period over which Universal Credit advances will be recovered will increase to 24 months, while the maximum rate at which deductions can be made from a Universal Credit award will reduce from 30 percent to 25 percent of the standard allowance.
A coronavirus loan scheme will be introduced to cover the cost of salaries and bills for small and medium sized businesses, Sunak announced.
"The government will offer a generous guarantee on those loans, covering up to 80 percent of losses, with no fees, so that banks can lend with confidence," he said.
The scheme will offer loans of up to £1.2m and will be delivered by the British Business Bank, he said.
The government will provide lenders with a guarantee of 80 percent on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £1.2m in value. This new guarantee will initially support up to £1bn of lending on top of current support offered through the British Business Bank.
"This will unlock up to £1bn of attractive working capital loans to support small businesses, with more as needed," Sunak said.
Giving his first budget, only a month after taking the post, Sunak pledged a raft of measures to help businesses and individuals deal with the impact of the Covid-19 outbreak.
He put forward a £7bn package of support for the self-employed, businesses and vulnerable people, including a business rates holiday for some of the hardest-hit sections of the economy.
"Museums, art galleries, and theatres; caravan parks and gyms; small hotels and B&Bs; sports clubs, night clubs; club houses, guest houses. They would not benefit from today’s measure – but they could be some of the hardest-hit,” Sunak said. "So, for this year, I have decided to extend the 100 percent retail discount to them as well.
"That means any eligible retail, leisure or hospitality business with a rateable value below £51,000 will, over the next financial year, pay no business rates whatsoever. That is a tax cut worth over £1bn, saving each business up to £25,000."
Sunak said he expects coronavirus to have a "significant impact" on the UK economy.
"But it will be temporary," he told parliament. "People will return to work. Supply chains will return to normal."