A VAT holiday until June and government grants to help pay workers’ wages have been announced by the chancellor as part of an additional package of measures to help the UK through the coronavirus crisis.

Rishi Sunak announced the “unprecedented measures for unprecedented times� in a speech outlining the design to help firms keep people in work.

He said: “To help businesses keep people in work, I’m deferring the next quarter of VAT payments. No business will pay VAT from now to mid-June. You’ll have until the end of the financial year to repay those bills.â€� This is a £30bn cash injection equivalent to 1.5 per cent of GDP.

Encouraging firms not to lay off workers, he announced a grant scheme to cover 80 per cent of the salary of retained workers, up to a total of £2,500 a month.

“The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March and will be open before the end of April for at least three months. There’s no limit on the funding available for the scheme, we will pay to support as many jobs as needed.â€� Full details on how to apply are expected to be announced soon.

Self-assessment tax payments have also been deferred until January 2021, while the self-employed will be allowed to access Universal Credit at a rate equivalent to Statutory Sick Pay for employees, should they need to.

The previously announced Coronavirus Business Interruption Loan scheme will now give interest-free loans for a year rather than 12 months, it was announced. Full details of the scheme and who will be eligible will be released on Monday when it opens for applications.

Sunak said: “The actions I have taken today represent an unprecedented economic intervention to support the jobs and incomes of the British people.

“Now more than at any time in our history we will be judged by our capacity for compassion. Our ability to come through this won’t be down to what government or business do but by the individual acts of kindness we show each other.â€�

Reacting to the announcement on Twitter, Civil Engineering Contractors Association chief executive Alasdair Reisner said: “Put simply, action like this is what industry was crying out for. Grants not loans to save jobs. This will save companies too.â€�

Hannah Vickers, chief executive of the Association for Consultancy and Engineering (ACE), said the measures outlined will ensure businesses can get through the short-term issues brought about by COVID-19.

She added: “With short-term issues now put to bed, focus needs to turn to the medium term and our industries’ role in the economic recovery of the nation.” The trade body has asked for a meeting with Sunak to outline how “construction and infrastructure investment remains a catalyst for growth when normality returns”.