As the country prepares to enter its second national lockdown from Thursday 5th November 2020, the government have announced changes to the financial support available to those effected.
Job Support Scheme postponed and Coronavirus Job Retention Scheme to continue for November 2020
You could be forgiven for losing track of what support measures are available for Employers and Employees as the Job Support Scheme (JSS) which was set to replace the Coronavirus Job Retention Scheme (CJRS) from 1 November had already been amended to increase the amount of support the government were contributing and the amount that employees could expect to receive for the hours they were not required to work. There were also different measures bought in for those businesses that were open (but with reduced demand) and those that were closed (for example because they were in a Tier 3 area). As this scheme will now no longer come into effect until 2 December (in theory!), we will provide a more definitive guide to this scheme once the upcoming lockdown has ended and there is clarity on how this scheme will in fact operate post-lockdown 2.0.
Instead, it has been announced that the Coronavirus Job Retention Scheme (where employees are furloughed from work) will continue for November 2020. Employees will receive 80% of their salary for hours not worked, up to a maximum of £2,500. Employees will be able to work on a part-time basis, with the CJRS scheme covering hours that they are unable to work, and employers paying for hours worked as usual.
The Government will fund the furlough salary up to the caps discussed above, with employers paying the Employer’s National Insurance and pension contributions in full. It does not matter if the employee or employee has not been part of the CJRS before, they will still be eligible for the November 2020 scheme. Employees must be on an Employer’s payroll by 30 October 2020, and on a submission made to HMRC made on or before this date.
Additional support for Self-Employed
The Government have announced two further extensions to the Self Employed Income Support Scheme Grant, with a grant available for the three month period to January 2021, and the three months to April 2021.
November 2020 – January 2021 Grant
This grant will cover 55% of average trading profits for three months, up to a maximum of £5,160. This has increased from the previously announced grant of 40% of trading profits as the Government have increased the grant for the month of November to 80% (meaning the average grant for the entire three month period is now 55% rather than 40%).
February 2021 – April 2021 Grant
The Government have said that they will review and confirm the level of this grant in due course – we assume based on what type of restrictions are in place at the time.
How to claim?
To be eligible for the extension grants, self-employed individuals or members of partnerships must:
- Have been eligible for the previous SEISS grants (see our article here for the original criteria) even if they did not claim the grant
- Declare that they intend to continue trading and are currently: either actively trading but impacted due to reduced demand because of Covid-19 OR were previously trading but are temporarily unable to do so because of Covid-19
An online application service is expected to be available from 30 November 2020 and further guidance will be provided in due course.
Business Grants available
If your business is required to close due to local or national restrictions, your business will be eligible for business grants of between £3,000 - £15,000 per month (depending on the rateable value of the business property). These grants were originally expected to apply in local lockdown situations, however this has been expanded due to the national lockdown coming into force on 5 November 2020 and updated guidance is expected soon. In the meantime, businesses should visit their local council’s website for details of how to apply.
Financing
The deadline for applying for a Coronavirus Bounce Back Loan or a Coronavirus Business Interruption Loan (CBIL) has been extended to 31 January 2021 from the previously announced 30 November deadline.
Coronavirus Bounce Back Loan
As a reminder, these are loans of up to £50,000 that the majority of UK businesses will qualify for if they were established before 1 March 2020 and have been impacted by coronavirus. The loan is for six years although borrowers have the choice to repay early without financial penalty. The loan is interest and fee-free for the first 12 months, with a 2.5% interest rate applying after the initial 12 month period. Businesses should apply to their bank for the loan if they have not already done so.
Coronavirus Business Interruption Loan (CBIL)
CBILS are available to UK businesses for loans and finance up to £5 million, and the first 12 months are fee and interest-free. There are a panel of lenders offering different forms of finance under a CBIL, although the application process is more detailed than for a Bounce Back Loan. If you are considering applying for a CBIL, please speak to your usual Charter Tax contact who can provide more detailed support for your business needs.
A Reminder – VAT payment deferrals
As explained in our previous website update, for those businesses that deferred previous VAT liabilities to 31 March 2020, you now have the option of arranging an interest free payment plan to spread the payments over the period to 31 March 2021. You will need to opt-in to the scheme, and further details are expected in due course.
As ever, we will provide further updates as more guidance is issued, but if you have any questions on the support available please get in touch with your usual Charter Tax contact who will be happy to help.
