COVID-19 Government Initiatives
Published on: Tuesday, 10 November 2020
Over the past few weeks, it has been hard to keep up with the governments various announcements and new measures to help businesses during the ongoing COVID-19 pandemic.
At the end of September, the Chancellor Rishi Sunak published his Winter Economy Plan which set out the end date of the Corona Virus Job Retention Scheme (CJRS) and its replacement: The Job Support Scheme (JSS). He also confirmed the extension of the Self-Employed Income Support Scheme (SEISS) and the deferral of qualifying VAT and self-assessment tax payments.
Last week we were met with a raft of updates, changes and new initiatives to support individuals and businesses mitigate the serious impact of COVID-19. The start of the week saw the re-introduction of the CJRS and SEISS schemes for November; extensions to application deadlines for the various loan schemes (CBILS and BBL’s) and further cash grants to help combat the UK’s second national lockdown that started on 5 November.
We have set out below our summary of all existing and new measures, some of which will be useful for you and some which may not impact you directly at this time.
CHANGES TO EMPLOYMENT SUPPORT
The Chancellor has postponed the introduction of the Job Support Scheme and confirmed that Corona Virus Job Retention Scheme would be extended until the end of March 2021.
This means that furloughed employees will receive 80% of their usual salary for hours not worked up to a cap of £2,500, for the next five months. Employers will have to pay employer National Insurance Contributions and pension contributions. Flexible furloughing will still be allowed in addition to full-time furloughing.
Changes to Eligibility:
- To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020.
- Neither the employer nor employee needs to have previously used the CJRS.
- Employers are advised that they will be able to claim either shortly before, during or after running their payroll. There will be a short period initially when the online claims service will be closed whilst the system is updated therefore, employers will be able to claim in arrears for that period that they are unable to access the system.
As before, a written confirmation of new employment agreement must be issued and kept.
The Job Retention Bonus will no longer be paid in February 2021 as a result of the extension of the CJRS. The government have confirmed that a retention incentive will be deployed at an appropriate time in the future.
SELF-EMPLOYMENT INCOME SUPPORT SCHEME EXTENSION
The Self-Employment Income Support Scheme grant extension provides critical support to the self-employed in the form of 2 further grants, each available for 3 month periods covering November 2020 to January 2021 and February 2021 to April 2021.
Unlike the CJRS, the SEISS eligibility criteria have not changed. Unfortunately for those who were not eligible for the first or second grants, they will still be unable to receive any additional support from the government.
The third grant will cover a 3 month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%. Crucially the next grant will be available from 30 November 2020 which is earlier than expected.
The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course.
We expect that taxpayers will continue to make claims using the online service in the same way as the first and second grants.
FINANCIAL SUPPORT FOR LOCAL BUSINESSES
An additional lockdown grant scheme was announced in September for businesses in England with property that has a rateable value and that are required to close due to local or national lockdown restrictions. Those that qualify under the criteria below will be eligible to receive cash grants. This scheme aims to help businesses that were open as usual prior to local or national restrictions, were providing services in person to customers from the business premises and who are closed for at least two weeks by local restrictions, or closed by national restrictions from November.
Support will be received for every two weeks the business is closed, and this will be paid every two weeks. For businesses with properties with a rateable value of £15,000 or under, grants of £1,334 per month are available for those that have been required to close due to lockdown restriction. For properties with a rateable value of between £15,000 and below £51,000 there is £2,000 per month for those closed. For properties with a rateable value of over £51,000, there is £3,000 per month available.
Local Authorities will also receive additional top up funding from the government to enable them to help businesses affected by closures which are not on the business rates list. We would urge you to check to see if you are entitled even if you do not think you qualify.
Local Authorities will be responsible for distributing the grant and may determine further eligibility criteria. We would recommend checking your Local Authority website for more details.
CHANGES TO FINANCE SCHEMES
The government is extending the four temporary loan schemes for a second time to 31 January 2021. This includes the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large
Business Interruption Loan Scheme (CLBILS) and Future Fund.
Bounce Back Loan Top up
If you already have a Bounce Back Loan but borrowed less than you were entitled to, from 10 November you can top up your existing loan to your maximum amount (being 25% of your turnover up to a maximum of £50,000). You must request the top-up by 31 January 2021.
Mortgage Payment Holiday Extension
Back in March the Chancellor announced that mortgage lenders would offer mortgage payment holidays of up to 3 months for those in need. As the crisis developed this was later extended until the end of November.
Following the Prime Ministers announcement on 31 October that England would enter a second national lockdown, the Mortgage Payment Holidays scheme has subsequently been extended beyond November 2020. Under the new rules, anybody who is in financial difficulties due to COVID-19 and has already taken advantage of the original maximum six month payment holiday can apply for a further three month holiday with their lender (this applies whether the six month holiday is still running or the borrower has resumed payments).
Borrowers that have not yet requested a payment holiday can also request a six month holiday. All new payment holiday requests must be made by 31 January 2021.
As before buy-to-let landlords can take advantage of the above but it should be remembered that, for all borrowers, interest will still accrue on the mortgage sum while the payment holiday is in place.
For a full transcript and further sources please follow the links below:
- https://www.gov.uk/government/news/government-extends-furlough-to-march-and-increases-self-employed-support Published 5 November 2020
- https://www.gov.uk/government/news/government-increases-support-for-self-employed-across-the-uk Published 2 November 2020
Finally, the government have now released an interactive “Business Support Finder” that highlights the assistance you may be entitled to after answering several questions about your business. A link to this is here:
As always please contact us if you have any queries or wish to discuss any of the measures set out above.