New raft of help measures in Government’s Covid-19 Lockdown 2.00 support package
27 November 20  /  Insights

Following the Prime Minister’s announcement that a further national lockdown would take place, the Chancellor, Rishi Sunak confirmed details of a further support package designed to protect jobs and help businesses through the uncertain months ahead.
 
This includes extending the Job Retention Scheme, also known as ‘furloughing’, to the end of March 2021, postponing the Job Support Scheme until the furlough scheme ends, extending the Self Employment Income Support Scheme, introducing a 15% VAT cut for the hospitality and tourism sectors, and providing help for businesses in repaying government-backed loans. Here, we take a closer look at some of the new levels of help available:
 
Job Retention Scheme (JRS)

The JRS is now extended to provide support to businesses and employees until 31st March 2021.  The level of support available mirrors that provided earlier, with the Government paying 80% of wages for hours not worked, up to a cap of £2,500, and employers paying National Insurance contributions and pension contributions for those hours. The furloughing scheme applies to those employed on a full or part time basis.  
 
While most of the scheme rules remain the same, notable changes include:

  • Neither employer or employee needs to have previously used the JRS - the scheme is available for employees on the employer’s payroll by 30th October 2020
  • In view of the late notice of the JRS extension, retrospective furlough agreements are allowed up to and including 13th November 2020

The Job Support Scheme, which was meant to commence on 1st November 2020 has been postponed until the furlough scheme ends in March 2021 at the earliest. For Government guidance, (click here).
 
Self Employed Income Support Scheme (SEISS)

The SEISS has been extended to support self-employed individuals experiencing reduced demand or unable to trade, with the grant now paying 80% of trading profits, for the period November to January, for all parts of the UK. This is calculated based on 80% of 3 months’ average trading profits for the last three years, paid out in a single instalment and capped at £7,500. A further grant will follow, covering February to April, with the Government yet to review the terms. To apply for a SEISS grant, please (click here).

Business Grants

Businesses in England that are forced to close due to national or local restrictions will receive up to £3,000 per month. This is worth over £1 billion a month with the new restrictions in place, and will benefit over 600,000 business premises. It means that 90% of small and medium sized business premises in the closed Retail, Hospitality and Leisure sectors should broadly have their monthly rent covered by these grants.
 
Businesses in the hospitality, leisure and accommodation sectors that suffered from reduced demand due to local restrictions introduced between 1 August and 5 November will receive backdated grants at 70% of the value of closed grants, with funding  based on the property’s rateable value (RV). For properties with an RV under £15k grants of £1,334 per month are available, for those with an RV £15k - £51k grants of £2,000 per month are available and for those with RV of £51k or above, grants of £3,000 per month are available. Local Authorities have the freedom to determine eligibility criteria in their local areas.  For support, apply to your Local Authority.
 
Latest announcements allow for a 100% business rates discount for all retail, leisure and hospitality venues, with no limit to Rateable Values.
 
Bounce Back Loans

As some businesses didn’t anticipate the disruption to their business would go on this long, the application deadline for loan schemes, including the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme, has been extended to the end of January 2021. This will give businesses two extra months to make loan applications. Bounce Back Loan Scheme rules have also been adjusted to allow those businesses who have borrowed less than their maximum to top up their existing loan. Businesses can make use of this option once.
 
Under the Bounce Back Loan scheme, any business can borrow between £2,000 and £50,000 (up to 25% of turnover) with cash available within 24 hours approval. The borrower does not need to make repayments for the first twelve months, and the Government will cover the first 12 months’ interest payments. For the rest of the period, the interest rate is set at 2.5% per annum. Loan terms are up to 6 years, with early repayment allowed and no early repayment fees.
 
To apply go to, (gov.uk)

For British Business Bank guidance, please (click here).

Coronavirus Business Interruption Loan Scheme (CBILS)

The application to apply for a CBIL has been extended to 31st January 2021 and is available for UK businesses with a turnover of up to £45m, operating within an eligible industrial sector. The lending scheme is managed through the British Business Bank, with loans available from £1,000 up to £5m per company, with the Government meeting interest costs for the first 12 months.
 
The scheme provides the lender with a Government-backed guarantee against 80% of the outstanding facility balance, potentially  turning a ‘no’ credit decision from a lender to a ‘yes’. CBILS now supports lending to smaller businesses, even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the Business Interruption payment. No personal guarantees for facilities under £250,000 required. For further details, please visit the British Business Bank website, (click here).
 
Future Fund

Support for innovative UK companies is provided through the Coronavirus ‘Future Fund’. This scheme issues convertible loans between £125,000 and £5 million to innovative companies facing financing difficulties due to the coronavirus outbreak. More funding has now been made available, with plans to extend the scheme until January, and the scale of the fund will be kept under review.
 
Delivered in partnership with the British Business Bank, the convertible loan agreement is predefined and cannot be negotiated. Funding must not be used to repay borrowings or pay dividends, bonuses or advisory fees. 8% annum interest charge applies, with the loan to mature after 36 months and repayment only on agreement. For Government guidance, (click here).
 
Retail, Hospitality and Leisure Businesses Grant (RHLGF)

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.Eligible businesses in these sectors with a property that has a rateable value of up to and including £15,000 will receive a grant of £10,000. For details, please (click here).
 
Mortgage Holidays

Mortgage payment holidays are being extended for homeowners financially affected by the pandemic. Borrowers who have not yet had a mortgage holiday can request from their lender a pause in repayments  for up to six months. Those who have already deferred their payments can extend their mortgage holiday until they reach the six-month limit. During this period, interest will still accrue on what borrowers owe. A recent study by the Joseph Rowntree Foundation found that a fifth of all British mortgage-holders were worried about paying their mortgage over the next three months. Those who have already reached the maximum six month mortgage holiday who are still facing difficulty making repayments are advised by the FCA to speak to their lender about a tailored support plan.
 
Statutory Sick Pay (SSP)

SSP is now payable to qualifying employees from day 1 for those who self-isolate or are unwell because of Covid-19. (The first 3 days are normally unpaid.) The current rate of SSP is £95.85 per week. For information, (click here).
 
VAT Deferral

VAT payments due from businesses between 20 March 2020 and the end of June 2020 can be deferred until the end of the tax year. For Government Guidance, (click here).
 
Stamp Duty Holiday

Stamp Duty Land Tax rates have been reduced for the purchase of residential properties made from 8 July 2020 until 31 March 2021. The 'nil rate' threshold, below which no SDLT is due, has been increased from £125,000 to £500,000 for purchases with an effective date within the applicable period. Above the 'nil rate' threshold, the existing rates continue to apply. For details, (click here).
 
Help available

For the latest information on help available for businesses during the pandemic, please refer to the official Government website, (click here).

If this article has highlighted the need for an accountant, legal or financial support, or assistance with corporate finance or banking, we are happy to introduce you to our connections, so please get in touch. Either call us on 01865 208 000 or email us at: info@mathewscomfort.co.uk
 
Safe wishes to all our clients and friends.

Sources:
 
Bird & Bird - An overview of the UK government financial package for COVID-19 relief
Bird & Bird - Covid-19 UK government financial package
Gowling WLG - COVID-19: Back to the future: CJRS Extension Q&A - updated guidance and Treasury Direction
Conservatives - 4 Ways this Government is Supporting Businesses this Winter
BBC News - Mortgage holidays extended for up to six months

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