Jack and Darren write with an important update: Over the weekend, the Prime Minister announced a second National lockdown in England. Although less draconian than the spring lockdown, it will no doubt be news that no-one wants to hear. The announcement makes clear that it is to be a 4 week lockdown, from this Thursday 5th November to Wednesday 2nd December, and once again non-essential shops, pubs, restaurants and cafes have been ordered to close.
Most clients who have been accessing the furlough scheme (known as the Coronavirus Job Retention Scheme or CJRS) will know this was originally due to finish on 31st October, however it has now been extended for the month of November, and moreover it has been reinstated back to an earlier, more-generous version of the scheme (i.e. the “August version”).
Main points on the reinstated CJRS (“furlough”):
- Employers will receive support from the Government covering 80% of qualifying pay (up to a maximum of £2,500 per month), which is the same as the version of CJRS which existed in August (therefore more generous for employers than it was in October).
- Employers will only be asked to cover National Insurance and employer pension contributions.
- Employers small or large, charitable or non-profit, are eligible for the extended CJRS arrangement, without needing to meet wider eligibility criteria (i.e. like JSS required).
- To qualify, employees need to have been on the payroll since 30 October 2020. Businesses not previously using the CJRS scheme may claim this time round. This should still include directors as before (but as before still doesn’t cover dividends).
- Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time (like Flexible Furlough).
- The Job Support Schemes (JSS) – as announced in our earlier blogs – is now postponed until the furlough scheme ends.
Grants from the Council
- Additionally, business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant.
- These will be the same as the already-announced “tier 3” grants which from Thursday will apply to all businesses ordered to close and are as follows:
- Grants for Tier 3 Closed Businesses Properties with a rateable value of £15,000 or under will receive grants of £667 per two weeks of closure (£1,334 per month)
- Properties with a rateable value of over £15,000 and less than £51,000 will receive grants of £1,000 per two weeks of closure (£2,000 per month)
- Properties with an rateable value of £51,000 or over will receive grants of £1,500 per two weeks of closure (£3,000 per month).
- We understand these grants will be available from your local council and can be applied for online via each council’s website.
- Discretionary grants: We also understand each council has been allocated funds to provide discretionary grants. These apply not just to businesses with premises, but also to other businesses in trouble who do not have premises nor connected to the hospitality, accommodation or other sectors ordered to close. Our understanding is that the council may award businesses a grant in spite of other grants having been received (or even not received).
- Self Employed Grants have been extended for 6 months, paid out in 2 lump sums; the first one the Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total. The 2nd instalment (Feb 21- Apr 21) is still to be set/agreed. This is already previously set out by the government. We wait to find out if this rate (40%) will be increased to be brought in line with the 80% furlough. .
- Mortgage holidays extended for 6 months, with no record on your credit file.
- A “pay as you grow” scheme was announced for businesses, allowing them to extend their bounce-back loans from six to 10 years, reducing their payments. Businesses can also move to interest-only payments or suspend repayments for six months if they are “in real trouble”. Credit ratings will be unaffected
- The government guarantee on Coronavirus Business Interruption Loans will be extended to 10 years and a new successor loan guarantee programme will be announced in January
- For restaurants and hospitality, the temporary reduction of VAT from 20% to 5% will remain in place until 31 March 2021
- Extra support has been announced to allow people to delay their income tax bill (arising from their 2020 tax return usually due on 31st January) – but it will still need to be paid. The chancellor said that those with tax debt of up to £30,000 will be able to set up a payment plan over 12 months to January 2022.
Please continue to stay safe and well during these challenging times.