New Lockdown, New Financial Measures
Boris Johnson addressed the nation last Saturday evening (31.10.20) to confirm a second national lockdown as a result of the failure of the tiered local approach to contain the soaring infection rates of Covid-19. The lockdown calls for restaurants, pubs, gyms and non-essential retail shops to remain closed during the period of the four week national lockdown which commences today (05.11.20) and is due to expire on 2 December 2020. Unlike the first lockdown, schools and universities will remain open.
Due to this aforementioned announcement, the Government has also announced further support to help afflicted business and households which can be summarised as follows:
- Furlough Scheme
The Coronavirus Job Retention Scheme (CJRS) or furlough scheme as it is more commonly known was due to conclude at the end of October and be replaced by the Job Support Scheme (JSS).
Over the preceding few months, the Government support under the furlough scheme has been gradually eased from initially paying 80% of employees’ wages and associated NICs and pension contributions to paying 60% of wages only in October. This in turn meant that employers payed 20% towards wages and associated NICs and pension contributions in October.
However, the announcement of the second full national lockdown has resulted in: 1) the extension of the furlough scheme until March 2021 and 2) the extension of state support, with the government again pledging to pay 80% of employees’ wages up to a maximum of £2,500.
On the other hand, in contrast to the first lockdown employers will now be expected to cover national insurance and pension contributions, which for the average claim accounts for 5% of total employment costs or £70 per employee per month.
To be eligible for the extension, employees must have been on their company’s payroll on the 30th October 2020. Moreover, employees that were on the payroll on 23 September 2020 (the day before the JSS was announced) whom were subsequently made redundant can be re-employed and claimed for.
The result of the extension of the furlough scheme means that the Jobs Support Scheme will now be put on hold until the furlough scheme finishes.
- Job Retention Bonus
The Job Retention Bonus was a one-off payment of £1,000 available for employers who successfully brought back furloughed employees and continuously employed them through to January 2021. However, the Government have now confirmed that in light of recent events, the bonus will not be paid in February 2021 and instead the incentive will be redeployed at the ‘appropriate time.’
- The Self-Employed
Government support will also continue for the self-employed who are unable to work or are suffering from reduced demand due to the coronavirus under the Self-Employed Income Support Scheme (SEISS).
Self-Employed workers will now be able to claim 80% of trading profits (from previous years) for the period covering November 2020 to January 2021. This will provide equivalent support to the self-employed as the employed through the furlough scheme as it will be paid out in a single instalment capped at £7,500.
This is now the third grant available under the SEISS and the 80% encompasses a reversion back to the terms of the first grant after the second grant was reduced to 70% of trading profits. In addition, a fourth grant is to follow for the period covering February to April.
The eligibility criteria remains the same as for previous grants. The window for claiming the third grant will open on 30 November with payment in time for Christmas.
- More support for Businesses
The Local Restrictions Support Grant, which was previously available for businesses required to shut in local tier three lockdowns, is now available for all businesses during the second national lockdown. The support a business is eligible for will depend on the businesses rateable value:
- Buildings with a rateable value of £15,000 or under can claim grants of £1,334 per month
- Buildings with a rateable value of between £15,000 and £51,000 can claim grants of £2,000 per month
- Buildings with a rateable value of £51,000 or over can claim grants of £3,000 per month.
The premise behind this support is so that businesses will have their monthly rent covered by these grants.
The Local Restrictions Support Grants will be dealt with by local authorities, so operators should consult their local council website for more information.
The government-backed loan schemes for businesses have also been extended until the end of January.
More information on the latest announcements can be found here.