In November, the government announced a number of changes and extensions to existing financial support for businesses. Much of the detail has still to be set out (and even the headline support is changing on an almost daily basis), but a summary of what we do know is set out below.
You should regularly check the Gov.uk website or speak with your client manager at R T Marke & Co Ltd to keep fully up to date
Coronavirus Job Retention Scheme (CJRS or “furlough”)
This scheme was due to be scrapped by the end of October, but has now been extended until 31 March 2021.
The rules have changed slightly, with currently 80% of gross wage costs (but not Employers’ National Insurance or Workplace Pension costs) being paid by the government for hours not worked.
The 80% support rate will definitely continue until January, and then be reviewed based on economic conditions, when employers may be asked to contribute more.
The scheme is flexible, i.e. employees can be fully furloughed or work part time while being partly furloughed.
To qualify, employees must have been on the payroll at 31 October 2020.
The official guidance can be found here and we expect this to be added to over the coming weeks: https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme
Note that the previously announced “job retention bonus” of £1,000 for previously furloughed employees still retained, now appears to have been withdrawn as a result of this announcement.
If you have employees who you do not currently have sufficient work for, consider utilising this scheme to save your business money.
Self Employed Income Support Scheme (SEISS)
This scheme has now been extended, with the extension providing two further grants, each available for 3 month periods covering November 2020 to January 2021 and February 2021 to April 2021
To be eligible for the grant extension self-employed individuals, including members of partnerships, must:
- have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- declare that they intend to continue to trade and either:
– are currently actively trading but are impacted by reduced demand due to coronavirus
– were previously trading but are temporarily unable to do so due to coronavirus
The first of these grants will cover a 3 month period from 1 November 2020 until 31 January 2021. The Government will provide a 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%.
The second extension grant will cover February 2021 to April 2021, but full details, including the amount, have yet to be announced.
The online service for claiming these grants is expected to be available from 30 November.
Note these are non-repayable grants, so “free money” for those eligible. Do not miss out if you think you may be entitled.
Further details can be found here https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension
Business grants – more “free money”
Grants are available for businesses forced to close their premises due to the lockdown. The amount you can claim is based on the rateable value of your business premises, with three monthly levels.
These grants will be administered by Local Authorities, so have a look at your District Council website or contact them for more details.
We understand that any business which is forced to close their premises due to the lockdown should be eligible so act now to avoid missing out.
In addition, local authorities are likely to be given additional funding to support certain businesses which are not legally obliged to close, but still affected by restrictions. Again, contact your District Council to see exactly what support you could be eligible for.
Interest free “Bounceback” loans
We are still speaking with businesses who are unaware of these – again don’t miss out! These loans, which are for amounts between £2,000 and £50,000 and are interest and repayment free for the first 12 months. More detail on the loans including eligibility criteria can be found here: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
As we have said previously, because of the ease of application, and the fact that they are interest and repayment free for 12 months, we strongly recommend that all businesses who have been impacted in some way by the Coronavirus consider applying, even if they do not currently foresee a significant problem with cashflow.
The gradual withdrawal of government support expected in the New Year, combined with deferred tax payments falling due and possible ongoing local lockdowns and other restrictions means that cashflow could be very tough for some businesses during 2021 even though their sales are returning to previous levels.
If a business takes out one of these loans and is then fortunate enough not to require it, it can simply be paid back next year before interest becomes chargeable.
Fraud warning
A reminder that sadly, fraudsters have viewed the Coronavirus as an opportunity to profit at the expense of both the Government and businesses. We have seen examples of quite realistic looking e-mails purporting to be from HMRC and referring to the VAT deferral scheme. No doubt others covering the various other Government support schemes will follow, so as ever if you are in any doubt whatsoever, contact your client manager at R T Marke & Co Ltd before opening an e-mail, and certainly before clicking on any links contained in it.
Other support
If you would like to chat through all of the available support which may apply to your business, please do contact us – we are here to help and support businesses get through these unprecedented times.
Action Points:
• If you are self-employed and your business is still adversely affected by the coronavirus, check your eligibility for SEISS grant support
• Consider whether you have employees you want to retain but do not currently have full time work for. If this is the case, consider furloughing them, to save money, even if they haven’t been previously furloughed
• Contact your Local Authority for the latest information on what business support grants you may be eligible for
• Consider applying for an interest free Bounceback loan as a safety net even if you don’t currently foresee cashflow problems.
• Update your business forecasts to cover the next 12 months, including payment of any taxes deferred and repayments of any new loans taken out
Keeping up to date
We are also providing regular news and updates on COVID-19 support via our App. If you do not already have this, please download now from the Playstore or iTunes – search for “MyAccountants” (all one word) then enter our office postcode EX392AT (no space) when prompted for a password.
If you have any questions on any of the points above, or have any other questions or concerns you would like to discuss, please call your client manager.
Please stay safe and well.