Government Winter Support

On the 24th September 2020 the Chancellor, Rishi Sunak, outlined the Governments Winter Economy Plan. The measures have been enacted in response to a foreseen tightening of the lockdown announced the week before.

A new support scheme to help support staff wages, a different way to pay deferred VAT payments and alterations to help those who may struggle to pay back their bounce back loans have all been announced amongst other support measures.

Below we have highlighted the main support announced to support businesses through what will be a long winter.

This article is continually updated as more information is announced over the winter

The Furlough Scheme has been re-introduced at 80% of an employees wages up to £2,500 per month until the end of January 2021. There will be no contributions from employers for hours not worked.

Any of the following can be put on furlough, whether they work full time or part-time:

• employees
• workers
• agency workers
• those on zero-hours contracts
• apprentices

Employers can also furlough the following:

• Those shielding with an underlying health condition
• Those who are caring for a vulnerable person in their household
• Those with childcare responsibilities

The scheme will be reviewed at the end of January 2021 to determine the level of furlough given in February and March 2021.

As such, the Job Retention Bonus due to be paid in February 2021 will not be paid but redeployed at the right time.

The Self Employment Income Support Scheme (SEISS) is to be extended to cover the period from 1st November to 31st January 2021. The initial grant will be provided to those who were eligible for the first and second SEISS grant. It is for those businesses who are facing reduced demand or temporarily cannot trade.

The grant is worth 80% of your average monthly profits for the quarter of November 2020 to January 2021. This covers the quarter of November to January 2021.

An additional second grant will be available for the quarter between February 2021 to the end of April. This may be adjusted as circumstances change.

The grants are taxable income and are subject to National Insurance contributions.

The service in which to apply is now open. HMRC will contact those it believes are eligible to provide them with a specific date to apply between Monday 30 November and Friday 4 December. 

You can still apply if you have not been contacted, although the eligibility criteria are similar to the first two grants. You have until 29th January to apply.

You must fulfil the following criteria to apply:

• You must have filed a 2018/19 tax return. HMRC will base your claim on the figures submitted for that tax return.
• You must earn at least 50% of your total income from self-employment.
• Average trading profits must be below £50,000/year.
• Your business must have been and continue to be adversely affected by a coronavirus between 1st November 2020 and 31st January 2021.
• You must intend to continue to trade

Whilst claiming you can continue to work and receive Universal Credit. Whilst you did not need to apply for the first two grants, the eligibility criteria is similar in a way which will still exclude most who could not.

Local Restrictions Support Grant (Closed)

Business grants have been announced to support businesses which have been forced to close due to the new national lockdown. These can be claimed through the Local Restrictions Support Grant scheme through your local council.

The funds for these grants will be issued out to Local Authorities and will be based on the number of hospitality, hotel, B&B and leisure businesses in their area. As such, it will be up to the Local Authorities to determine which businesses will be eligible and receive the grant. Eligibility criteria will be available from Local Authorities once funds are paid.

Local Authorities will receive a funding amount that will be equivalent of (during the November National Lockdown):

• For properties with a rateable value of £15,000 or under, grants of £1,334 per month, or £667 per two weeks
• For properties with a rateable value of over £15,000 and below £51,000, grants of £2,000 per month, or £1000 per two weeks
• For properties with a rateable value of £51,000 and over, grants of £3,000 per month, or £1,500 per two weeks

Local authorities will also receive a top-up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions. This will be on the basis of £20/head of the population of the region.

Businesses in the hospitality, leisure and accommodation sectors that suffered from reduced demand due to local restrictions introduced between 1st August and 5th November will receive backdated grants at 70% of the value of closed grants up to a maximum of £2,100 per month for this period.

You can now apply for a Local Restrictions Support Grant through your local council. You must be able to confirm your business will be closed for at least three weeks. It is payable every 14-day period your business is closed.

Local Restrictions Support Grant (Open)

For businesses that have not been forced to close, operate in a Tier 2 or Tier 3 region, have been adversely affected by local restrictions and operate from a property with a rateable value.

This grant will be paid at the discretion of local councils for each 28 day period the business has been adversely affected by local restrictions.

Your business must have been established before the local Tier restrictions came into effect.

• If your business has a property with a rateable value of £15,000 or less, you may be eligible for a cash grant of up to £934 for each 28 day period.
• If your business has a property with a rateable value over £15,000 and less than £51,000, you may be eligible for a cash grant of up to £1,400 for each 28 day period.
• If your business has a property with a rateable value of £51,000 or above, you may be eligible for a cash grant of up to £2,100 for each 28 day period.

Local Restrictions Support Grant (Sector)

For businesses that were forced to close on 23rd March 2020 and have been unable to reopen since.

Eligible businesses are:

•  Nightclubs, dance halls, and discotheques
•  Sexual entertainment venues and hostess bars

Businesses will receive grants based on the following rateable values:

• rateable value of exactly £15,000 or under on the date of the commencement of the national restrictions will receive a payment of £667 per 14-day qualifying restriction period.
• rateable value over £15,000 and less than £51,000 on the date of the commencement of the national restrictions will receive a payment of £1,000 per 14-day qualifying restriction period.
• rateable value of exactly £51,000 or above on the commencement date of the national restrictions will receive a payment of £1,500 per 14-day qualifying restriction period.

Grants are available from your local council from 1st November 2020.

Additional Restrictions Grant

This grant is cover those not eligible for the Local Restrictions Support Grants. This will typically be businesses not legally forced to close but who pay no business rates.

This could include:

• businesses which supply the retail, hospitality, and leisure sectors
• businesses in the events sector
• business required to close but which do not pay business rates

The amount and availability of the grant will be up to the discretion of your local council. All applications for the grant should as such be made with them who will assess your availability.

Christmas grant for Pubs

The government has announced a £1,000 grant for ‘Wet-led’ pubs in tier 2 and tier 3 regions who will miss out on much-needed business trade.

This grant is for those pubs who predominately serve alcohol rather than food.

This will be a one-off payment in December and will be paid on top of any other grant that has been paid to the business.

A new payment scheme has been set up to accommodate those businesses who deferred VAT payments who may still be struggling to pay these bills before the deadline of 31st March 2020. This will allow those businesses
to make 11 interest-free payments for VAT during the 2021-22 financial year rather than one lump sum. This will no doubt provide some welcome relief to those who may have missed out on previous support but are still struggling to find normality.

In addition, the ‘Time to Pay Service’ has been extended to give a 12-month extension for those who deferred the July 2020 Self Assessment payment. This does not now need to be paid until January 2022. This also applies to any payments on account needing to be made in January 2021, which can also be deferred to January 2022.

The temporary 15% VAT cut for the hospitality and leisure sector from 20% down to 5% will also be extended to the end of March 2021.

The flexibility for paying back your Bounce Back Loan has been greatly expanded.

The original length of the 6-year term to repay your loan has been extended to 10 years. This will reduce the repayment value if you opt to extend the repayment period. Interest-only periods of up to six months and payment holidays will also be available to businesses struggling to make repayments.

In addition, the application period to acquire any of the government’s coronavirus loan schemes have been extended until the end of January 2021.

Businesses who borrowed less than their maximum (i.e. the lower of £50,000 or less than 25% of their turnover) can now top up their existing loan.