New national lockdown and changes to business support measures
The Prime Minister, Boris Johnson speaking at a press conference on Saturday night, 31 October 2020, confirmed widespread expectations of a second national lockdown in England to help stem the growing resurgence of the coronavirus. The Government was faced with significant concerns that if they took no action, the NHS could be overwhelmed with death rates far exceeding those seen in the first lockdown.
The four week lockdown is set to come into effect from midnight on Thursday 5 November and will apply until Wednesday 2 December 2020. This lockdown will close pubs, restaurants, entertainment venues, hotels and non-essential shops and people will be advised to work from home if possible. In a marked departure from the first spring lockdown, schools, colleges and universities will remain open. The exit strategy from this lockdown remains unclear and there are fears that the lockdown could continue beyond this period if the infection rate does not reduce significantly.
We have set out below the most up-to-date support measures available to businesses following the announcement of these new restrictions.
Coronavirus Job Retention Scheme
The Prime Minister announced that the Coronavirus Job Retention Scheme (CJRS) commonly known as the furlough scheme will be extended until December with employees receiving up to 80% of their salary for hours not worked. The exact date when the extended scheme will finish has not yet been confirmed.
The furlough scheme had been wound down over the last few months, with Government support reduced to 70% of wages in September and 60% in October before the scheme was due to come to an end on 31 October 2020. It had been announced that the CJRS would be replaced by the Job Support Scheme (JSS), a scheme that would have topped up wages for people returning to work on reduced hours. The introduction of the JSS has now been put on hold until the CJRS extension ends.
A bullet-point summary of the main details of the CJRS extension announced to date is set out below:
- People who are unable to work will receive up to 80% of their wages during the new lockdown. This payment is subject to a maximum of £2,500 per employee (for hours not worked). Employers will have the discretion to top-up the payments if they so wish.
- The scheme is expected to apply across the UK, in England, Wales, Scotland and Northern Ireland even where the regions are subject to different lockdown restrictions.
- Employers will be required to pay employer NICs and pension contributions for their employees whilst on furlough.
- Flexible furloughing, whereby employers can bring back employees to work part-time will be allowed. Employers will have to pay employees for the hours they work but can still use the scheme to cover any normal hours where employees are furloughed.
- Businesses will be paid upfront by the Treasury to cover wages costs. However, there will be a short period whilst the Government changes the legal terms of the scheme and updates the system. During this time businesses will be paid in arrears.
- To be eligible, employees must have been registered on their employers PAYE payroll by 23:59 on 30 October 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 30 October 2020.
- All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
- Further details on how to make a claim are expected to be released shortly. There will be no gap in eligibility between the previously announced end date of the scheme on 31 October 2020 and this new extension.
It has also been confirmed that mortgage payment holidays will no longer end as planned on 31 October 2020. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.
It had been previously announced that businesses in England that are forced to shut as a result of a lockdown will be eligible for grants of up to £3,000 per month payable every two weeks. Businesses will be eligible to claim after two weeks of closure.
The amount businesses will be able to claim from their local authority depends on their rateable value:
- Small businesses with a rateable value of or below £15,000 will be able to claim £1,334 per month or £667 per two weeks.
- Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month, or £1,000 per two weeks.
- Larger businesses will be able to claim £3,000 per month, or £1,500 per two weeks.
Further support for businesses
The government is providing an additional £1.1bn to Local Authorities in England, distributed on the basis of £20 per head. These payments are designed to help Local Authorities to support businesses more broadly.
Self Employed Income Support Scheme Extension (SEISS)
No further changes to support measures for the self-employed have been announced. The most recent announcement confirmed that the grants for the self-employed will be extended based on 40% of previous qualifying earnings.
The initial lump sum will cover three months of profits from 1 November 2020 calculated as 40% of average monthly profits, up to a maximum total of £3,750. The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and meet the eligibility requirements.
An additional second grant will be made available from 1 February 2021 to 30 April 2021. The level of this second grant amount is subject to review and will be set in due course.