While news of a potential vaccine offers a flicker of light at the end of the tunnel, unfortunately, we still cannot escape the unique financial challenges that this pandemic continues to present. As such, the government has announced a raft of new business support measures – and extensions to existing schemes – to try and limit the financial fallout from the latest round of restrictions.
We’ve taken a closer look at some of those measures and how they might apply to you.
Business Support: Job Retention Scheme Extension
After the Prime Minister announced the continuation of the Job Retention Scheme (JRS) to combat the lockdown in November, the government has since extended the so-called furlough scheme until the spring.
The four-month extension means furloughed employees will receive up to 80% of their salaries (up to £2,500) until the end of March (31st). As was the case for the JRS in August 2020, employers must cover the cost of employer’s National Insurance and employer’s pension contributions. On average, that equates to around 5% of total employment costs. The government will review employer contributions to the JRS in the New Year.
This scheme only applies to those who have no work due to Coronavirus and are therefore furloughed. Any employer with a UK bank account and UK PAYE schemes can make a claim. What’s more, employers do not need to have claimed the JRS before. Eligible workers can be employed on any type of employment contract but must have been named on your company’s PAYE payroll on Friday 30th October 2020. If you wish, you can also top-up employee wages from 80% to up to 100%, but you’re not legally bound to do so.
This incarnation of the JRS will operate in the same way as the previous scheme. Flexible furloughing is permitted in addition to full-time furloughing, and businesses will get paid upfront by the government to cover wage costs.
Furthermore, as a result of the extension, qualifying employers will now NOT receive the £1,000 Job Retention Bonus in February. Instead, the government will “redeploy a retention incentive at the appropriate time”.
Business Support: Limited Company Directors
If you’re a salaried Limited Company Director, or a salaried individual who’s a Director of your own PSC, you are eligible for furlough and therefore support through the extended JRS. Please note, the 80% derives from your salary – it DOES NOT include any Dividends you draw.
Once furloughed, you should not perform any work to generate sales or revenue. Nor are you permitted to provide services to a third party on behalf of your company. If you need to carry out a particular task to fulfil certain statutory obligations owed to your company, you may do so provided you do no more than is reasonably necessary for that purpose. You’re also entitled to make a claim for yourself if you’re a Director with an annual pay period – so long as you meet the necessary conditions.
Support for the Self-Employed
The Self-Employment Income Support Scheme (SEISS) grant has also been increased – again. The November-to-January grant now covers up to 80% of average monthly trading profits (capped at £7,500).
Previously, the third grant was to cover up to 80% of average profits for the month of November, then up to 40% for December to January (capped at £5,160). We’ll get more details on the fourth grant (February to April 2021) next year.
To be eligible for this grant, you must have been eligible for the first two SEISS grants. However, you do not have to have claimed either of them. You must also:
- Be a self-employed individual or partnership and earn more than half of your income through self-employment
- Have traded in the previous tax year and ‘intend’ to continue trading in 2020-21
- Have trading profits of less than £50,000 per year
Unfortunately, those who are new to self-employment will not receive any help under this scheme. Likewise, if you pay yourself a salary and/or Dividends through your own Limited Company, you will NOT be covered by SEISS. Find out more, here.
If your business closes due to local/national restrictions in England, you’re also eligible for the following business grants:
- £1,334 per month/£667 per two weeks for properties with a rateable value of up to £15,000.
- £2,000 per month/£1,000 per two weeks for properties with a rateable value of between £15,000 and £51,000.
- £3,000 per month/£1,500 per two weeks for properties with a rateable value of more than £51,000.
Other Business Support
Other measures of support available include:
- The cancellation of any VAT increase for the tourism and hospitality sectors (currently at 5%) – until March 2021.
- Repayment extensions for VAT deferrals. Plus, a host of business loan schemes, including Bounce Back Loans and the Business Interruption Loan Scheme.
- A six-month extension to mortgage holidays, which were due to end in October 2020.
If you have a question about any of the issues discussed above, speak to your accountant today. Or, for more information on how Danbro Accounting can help your business, get in touch at firstname.lastname@example.org.