COVID-19 – Business Support – Further Government Support Through to March 2021

Posted by on Nov 6, 2020 in Uncategorized | No Comments

The week started with the last-minute reprieve of the Job Retention Scheme for November and ends with the scheme being extended through to March 2021.

The Chancellor has announced that, for December and January, the scheme will continue to cover 80% of an employee’s current salary for hours not worked, up to a maximum of £2,500.  Flexible furloughing will continue to be allowed in addition to full-time furloughing.  The employer will remain responsible for the National Insurance and pension contributions for hours not worked along with the full costs of hours worked.

The Government will review the landscape in January to determine whether an additional employer contribution would be appropriate.

As well as providing much-needed certainty for those businesses severely impacted by COVID-19, this also offers a lifeline for businesses that suffer turbulence from Britain leaving the European Union on currently unspecified terms on 31st December.

In a major change, employees that were employed and on the payroll on 23rd September 2020, which was the day before the Job Support Scheme was unveiled, and were then made redundant or stopped working can be re-employed and furloughed.

The Government also announced increased support under the third instalment of the Self-Employment Income Support Scheme, with people receiving 80% of average trading profits for the November to January period.  The online service for this grant will be available from 30th November 2020.

There will be a fourth grant covering February to April 2021 and the Government will set out further details, including on this in due course.

It is important to remember that these grants are taxable income and also subject to National Insurance contributions.

Whilst this is welcome news for those already on the scheme, to qualify for this third tranche, 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); and
  • declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to COVID-19; or
    • were previously trading but are temporarily unable to do so due to COVID-19.

This means that the original eligibility criteria remain the basis.  These being that the individual:

  • submitted their Self-Assessment tax return for the 2018-19 tax year;
  • continued to trade in 2019-20 and intend to keep trading in 2020-21;
  • carry on a trade which has been adversely affected by COVID-19; and
  • have average self-employed trading profits of no more than £50,000 and at least equal to their non-trading income.

It seems extraordinary and, quite frankly, shameful that those groups that have fallen through the cracks continue to remain on the outside.

The individual who started their self-employment after the 2018-19 tax year, the freelancer working through their limited company and many small business owners are left neglected other than, potentially, access to Universal Credit.

Given that that the filing deadline for the 2019-20 Self-Assessment falls within the period of the third grant, it is inexplicable to why it cannot be used as the eligibility base.

As well as those who started trading in the 2019-20 tax year, this would also extend the level of support two other groups.  Those whose self-employment income has declined to below the £50,000 average threshold in the year and those who started their self-employment part way through the 2018-19 tax year.

Whilst the Job Retention Scheme is a vital lifeline for many small businesses, the stark reality is that those business owners whose remuneration had been driven primarily through dividends and whose business has been crushed by COVID-19 are getting no tangible personal support.  One wonders how many of these businesses will survive into the spring.

In other announcements:

  • the Job Retention Bonus will not be paid in February 2021 and will instead be redeployed at the appropriate time after the Job Retention Scheme ends;
  • the application deadline for the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Future Fund, and Coronavirus Large Business Interruption Loan Scheme has been extended to the end of January 2021; and
  • the Bounce Back Loan Scheme rules will be adjusted to allow those businesses who have borrowed less than their maximum (the lower of £50,000 or 25% of their turnover) to top-up their existing loan from next week. A business can make use of this option once.