New Financial Support Measures Announced

New Financial Support Measures Announced

The Chancellor, Rishi Sunak, has delivered his third major statement to the House of Commons in less than a month. This followed the Winter Economy Plan on 24 September and further announcements on 9 October that expanded the scope of the Job Support Scheme and introduced new grants for businesses forced to close because of local or national lockdown measures.

In his third statement delivered on 22 October, the Chancellor has significantly revised previously announced measures to help protect jobs across the UK whilst the country faces a fresh spike of the virus and a winter of uncertainty.

These measures are intended to offer increased support through the existing Job Support and self-employed schemes and to expand the availability of business grants to support companies in Tier 2 areas of England.

https://www.bbc.co.uk/news/business-54644241

1. Job Support Scheme

Under the original terms of the Job Support Scheme, due to start on 1 November 2020, employees would have had to work at least one-third of their hours, paid as normal, in order to qualify. The government and employer would then each have covered one-third of any remaining hours the employee is not working.

Under the revised scheme announced today, the employer contribution to those unworked hours has been reduced to just 5% (from 33%), and the minimum hours requirements for staff has been reduced to 20% (from 33%). The Government will now fund up to 61.67% of wages for hours not worked, up to a maximum payment to £1,541.75 per employee.

These changes mean an employee will need to work just one day a week to be eligible for the scheme. The use of the scheme will be available to businesses in all alert levels.

The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.

The Job Support Scheme will replace the existing Coronavirus Job Retention Scheme (CJRS) which ends on 31 October.

2. Self-Employment Income Support Scheme Grant Extension

The Chancellor also announced that the grants for the self-employed are to be doubled to 40% (from 20%) 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 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.

3. Business grants

The Chancellor also announced an extension to the business grant measures previously announced for businesses in England that are forced to shut as a result of lockdown measures.

This extension to the scheme could benefit some 150,000 businesses in the hospitality, accommodation and leisure sector who are not legally closed but who are severely impacted by Tier 2 restrictions in England. These grants can be backdated to August in affected areas.

These businesses will be eligible for cash grants of up to £2,100 per month. The grant figures are based on 70% of the grant amounts (up to £3,000) provided to businesses that are closed.

The amount affected 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 £934 per month.
• Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £1,400 per month.
• Larger businesses will be able to claim £2,100 per month.

It will be up to Local Authorities to decide exactly which businesses are eligible to receive the grants. Local Authorities will also receive a 5% top up to help other affected businesses.

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