To support businesses through the pandemic during the winter months, a number of government programmes have recently been extended or replaced by a new scheme. To help you wrap your head around the details, we have drawn up an overview of the key government business support packages as announced on Monday 12th October 2020.
Job Support Scheme
This is designed to protect viable jobs in businesses who are facing lower demand due to COVID-19. It will run for six months, from 1 November 2020 until April 2020, and will replace the furlough, or Job Retention Scheme (JRS), which ends on 31 October 2020. In order to support only “viable” jobs, employees must be working at least one-third of their usual hours. For hours worked, the employer will continue to pay the wages of the employee. For every hour not worked by the employee, both the government and employer will each pay one third of their hourly wage. The government’s contribution is capped at £697.92 a month.
All employers with a UK bank account and UK PAYE schemes can claim the grant, and it is not necessary for the employer or the employee to have previously used the JRS. Whilst large businesses will need to meet a financial assessment test, SMEs will not have to.
In addition to this, as part of the scheme firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work. In this instance, the government will pay two thirds of each employees’ salary, up to a maximum of £2,100 a month.
Jobs Retention Bonus
This is a £1,000 one-off taxable payment to you (the employer), for each eligible employee that a business furloughs and keeps continuously employed until 31 January 2021. This bonus can be claimed between 15 February 2021 and 31 March 2021. It is designed to sit alongside the Job Support Scheme.
Self-Employment Income Support Scheme
This grant will be extended for self-employed individuals who are actively continuing to trade, but are facing lower demand due to Covid-19. This will come in the form of two grants and will last for six months. The first grant, which covers the period from the start of November 2020 until the end of January 2021, will be paid in a single instalment covering 20% of average monthly trading profits, for three months’ worth of profits. This will be capped at £1,875 in total. The second grant will cover a three-month period from the start of February 2021 until the end of April 2021, though the details around the level of the grant have not yet been set by HMRC. Both grants are subject to Income Tax and National Insurance Contributions.
Coronavirus Business Interruption Loan Scheme (CBILS)
The deadline for application has been extended until the end of November 2020, and the length of repayment has been increased from six years to ten. Through this scheme, small and medium-sized businesses can access loans and other kinds of finance up to £5million, with the government guaranteeing 80% of the finance to the lender and paying interest and any fees for the first year.
Bounce Back Loan Scheme (BBLS)
The application deadline for BBLS has also been extended to the end of November 2020, and the length of repayment has been increased from six years to ten. Through this scheme, SMEs can borrow between £2000 and up to 25% of their annual turnover, up to a maximum of £50,000. The government guarantees 100% of these loans, in addition to any fees or interest for the first year. After this, an interest rate of 2.5% a year will apply.
You cannot apply for a Bounce Back Loan if you have already claimed under the Coronavirus Business Interruption Loan Scheme (CBILS). However, loans of this kind up to £50,000 can be transferred to a Bounce Back Loan, providing you arrange this with your lender before the end of November 2020.
It’s important to remember that both CBILS and BBLS are government measures designed to encourage banks to offer the loans – borrowers are still responsible for 100% of the outstanding debt.
As you can see, there are a range of government business support packages available to help you navigate the coming winter months, and there’s still time to apply if you haven’t done so already.
We’re Here To Help
Of course, MCC Accountants are always here with expert guidance for SMEs and business owners in Manchester and Salford. As small business accountants Manchester, we offer a range of packages to ensure your financial considerations are kept in check during these unprecedented times. Through our Government Support Review service, for example, we will help you navigate the necessary paperwork, and work alongside accredited lenders, to give you the best chance of securing the required loan payments.
To find out more, get in touch on 0161 707 1500. Whatever you choose to do, we wish you the very best of luck.