CORONAVIRUS UPDATE– BUSINESS NEWS 26.10.2020
Chancellor increases support measures
The chancellor of exchequer, Rishi Sunak, has announced increased support measures for businesses.
Addressing the House of Commons, 22 October, chancellor Sunak confirmed changes to the Job Support Scheme, which replaces the furlough scheme on 1 November, as well as more favourable business grants and grants for the self-employed.
With regards to the Job Support Scheme, employers paying a third of their employees’ wages for hours not worked and required employers to be working 33% of their normal hours. The new scheme is available to all businesses regardless of Tier which can demonstrate massive loss of income.
However, updated rules now reduce the employer contribution to those unworked hours to 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible.
HM Treasury noted: “If someone was being paid £587 for their unworked hours, the Government would be contributing £543 and their employer £44.”
The government will provide up to 61.67% of wages for hours not worked, up to £1,541.75 per month, which more than doubles the maximum payment of £697.92 under the previous rules. The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.
Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme Closed for businesses legally required to close remains unchanged.
Chancellor Sunak confirmed additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector which may be adversely impacted by the restrictions in high-alert level areas (Tiers 2 and 3).
These grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for Local Authorities moving into Tier 3 which, if scaled up across the country, would be worth more than £1bn. Grants can be backdated to August.
These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs, with HM Treasury adding: “[And] many more who aren’t legally required to close but have been adversely affected by local restrictions, nonetheless.”
For properties with a rateable value of £15,000 or under, grants of £934 per month are available, while properties with a rateable value of between £15,000-£51,000 can claim £1,400 per month. Properties with a rateable value of £51,000, grants of £2,100 per month.
Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
Events businesses are advised to check with their Local Authorities.
The chancellor has also confirmed an increase of the amount of profits covered by the two forthcoming self-employed grants from 20% to 40%. HM Treasury clarified that the maximum grant will increase from £1,875 to £3,750.
Responding to the additional measures, the Association of Independent Professionals and the Self-Employed (IPSE) said that although the increase in the amount of support paid by the Self-Employment Income Support Scheme (SEISS) is welcome, there are still “deep structural problems” with the system.
Derek Cribb, IPSE’s CEO, said: “It’s welcome that the Government has doubled SEISS to 40% of previous income. However, there are still deep structural problems with the scheme, which the Government must urgently address.
“A third of the self-employed, including sole directors of limited companies and the newly self-employed, are still completely excluded from SEISS (and the proportion is even higher in the hospitality sector). This is an enormous omission and it is deeply troubling that the government has not addressed this.
“The gaps in the support have already led to the biggest drop in the number of self-employed on record: over 250,000 since the beginning of the year. With large parts of the country locking down again, this is only set to worsen as many forgotten freelancers face financial devastation. Government must act now and open up SEISS or other targeted support to these groups.”