Government announces further support for businesses
Due to rising Covid-19 infections and measures introduced to help reduce the spread of the virus such as the ‘rule of six’ and pubs closing at 10pm, the Government has announced further support for businesses which is designed to help until March 2021.
The furlough scheme ends on 31 October and it will be replaced with new financial support for businesses with staff working reduced hours. The new Job Support Scheme will be available for businesses with staff working at least one third of their normal hours but receiving 77% of their normal wage (unless hitting the cap). The scheme is open to all SMEs and to larger businesses who can show a fall in turnover. It starts on 1 November 2020 and will operate for six months.
Making up the unworked hours will be down to both the employer and the Government. In short on a basic calculation the employer will be paying 55% of a worker’s wages for an employee working a third of their hours
Other announcements include the extension of the repayment terms of the bounce back loans and CBILS which can now be extended to up to 10 years.
Bounce back loans and CBILs applications will now remain open until the end of this year and will be replaced with a new ‘successor loan scheme’ from January 2021.
Businesses which have deferred VAT payments until March 2021 can now spread payments over 11 smaller instalments with no interest penalties. Self-assessment income taxpayers can also spread payments over a 12-month window from January 2021.
The hospitality and tourism sectors receive an extension of the 5% VAT rate through to 31 March 2021 which will be welcomed by many.
Again, more welcome measures from the Government to help struggling businesses, but there will be pros and cons so it is important to be fully informed and take legal advice where necessary before making any decisions.