Financial Business Support During Second Lockdown

6 November 2020
UK's second nationwide lockdown

Second Lockdown Business Support:

The new second lockdown business support measures have been announced, seeing the closure of bars, restaurants, leisure facilities and non-essential shops for the second time this year.

With the devastating financial effects the first lockdown had on businesses in March, many business owners are worried about what financial support will be offered to businesses this time around. Just hours before the furlough scheme was supposed to come to an end, and be replaced by the new Job Support Scheme, Boris Johnson announced on the 31st October 2020 that furlough would be extended until the 2nd December 2020 to provide financial support until the end of the second lockdown.

Today, as the UK has entered the second lockdown, Chancellor Rishi Sunak has confirmed that he will extend the furlough scheme across the UK until the end of March. The scheme will continue to pay up to 80% of a person’s wage up to £2,500 a month up until the end of March. Mr Sunak told the Commons that the government will review the policy in January which may result in revisions to the support on offer.

The chancellor said his intention was “to give businesses security through the winter.”

 

The Furlough Scheme has been extended

 

     

In a bid to save millions of jobs, furlough will continue to support businesses and the scheme will be reviewed in January. Payments will continue at 80% of employee’s wages, up to a maximum of £2,500 for the duration of the new lockdown measures and up until March 2021. However, employers must still cover national insurance and employer pension contributions. A person may be paid more than 80% of their wages if topped up at the business’s discretion and out of their own pocket.

As part of the revised scheme, anyone made redundant after September 23 can be rehired and put back on furlough.

Boris Johnson has apologised for the difficulty businesses will continue to face as a result of a second lockdown starting on 5th November. “That’s why we are going to extend the furlough system through November. The furlough scheme was a success in the spring and supported people in businesses in a critical time,” he said.

Mr Sunaks statement comes after the Bank of England said it was pumping an extra £150bn into the economy. In an attempt to pre-empt criticism over another U-turn, Mr Sunak said he needed to make “rapid adjustments” to the government’s economic response to the COVID-19 pandemic because of how the virus has spread.

The chancellor said the second lockdown – which was the “only viable solution left to protect our NHS” – had necessitated a change in approach.

Frances O’Grady, the Trades Union Congress (TUC) secretary has stated, “families will face a grim winter because of the delay in support.” She said: “The extension of the furlough scheme is long overdue and necessary, but ministers must do more to protect jobs and prevent poverty. Furlough pay must never fall below the national minimum wage” and “Universal Credit must be boosted, and the self-employed should not be abandoned”.

                       

      

What does this mean for the Job Support Scheme?

With the second national lockdown commencing and the announcement of the extension of the furlough scheme in place until March 2021, the Job Support Scheme has been postponed. The Job Support Scheme was announced back in September, it was designed to help support open and closed businesses due to coronavirus restrictions.

 

What support is there for self-employed people during the second UK lockdown?   

          

                

Support for self-employed people through the Self-Employment Income Support Scheme (SEISS) will also be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

Business grants up to £3,000 per month will be available to business premises that have been forced to close due to government lockdown measures. Local authorities will also receive a one-off payment of £1.1 billion, which will be used to financially support local businesses.

The director-general of the Institute of Directors, Jonathan Geldart stated, “the new restrictions will inflict great strain on an already fragile business community”. He said, “furlough would be a relief to many firms nonetheless, small company directors who have gone without the support throughout the crisis need to be helped through local authority grants,” he added.

Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed (IPSE) said, “It is vital that if the furlough scheme is extended, SEISS should be adjusted accordingly,” The IPSE added, new measures will give “vital support” to some, but accused the government of still “wilfully ignoring a third of self-employed”.

The government have announced that there will be a fourth grant, which will cover the average income for February to April 2021, however, no specific details have been given on how much this will cover or when the deadline for applying will be.

 


How can Maple Accountancy help?

At Maple Accountancy, we work closely alongside our clients to provide them with all the tools they need to manage their finances effectively. We act for a broad range of business and personal clients, and we offer a wide range of services to cover all your finance, accounting, and tax needs.

If you need help managing your business finances throughout the coronavirus pandemic and second UK lockdown, contact Maple Accountancy today. Our team of expert business advisors are more than happy to help and offer any advice we can to help you through this difficult time. To find out more about Maple Accountancy contact our friendly team on 011 341 820 78 or email us at success@maple.uk.com.

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