The information below was correct as of 5th November but the government may issue new guidance
So now the worst is upon us and the second Coronavirus national lockdown is starting today – Thursday 5th November. It will last until Wednesday 2nd December – so four full weeks of nationwide lockdown, but this time with the plan for schools and universities to remain open.
This is depressing news for businesses and employees alike. In recent months, many businesses in the hairdressing, beauty, holistic, health and fitness sectors have been able to reopen. They have been able to trade again but have been restricted by the strict virus controls and many are barely back on their feet after the losses they incurred during the first lockdown, but now they must close again.
Chancellor Rishi Sunak has stated that the lockdown will end on 2nd December “as a matter of law” but already politicians, such as Michael Gove, who was interviewed on TV on Sunday, 1st November, have said that the lockdown will continue longer if its targets are not met by the start of December.
Government announcements made in October for financial support have now been revised with the aim of continuing support during this second lockdown and the new Job Support Scheme – due to have started on 2nd November – has been postponed until the lockdown is over.
So what financial support will be available during this second lockdown?
The Coronavirus Job Retention Scheme, to give furlough its official name, was introduced back in March to prevent mass redundancies. It has now been extended until the end of March 2021. To be eligible for this, the employee needs to be advised in writing by their employer that they are furloughed. HMRC then makes payments to the employer to pass on to their staff.
Mr Sunak confirmed that the scheme applies throughout the UK, saying the country has “a Treasury for the whole of the United Kingdom”. Anyone working in a full time job (or on a PAYE basis) on 30th October can be furloughed. Employees won’t notice any difference in their pay packets compared to the first furlough scheme, but employers are set to receive more support than in recent months from the government.
In recent months, businesses were required to top up furloughed wages by 20%, and the government paid 60%. Under the new scheme, government will go back to paying up to 80% of workers’ wages, up to a maximum of £2,500 per month and employers will only be required to cover national insurance and employer pension contributions.
The new scheme will be reviewed in January to consider if the economy is recovering enough to ask employers to increase the amount they contribute towards furloughed employees’ pay.
In addition, if you are the owner or tenant of work premises, you will also now be able to apply for a business grant. The calculation of these grants is based upon the rateable value of the property you occupy and monthly payment amount ranges from £1,334 to £3,000 for the duration of the time that your business is closed due to local or national restrictions.
Local Authorities will also have additional funds to distribute to businesses via one-off payments. The Chancellor has today increased this pot of funds, meaning that more assistance will be available to businesses via their local authority.
If you are self-employed, then the news for you has improved on the 2nd November as the Prime Minster announced that self-employed workers would be able to claim support worth 80% of trading profits for the month of November only; December 2020 and January 2021 were due to be paid at 40%. But now (on 5th November) this support has again been increased to 80% per month for each of those three months, the maximum grant value being £7,500 for the three month period.
The Self-Employment Income Support Scheme Grant Extension is continuing for six months from November 2020 to April 2021 and this will be payable in two instalments – from November 2020 to January 2021, and February to April 2021. These payments will continue to be paid retrospectively, although the government is taking steps to bring forward the payment of the first grant. The level of grant payment for February to April 2021 has not yet been decided by the government.
The grants need to be applied for online and all payments will be subject to income tax and National Insurance contributions. The online service will be available from 30th November, which is two weeks earlier than the originally planned 14th December. Importantly, you are required to keep evidence to show that your income was impacted by the Covid-19 crisis and lockdown restrictions.
ADDITIONAL FINANCIAL SUPPORT:
UNIVERSAL CREDIT AND MORTGAGE PAYMENT HOLIDAYS
The UK.GOV website provides information about additional income assistance that is available for all UK residents, including Universal Credit, which the Chancellor has recently committed to upgrade, giving increased levels of support to those on the lowest incomes. Applying for this can also help people to get reduced payments for Council Tax during those months that they are severely impacted if income is significantly reduced.
MORTGAGE PAYMENT HOLIDAYS
The government have now also extended the mortgage payment holiday for those who have not previously claimed. They will be entitled to apply for a six month payment holiday and all those who are currently claiming will be able to continue to the six month mark, without this being recorded on their credit files. However, no additional support is being provided for those who rent their homes.
Full information about financial support in the second lockdown, can be found on the UK. Gov website via these links: