On 31 October, the rise in COVID-19 infection rates forced Boris Johnson to announce a second national lockdown, to take effect from 5 November 2020. Our update today contains details of the additional financial support the government has implemented to address the challenges caused by a second lockdown, as well as other measures introduced since our last update of 28 September.
Coronavirus Job Retention Scheme (CJRS)
Prior to the announcement of the second lockdown, the CJRS was due to be phased out completely on 1 November, to be replaced by the Job Support Scheme. CJRS has now been extended for one month and is available for all employers until the start of December 2020. The government is yet to publish exact dates.
The extended scheme has the following features:
- The level of grant will be the same as that in August 2020.
- 80% of wages will be covered by the government, up to a cap of £2,500 per furloughed employee.
- Employers will be responsible to pay the Employers National Insurance Contributions and pension contributions for the hours that the employee is on furlough.
- Operationally, the claims and payments process of the CJRS remain the same
- Employers continue to be able to furlough workers on a flexible basis as well as on a full time basis,
- All employers with a UK bank account and UK PAYE schemes can claim the grant.
- Neither the employer nor the employee needs to have previously claimed CJRS
- The government will pay 80% of wages for hours not worked by the employee.
- The employer must pay the grant in full to the employee.
- Employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
- The Government will confirm shortly when claims can first be made in respect of employee wage costs during November.
- To be eligible under this extension of the CJRS, employees must be on an employer’s PAYE payroll by 11:59pm of 30th October 2020. This means that an RTI submission for that employee must have been made on or before 30 October 2020.
As with previous CJRS rules, the following guidelines apply when considering whether to place employees on furlough:
- Employees can be on any type of contract.
- Employers will be able to agree any working arrangements with employees.
- Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period.
- Employers will need to report and claim for a minimum of 7 consecutive calendar days.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
- Employers will be responsible for paying employees for hours worked.
Our update of 28 April provides more details on the HR issues employers should consider if implementing CJRS for the first time.
Job Support Scheme (JSS)
Introduction of the JSS has now been postponed until the extended CJRS ends.
Self-Employment Income Support Scheme (SEISS)
Our update of 28 September contains details of the extensions made to the SEISS as part of the Winter Economy Plan. On 22 October 2020, the Chancellor enhanced the first grant of this extension, to 40% of average monthly trading profits, to provide increased support.
The government made a further enhancement to this first grant on 2 November 2020, following the weekend announcement of the second national lockdown,
- The first grant covers the period from 1 November 2020 to 31 January 2021.
- It will now cover 55% of average monthly trading profits, and will be paid out in a single instalment.
- This instalment will cover 3 months’ worth of profits, and will be capped at £5,160 in total.
- The online service for the grant will be available from 30 November 2020.
- HMRC will provide full details about claims and applications in due course.
Local Restriction Support Grant (LRSG)
Prior to the announcement of the second lockdown, the government introduced the Local Restriction Support Grant (LRSG) scheme for businesses in England affected by local restrictions in high (tier 2) and very-high (tier 3) alert level areas. Most grants under LRSG will be available retrospectively, and will also be available for businesses forced to close as a result of the second national lockdown.
The LRSG is administered by local authorities, and so businesses will need to contact their respective local authorities to understand how they can claim for grants under the scheme.
The LRSG is expected to run for 6 months from 1 November 2020 until 30 April 2021. However, it will be reviewed in January 2021.
Payments under LRSG count towards the total de minimis State Aid and are also eligible under the COVID-19 Temporary Framework for State Aid. Our update of 5 May 2020 provides detailed information on State Aid and COVID-19.
Monthly grants will be made available to such businesses, dependent on property size according to the following rateable value ranges:
|Properties with a rateable value of…||Amount of grant per month||Amount of grant per two weeks|
|£15,000 or under||£1,334||£667|
|over £15,000 and under £51,000||£2,000||£1,000|
|£51,000 and over||£3,000||£1,500|
The government had announced grant funding, under LRSG, to support businesses in the hospitality, accommodation and leisure sectors in high-alert level areas (tier 2), which were not legally required to close, but were nevertheless severely impacted by restrictions on socialising.
The level of monthly grants available to such businesses is dependent on property size as follows:
|Properties with a rateable value of…||Amount of grant per month|
|£15,000 or under||£934|
|over £15,000 and under £51,000||£1,400|
|£51,000 and over||£2,100|
The government will also provide local authorities with additional top-up funding of 5% over and above these amounts so that the local authority can extend grants to businesses affected by the restrictions but which do not fit neatly into the hospitality, accommodation and leisure categories, or those that are outside of the business rates system.
All grant amounts will be determined at each local authority’s discretion. The above amounts are guidelines provided by the government.
Businesses which were in very high alert level areas (tier 3), prior to the second national lockdown, will qualify for grants of £3,000 per month if they had been legally required to close.
Certain businesses which were open in tier 3 areas will also receive support through business support packages. Information on these support packages is not available at the moment, but it will be published by the relevant local authority once the packages have been agreed with central government.
If you wish to discuss any of the key points and receive advice on how best to manage the next steps, then please contact us. We understand the difficulties that businesses face during this challenging time, and we can offer guidance to you, your business and your employees.