COVID-19: Government announces £4.6 billion in new lockdown grants to support businesses and protect jobs

Commenting on this latest package of measures, Mr Sunak said ‘This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen’.

More detail is set to emerge, but this is a summary of what we know:

• The Chancellor announced that businesses in retail, hospitality and leisure will receive new grants to help them keep afloat until spring
• The grants will be worth up to £9,000 per property (see tiered breakdown below)
• The cash is provided on a per-property basis to support businesses through the latest restrictions and is expected to benefit over 600,000 business properties
• This support is in addition to business rates relief and the furlough scheme which has been extended until the end of April
• Separately, £594 million will be made available to affected firms outside these sectors.

Businesses should apply to their local authorities. For full details click here

These one-off top-ups will be granted to closed businesses as follows:

• £4,000 for businesses with a rateable value of £15,000 or under
• £6,000 for businesses with a rateable value between £15,000 and £51,000
• £9,000 for businesses with a rateable value of over £51,000

Click here to access a previous article with direct links to your local authority.

Furlough scheme now extended to the end of April 2021

On 17 December, the Chancellor announced plans to further extend the furlough scheme until the end of April in a move designed to provide more certainty for both businesses and employees as we go into 2021.

The government will continue to pay 80% towards wages of unworked hours with a cap of £2,500 per month. This is unchanged with employers required to pay the wages, National Insurance contributions and pensions for hours worked as well as National Insurance contributions and pensions for hours not worked.

For full details please click here

Government-backed loan schemes available until the end of March 2021

At the same time, Mr Sunak also confirmed he would be extending the government-guaranteed COVID-19 business loan schemes until the end of March.

Businesses will also have until 31 March to access the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

These schemes had been due to close at the end of January.

Self Employed Income Support Scheme (SEISS) deadline looms on 29 January 2021

The deadline for the SEISS third grant application also runs out at the end of this month for those self-employed business owners that are entitled to claim, with the likelihood of a fourth grant then being available.

It’s important to note:

• You must make your claim on or before 29 January 2021
• To make a claim for the third grant your business must have been impacted by coronavirus on or after 1 November 2020 – see explanation below
• You can make a claim for the third grant if you’re eligible, even if you didn’t make a claim for the first or second.

The latest guidance includes an additional test which is that the taxpayer must:

• intend to continue to trade; and
• reasonably believe there will be a significant reduction in their trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus.

We understand that the significant reduction in trading profits test is to be applied to the accounting period as a whole which means that claimants will potentially need to forecast their financial results in order to establish their eligibility for this third grant.

HMRC’s guidance also indicates that it expects claimants to make ‘an honest assessment’ about whether they reasonably believe that their business will have a significant reduction in profits.

For full details please click here

Additional support grants that may be available

Under the new national lockdown restrictions, all non-essential retail and hospitality must close or remain closed and many business owners may need to seek additional support over the coming months.

Businesses which are legally forced to close and those which can remain open (but are severely impacted due to COVID-19 related social restrictions) can apply to their local authority for grants.

To assist you the list of main grants currently available are:

• Click here to check if your business is eligible for a coronavirus grant due to national restrictions (for closed businesses)
• Click here to check if your nightclub, dance hall or adult entertainment business is eligible for a coronavirus grant due to national restrictions
• Click here to check if you’re eligible for the coronavirus Local Restrictions Support Grant (for open businesses)
• Click here to check if you’re eligible for the coronavirus Local Restrictions Support Grant (for closed businesses)
• Click here to check if you’re eligible for the coronavirus Additional Restrictions Grant
• Click here to check if you’re eligible for the Christmas Support Payment for wet-led pubs

Chris Bowles, Director at Old Mill’s Wells office comments ‘Whilst I sense that there’s quite a bit of COVID-related fatigue with endless lockdowns and constantly changing rules, as we’ve seen today it’s really important for business owners to keep their eye on the ball in terms of the various levels of grants and support still available. 

‘It’s clear that the road to recovery just got longer with many businesses potentially now facing an even tougher few months ahead, so I would encourage people to take stock and try to work out how best to navigate through this next phase and take advantage of the support measures.

‘Whilst we welcome the extension of the furlough scheme, which will help some firms to pay wages and keep jobs, many businesses will also need further access to cash to cover rent or pay their suppliers and other bills… so it may be worth reviewing what’s still on offer and looking at the Local Authority route.

‘That said, in terms of the support grants, as we have previously indicated, this is becoming potentially a bit of a minefield and we strongly urge that claimants have a conversation with their adviser if they are in any doubt about the new rules as we can foresee that some business owners may inadvertently miss the fact that the new criteria is significantly different from those that applied to the earlier grants.’

Finally, following November’s spending review, the delayed budget has now been set for 3 March 2021.

The spending review indicated that the country was facing an ‘economic emergency’ with the economy set to contract by 11.3% (with analysts predicting these latest restrictions will squeeze GDP further).

This will also be the first opportunity for the Chancellor to announce any changes to the tax regime so, clearly, there will be intense scrutiny around how he plans to reduce the government’s borrowing.

Head of Owner Managed Businesses at Old Mill, Jolyon Stonehouse concludes ‘Whilst this isn’t the start to the new year many South West businesses would want, it’s important to remind ourselves that there is now some real light at the end of the tunnel in the form of an effective vaccine that’s now being rolled out across the country.

‘The government has spent billions in helping businesses survive and won’t want them to fail now so it’s no surprise to see new support measures announced today. I would also anticipate further financial support, particularly beyond Easter when, as things stand, the business rates holiday, lower VAT rates and the furlough scheme are all scheduled to end.

‘It’s interesting that the government has been quick to respond to calls from influential bodies like the Institute of Directors to bolster support for the worst affected sectors and to reinforce the discretionary grant scheme allocated through local authorities, which has helped to reach those who may have fallen through the gaps.

‘So, it’s more important than ever for owner managers to stay focused and keep on top of this fast-moving situation and talk to their professional advisers regularly over the next few months.’

For further information please contact your usual Old Mill adviser or click here.