Furlough scheme extension and other financial support available during lockdown

6th November 2020

As we begin a second national lockdown, businesses will be understandably concerned about what it means for their finances. The Government has already confirmed the Coronavirus Job Retention Scheme (also know as the furlough scheme), which was due to be replaced with a new Job Support Scheme from November, is to be extended. Find out about the scheme and the other support available in our guide.

furlough scheme and the financial support available during lockdown

Furlough scheme extension

The furlough scheme has been extended until the end of March, however it will revert back to how it worked in August. In September and October, employers were required to contribute 10% and 20% of wages, but now will only have to pay National Insurance and pension contributions (which accounts to roughly 5% of total employment costs for the average claim).

Under the furlough scheme, the Government contributes 80% of an employee’s salary, up to a maximum of £2,500 per month.

Eligibility criteria remains the same, however neither employer or employee is required to have used the scheme before and the employee must have been on the employer’s payroll before 23:59 on 30th October 2020.

You can read more about how the Coronavirus Job Retention Scheme works in our guide here.

Business grants

There is support available for businesses required to close in England due to lockdown restrictions, such as non-essential shops, leisure and hospitality venues. These businesses can claim grants at the following levels:

Rateable value Grant
£15k and under £1,334 per month/£667 per two weeks
£15k-£51k £2,000 per month/£1,000 per two weeks
£51k and over £3,000 per month/£1,500 per two weeks

Mortgage holidays

Mortgage payment holidays have been extended by a further six months. This means that homeowners who have no yet taken a mortgage holiday can apply for one, while those who have not used the full six months can request an extension.

During a mortgage holiday, monthly payments are paused and there will be no impact on the borrower’s credit file – however it’s important to remember that interest will still accrue on the amount borrowed.

The Financial Conduct Authority is advising those who have already taken the maximum six months to speak to their lender to discuss a repayment plan.

Can I use the furlough scheme if I’m self-employed?

Self-employed people and sole traders can apply for additional grants through the Self-Employed Income Support Scheme (SEISS), which has been extended until April 2021.

Grants will be paid in two lump sum instalments to cover two three-month periods from November 2020 to January 2021, and February 2021 to April 2021. The Government has confirmed the Nov-Jan grant will be calculated at 80% of three months’ average monthly trading profits, capped at £7,500. It has not yet announced the level of the grant to cover Feb-Apr but has confirmed it will be available.

Eligibility for the SEISS grant is slightly different this time. In addition to the previous eligibility criteria, claimants must now:

  • either be currently trading but are impacted by reduced business activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus
  • declare that they intend to continue to trade, or restart trading, and that they reasonably believe that the impact on their business will cause a significant reduction in their trading profits
  • only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks) does not make a business eligible for the third SEISS grant.

Their business must have been impacted on or after 1 November 2020. Customers must keep evidence that shows how their business has been impacted by coronavirus, resulting in reduced activity, capacity or demand, or a temporary inability to trade.

Remember, you will not required to pay back the grant but it is taxable. You can find out more about the grant and apply here.

Talk to the experts

We know this is a worrying time for businesses, and we’re happy to help our clients with any queries relating to the support available. Get in touch to speak to our friendly team.

All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article.

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