Welcome back to our Weekly Digest. We hope you and your family are safe and doing well. Read on for this week’s update.
New Job Support scheme set to replace furlough
Chancellor Rishi Sunak has announced the government’s plan to protect jobs and support businesses in the coming months. Key parts of the announced Winter Economy Plan include:
- a new Job Support Scheme,
- an extension of Self-Employment Income Support Scheme,
- an extension of the VAT cut for hospitality and tourism sectors,
- and help for more than 1 million businesses in repaying government-backed loans.
Job Support Scheme Wage Subsidy
The Job Support scheme will be introduced from 1 November 2020 to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19. The aim is to help businesses keep their employees attached, and will run for 6 months.
The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria. You can see more details including eligibility requirements here.
VAT cut extended for Hospitality and Tourism sectors
Part of the Chancellor’s announcement includes an extension of the VAT cut for the hospitality and tourism sectors. The temporary reduction of VAT rates from 20% to 5% will remain in place until 31 March 2021 instead of January.
The cut applies to food and non-alcoholic drinks, accommodation and admission to tourist attractions across the UK.
Giving businesses flexibility to pay back loans
More than a million businesses who took out a Bounce Back Loan will be given flexibility with repayments through a new Pay as You Grow system. We’ll keep you informed as we get more details.
Lockdown Tightened In North-East England
For the first time since the onset of the pandemic, it will be illegal for people in north-east England to meet people they do not live with in pubs, bars, or restaurants.
The measure comes into force on Wednesday in Durham, Gateshead, Newcastle, Northumberland, North Tyneside, South Tyneside, and Sunderland. Violating this new regulation will result in a £200 fine for a first offence, doubling each time, up to a maximum of £6,400.
This comes as the infection rate in the areas had risen above 100 cases per 100,000 people.
New COVID-19 Restrictions
Last week , we shared a set of restrictions for England which could last up to 6 months. Below are the new rules as summarised by BBC:
- Office workers are being told to work from home again if possible
- Penalties for not wearing a mask or gathering in groups of more than six will increase to £200 on the first offence
- From 24 September, all pubs, bars and restaurants will be restricted to table service only. Takeaways can continue
- Also from 24 September, hospitality venues must close at 22:00 – which means shutting then, not calling for last orders (in Scotland the same curfew rule comes into force on Friday)
- Face coverings must be worn by taxi drivers and passengers from Wednesday
- Retail staff and customers in indoor hospitality venues will also have to wear masks from Thursday, except when seated at a table to eat or drink
- From 28 September, only 15 people will be able to attend weddings and civil partnerships, in groups of six. Funerals can still take place with up to 30 people
- Also from 28 September, you can only play indoor adult sports in groups of less than six
- The planned return of spectators to sports venues will now not go ahead from 1 October
However, on Monday, a series of new restrictions have been implemented. There are new policies requiring people to self-isolate, businesses having to abide by workplace safety measures, and limitations on music, singing, and dancing. You can find the most notable ones in this article.
Some of these new rules may be quite difficult for small businesses. So if you need some guidance on how you can adapt and pivot your business, don’t hesitate to drop us a message.
UK Pledged Over £571M to COVAX
Prime Minister Boris Johnson said the UK would pledge £571 million to ensure the COVID-19 vaccine would get distributed to the world’s poorest countries. The funding will go toward COVAX, an effort spearheaded by the World Health Organization for the development, manufacturing, and distribution of COVID-19 vaccines fairly across the world.
Johnson also said he would increase funding to WHO by 30%, or £340 million over the next four years.
What funding is available for your business?
While many businesses are in a state of financial distress, the government continues to provide support for business recovery.
To cover the impact of the crisis, there are grants made available by the government such as the £1.25b Future Fund and R&D rescue package for fast growth businesses and smaller businesses with a Research & Development focus. The UK government has recently expanded this rescue package for start-ups.
If your business has been severely hit by COVID-19 and you need more support, the government is giving businesses access to financial support through various initiatives such as the Bounce Back Loan Scheme, where you can get up to £50,000 no-interest loans for the first 12 months.
The Business Interruption Loan Scheme offers a maximum loan of £5 million made available through commercial banks, lenders have provided £12.2 billion worth of facilities to 55,674 companies.
You can also claim for 80% of your employee’s wages plus any employer National Insurance and pension contributions if you have put them on furlough because of COVID-19 under the Job Retention Scheme, which has been extended until the end of October. You can check your eligibility here.
With all the financial assistance schemes available for businesses, it can be difficult to assess which one is suitable for your business. Get in touch if you need some help.
How Small Businesses Can Source Finance During COVID-19
Although there are government funding schemes and support available, you might still need alternative finance to keep your business going.
If you are not sure where to turn for funding, consider these three sources of finance:
- External sources– This type of finance come from entities outside the business in the form of business loans, merchant cash advance, and invoice financing.
- Internal sources– This is sourcing funds from within the business, typically in the form of share capital and selling of assets.
- Personal sources– This means using your personal funds to finance certain elements of your business. This could mean using your personal savings and investments and selling your personal property.
If your small business is struggling due to the impacts of COVID-19, get in touch with us so we can help you assess your options and plan your business recovery.
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