The Chancellor has stated that the Coronavirus Job Retention (furlough) Scheme would be extended until the end of April, providing continuing support for the UK workers.
The initiative, which was supposed to run for three months starting in March, has been extended many times, with the government continuing to pay 80% of people’s salary for hours not worked, up to a monthly limit of £2,500.
Businesses who are struggling due to the ongoing economic downturn will be helped by an extension of the government-backed COVID-19 business lending schemes. The Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and Coronavirus Large Business Interruption Loan Scheme are currently open until the end of March.
These adjustments come ahead of the Budget, which will be held on March 3, 2021, as the Chancellor has stated. The extension of the business loan and furlough schemes, according to the government, will allow firms to plan and receive help in the first few months of 2021, ahead of a further update on COVID-19 economic support.
Through a successor loan plan, the government has already stated that further assistance will be available beyond March. More details will be available as soon as feasible.
The Job Support Scheme
In January, the Job Support Scheme was set to be evaluated to see if economic conditions had improved enough for businesses to contribute more to the program. However, in light of the current challenging circumstances, the government has chosen to keep the plan running in its current form.
The following are the major features of the new Job Support Scheme, which was unveiled on October 22 as part of the government’s Winter Economic Plan:
- The scheme supplements wages in companies that are unable to rehire full-time personnel.
- The plan began on November 1 and encompasses all of the United Kingdom’s countries.
- The employee is paid up to two-thirds of their regular wage for each hour not worked.
- For hours not worked, the government pays up to 61.67 percent of earnings, amounting to £1541.75 each month. Under the prior regulations, the highest payout was £697.92, which was more than quadrupled.
- The employer’s share of unworked hours has been cut to just 5%.
- Employees who work just one day a week are eligible since the minimum hour’s requirement has been decreased from 33% to 20%.
Schemes for Business Loans:
Coronavirus Business Interruption Lending Scheme, Bounce Back Loan Scheme, and Coronavirus Large Business Interruption Loan Scheme are the three emergency loan plans accessible to enterprises.
All three schemes have been extended until the end of April, with the Coronavirus Business Interruption Loan Scheme (CBILS) accepting applications until March 31, 2021.
The CBILS scheme provides loans of up to £5 million to small and medium enterprises in three ways: term loans, invoice financing, and credit facilities. The original scheme period was set at six years; however, it was later increased to ten years.
The funds may be developed for a variety of things, including mergers and acquisitions, repaying existing debt, and investing in future development. The government guarantees 80% of the loans, and the lender based on the kind of financing sets the interest rate. There is no need for a personal guarantee.
The Bounce Back Loan Scheme (BBLS) is aimed at smaller enterprises and offers loans of up to £50,000 based on 25% of yearly revenue. The government guarantees the loans 100 percent, and the interest rate is set at 2.5 percent for the duration of the loan.
The loan duration was originally set at six years, but it has since been modified to six or 10 years, with payment holidays possible.
Future government support plans:
Even though no official announcements have been made, analysts predict that future support schemes would focus more on recovery, development, and job creation until 2021.
One rumor going around is that there would be an effort to finance award schemes accessible through Local Enterprise Partnerships to help create new employment.
The government’s exact intentions will very certainly be revealed in the April Budget.
Commentators have also suggested that a 45-day redundancy notice period might be announced, which would coincide with a Budget 45 days before the present support schemes expire.
CMB Accounting can assist you!
As the new form of coronavirus continues to spread, the Chancellor has prolonged important schemes to help firms and employees until spring, when the government believes that the twin vaccinations will start to curb the epidemic.
Furlough and coronavirus funding are complicated topics that demand careful study before making any final judgments. Our small business professionals, tax accountants, and attorneys can assist you in determining the sort of assistance that is most appropriate for your company and getting you back on track. Keep in touch with CBM Accounting if you would like to talk with a small business advisor.