The ongoing Coronavirus pandemic is continuing to cause hardship for businesses and individuals alike. In a bid to provide additional much needed financial support, the Government has extended its package of economic support.
Here, we take a look at two of the key announcements made by Chancellor Rishi Sunak in his recent Budget and explain what this means for you and your business.
Arguably one of the most important interventions has been the The Coronavirus Job Retention Scheme (CJRS), more commonly referred to as furlough.
First introduced a year ago, the scheme has provided an essential lifeline to employers, helping them shoulder the employment costs for employees who were unable to work or who work reduced hours due to the pandemic and its restrictions.
The furlough scheme had been due to end in spring 2021 but, to the relief of businesses and employees alike, it has now been extended until the end of September this year.
The 80 per cent furlough grant, up to a maximum of £2,500 per employee each month, will continue, as before, until 30 June 2021.
To prevent an abrupt end to this financial lifeline, from 1 July 2021, the amount paid will be gradually reduced – meaning that employers will be expected to start making additional contributions. This gradual tapering means that, from July, Government support will be limited to 70 per cent, with the remaining 10 per cent provided by the employer.
Then, from 1 August until the end of the scheme on 30 September 2021, employers will be expected to contribute 20 per cent, with the Government covering the remaining 60 per cent.
In addition to the 10 per cent and 20 per cent contributions made in July, August and September, employers must continue to pay employers National Insurance and pension contributions on the full amount being paid to employees.
The hope is that by the summer, with the gradual reopening of the economy, many businesses will have weathered the worst of the economic storm and be in a stronger financial position. However, the reality is that some business owners may need to consider restructuring to protect the long-term future of their companies. If redundancies are necessary, it is important to build in sufficient time for consultation with workers who will be affected, so preparations will need to start now.
Another important Budget announcement is welcome news for self-employed workers – with the Chancellor confirming that the Self Employment Income Support Scheme (SEISS) grant will be extended for a fourth time.
Previous versions of the scheme had been criticised for failing to protect those who had recently begun working for themselves.
Taking these issues into account, the Chancellor has confirmed that SEISS 4 will be extended to include those who became self-employed in 2019/20 and who completed a tax return for the same year. Under the scheme, self-employed workers affected by Covid-19 could get up to 80 per cent of their average trading profits in a three-month period as a one-off lump sum.
However, newly self-employed taxpayers may be required to undergo pre-verification checks before they can access the fourth SEISS grant,
SEISS 4 applications can be made via the Government website.
If you are struggling to understand the new rules relating to furlough or are not sure which grants or business loans are available to your business, please get in touch with the team at McGills in Cirencester who will be happy to help. Tel: 01285 652128, email: firstname.lastname@example.org or visit us at Oakley House, Tetbury Road, Cirencester, Gloucestershire, GL7 1US