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Up until recently, Chancellor Rishi Sunak had ruled out any possibility of an extension to furlough, instead opting for smaller job retention grants and the more flexible job support scheme (JSS).
That’s all changed now, and following the announcement of a second national lockdown in England, the coronavirus job retention scheme (CJRS) has been extended until 31 March 2021.
While additional support over the winter has been welcomed by many businesses, some have been left feeling frustrated that the time they spent preparing for the new job support scheme, which was originally set to start on 1 November, has now gone to waste.
Concerns also remain about the scheme’s vulnerability to fraud and misuse. Employers who face performance issues among staff may use the scheme to put off managing it, for instance, pushing problem staff down the road to deal with later.
And there’s some speculation that businesses might take the opportunity to furlough employees over the Christmas period, when they were planning to close anyway.
With HMRC estimating a fraud or error rate of around 10% in furlough claims, adding up to around £3.5 billion up to 16 August 2020, this next phase of the scheme may only add to that backlog of cases.
The CJRS, which will now run until 31 March 2021, is available to businesses anywhere in the UK.
For the period running from 1 November 2020 to 31 January 2021, it will offer 80% of employees’ usual salary for hours not worked, up to a cap of £2,500 per month.
Employers will need to cover employers’ National Insurance and workplace pension contributions, but they won’t be required to contribute to employee wages for hours not worked.
This is set to be reviewed in January, however, so the Government may increase employer contributions depending on whether economic conditions are improving.
In another major announcement on 5 November, the Chancellor increased the level of the third grant provided through the self-employed income support scheme (SEISS).
For the period from November 2020 to January 2021, self-employed workers will be able to claim a taxable lump sum covering 80% of average monthly trading profits, capped at £2,500 a month.
This puts the scheme roughly in line with the support provided by CJRS, compared to the lower grant of 55% of average profits that was previously announced.
A fourth grant, running up to April 2021, has been confirmed but no further details have been announced so far.
There’s no news either on further changes to the scheme that would include those who have been left out of full support, such as people who are newly self-employed, or limited company directors who take most of their income as dividends.
Finally, for businesses that are still trading but need an additional boost to their cashflow, the extension of various Government-backed loan schemes was welcome news.
All three of the main loan schemes were set to close to applicants by the end of 2020, but have now been extended until 31 January 2021.
The coronavirus business interruption loan scheme (CBILS) provides loans of up to £5 million to UK-based SMEs with an annual turnover of up to £45 million.
To be eligible, businesses must be able to show they have been adversely impacted by COVID-19 but are still viable.
The coronavirus large business interruption loan scheme (CLBILS) is similar, but provides loans to larger firms with a turnover of £250 million or more.
Bounce-back loans (BBLs), meanwhile, are available to all kinds of businesses, and offer up to £50,000. They’re interest-free for a year, and they don’t require any repayments during that period.
It’s also been announced that firms can top up their BBLs if they took out a loan earlier this year that didn’t use up the £50k limit.