Today the Chancellor announces further support for businesses and individuals as the government looks to manage the virus whilst protecting jobs.
We are in a very different position to back in March, when there were many uncertainties and the measure implemented were for immediate support and thought temporary. We now know that further restrictions are likely for the next 6 months, and the hence the support announced today.

The primary goal of the next stage is to protect jobs, yet the current Job Retention Scheme, more commonly known as "furlough" will finish at the end of October 2020. The new scheme is aimed at protecting genuine jobs, and not to support those that can only survive through the furlough scheme.  

Lucinda Matkin of LM Insolvency welcomed the new scheme stating "it offered continued support in unprecedented times, but also acknowledged that support must be focused viable businesses" she went on to say" It is clear that not all jobs will be saved. nor all companies, but this is not possible for any government. The rate of insolvencies have been significantly lower than the previous year, with company insolvencies for the month of August 2020 being 43% lower than the same time last year. Likewise bankruptcies were also down 43% on the same month last year. These statistics illustrate the need to support what the chancellor termed viable jobs and not just those that can survive through the furlough scheme, as many businesses that would originally have been insolvent have in effect been given a lifeline, or the inevitable has been delayed"

So what is the continued support?
There are two elements;

1. job protection; and
2. cash flow support

Job protect comes in the way of a New Job Support Scheme with three objectives;

1. to support viable jobs
2. to  support all all those businesses that need it
3. support all businesses even those that had not used furlough

so, what is the Job Support Scheme?
The scheme will run for 6 months from 1 November 2020 (follow on from the furlough scheme which will end). Its aimed at viable jobs, so is support for those working. 
It is support for those working at least one third of their normal hours, which a company/employer will pay for as normal.
For the remainder which they do not work, the employee will be supported further by the government and the employer, with each contributing one third of the pay for normal hours not worked.
All small and medium sized businesses will be eligible to claim for the scheme, but large business will need to prove they have been affected with a fall in turnover. The scheme will also be open to those that did not utilise the furlough scheme.

The Job Retention Bonus and Kick Start Schemes remain in place and are unaffected by the new scheme.
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The second part of the support announced today by the chancellor is aimed at support the cash flow of businesses, whilst they protect jobs.

There are no new loan schemes or grants announced rather an extension of existing schemes.

Bounce Back Loans
Bounce Back Loans gave a £38 billion boost to businesses, and originally were interest free for year and then repaid over 6 years. The "Pay as You Grow" announced today means these loans can now be paid back over a period up to 10 years, almost halving the monthly payments, companies also have options to make interest only payments for a period of time and take 6 months repayment holiday if really struggling. Further more these measure would not impact the credit score of a business using them.

Lucinda Matkin of LM Insolvency said "this will help businesses as they look to recover, but I hear of many businesses that took a minimal loan amount, thinking the impact would only be temporary, and under current terms are unable to top up that loan. Now that it is clear we face longer term restrictions, an option for those that had not utilised the support fully would have been extremely beneficial to those businesses that miscalculated the impact of the outbreak or the longevity of it"

Business Interruption Loans (CBILS)
The government backed guarantee has also been extended to 10 years for these loans, and the deadline for applying has been extended.

Vat
Over £30 billion of vAT was deferred to March 2021. To help cash flow rather than the a lump sum becoming due, companies will be able to spread the cost over 11 months interest free.

​In addition the reduced VAT rate of 5% for the hospitality industry will remain at 5% until the 31 March 2021.

Self Assessment Tax
Deferred Self Assessment payments due January 2021, can also be spread over 12 months from next January, rather than a lump sum becoming due.

We welcome the changes to Insolvency legislation to help directors at this difficult time, more details to follow as there are still many antecedent transactions that directors should be aware of.

The Government have announced that Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.

Commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.

As commercial tenants will still be liable for the rent after this period, the government is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

Tenants should be mindful, whilst protection is offered in the short term, the rental payments will still be due after the period of protection, and should make what payments they can afford in the meantime.

The change will come into force when the Coronavirus Bill receives Royal Assent. It will last until 30 June, with an option for the government to extend if needed.

If you have commercial premises and looking to manage your cashflow, please do not hesitate to contact us on Tel: 07972928153 or email: lucinda@lminsolvency.co.uk should you need assistance with forecasting, and knowing more about the options available to you.