COVID-19: Chancellor announces increased financial support for businesses and self-employed workers
By Shanice Golder
In a bid to support economic recovery, the government announced on 22 October 2020, that businesses in high or very high alert coronavirus areas (tier 2 and tier 3) could be eligible for additional cash grants with an estimated 150,000 businesses in the hospitality and leisure sector set to benefit from the proposal.
This announcement comes after the recent “tier system” was established which means, based on the coronavirus infection level in specific areas, predominately businesses within the hospitality sector will be forced to comply with restrictions which may adversely impact trade or, in very high alert areas, cause them to cease trading.
Additionally a third tranche of the Self-Employed Income Support Scheme (“SEISS”) has been introduced for self employed people who have experienced reduced trade or temporarily cannot trade as a result of coronavirus restrictions.
Giving power to local authorities
The business grants are to be paid to local authorities in areas which are deemed high or very high alert as these businesses are most likely to financially suffer from social distancing restrictions. The amount a local authority receives from the government will be based upon the number of hospitality and leisure businesses in the area.
The aim is to give local authorities appropriate flexibility to respond to economic issues locally as they can determine which businesses are eligible for the grant and ultimately how much a business is to receive.
What businesses are eligible for the grant and how much is it?
The grants are available predominantly for businesses in the hospitality, leisure and accommodation sector.
Each local authority will receive an amount to distribute to applicable businesses per the number of months that tier 2 restrictions apply depending on the rateable value of properties as follows:
Properties with a rateable value of £15,000 or under, grants of £934 per month;
Properties with a rateable value of £15,000-£51,000, grants of £1,400 per month;
Properties with a rateable value of £51,000 grants of £2,100 per month.
These levels are an approximate guide and it is for each local authority to determine how much each business receives.
Businesses in very high alert areas (tier 3) are eligible for further support and can receive up to £3000 per month.
In addition, an additional 5% top up amount will be available for other businesses who may be adversely affected by coronavirus restrictions but do not fall within the hospitality sector.
When will the grants become available?
It is for local authorities to decide which businesses are eligible for the grant and how much can be allocated and therefore availability is likely to differ between authorities and can depend on whether a specific area is high or very high risk.
The grants are retrospective and therefore if businesses within the hospitality sector have been running under restrictions which has caused reduced trade since August, the grant can be backdated until then.
Do the grants have to be paid back?
The grants are not loans and therefore do not need to be paid back.
The third SEISS
In addition to the business grants, the government announced that they will provide two taxable SEISS grants for self-employed workers who are experiencing reduced demand as a result of coronavirus and who were eligible for the first and second stages of the scheme and meet the eligibility criteria.
Please see our previous article on the SEISS which summarises the eligibility criteria.
How much is the third grant and how is it paid?
The grants are set to be paid in two instalments, each covering three months. The first will cover November 2020 until January 2021 and the second will cover February to April 2021.
The first grant will cover 40% of average monthly trading profits. It is paid out in one instalment covering the three month period and is capped at £3,750. The government are due to set the level of the second grant in due course.
These grants are taxable and subject to National Insurance contributions.
How can you claim?
The application process is to be announced in due course. We are unable to make a claim for grants on your behalf. However, we can help you with any queries you may have.
For further information, please contact email@example.com