Furlough and business loan schemes extended
Chancellor Rishi Sunak plans to extend coronavirus business loan schemes to the end of March and furlough scheme until the end of April 2021 to support UK businesses as restrictions continue. The Budget has been set for 3 March 2021.
As more areas of England plunge into tier three restrictions today, Chancellor Rishi Sunak has extended the coronavirus business loan applications until the end of March to alleviate prolonged business disruptions.
In addition, the government announced that the furlough scheme will be extended alongside loan schemes until 30 April 2021, with the government continuing to contribute 80% towards wages.
2021’s Budget has also been confirmed for 3 March and will “set out the next phase of the plan to tackle the virus and protect jobs”.
The announcement also alludes to a 45-day redundancy notice period for business “with Budget setting out the next phase of support more than 45 days before the new end date of the scheme”.The announcements come as ministers scramble to ease pandemic and Brexit strains as businesses face continued tier restrictions until spring 2021.
The news come as ministers scramble to ease pandemic and Brexit strains as businesses face continued tier restrictions until spring 2021.
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs,” commented Sunak.
The UK government has injected a current total £68bn into the economy via business loan schemes, with £43.5bn going towards the Bounce Back Loan Scheme (BBLS) alone.
Coronavirus business loan schemes
CFN chairman and accountant-in-residence at Capitalise Kirsty McGregor commented, “The CBILS extension to 31st January was very welcomed when it was announced and now we are seeing an increase in applications again as we approach the new deadline.
The three key emergency loan schemes – CBILS (Coronavirus Business Interruption Loan Scheme), BBLS and CLBILS (Coronavirus Large Business Interruption Loan Scheme) – are set to be extended until the end of the financial year. The official announcement is expected later today.
“We know in the accounting profession that January is always a busy month so we have been encouraging all advisers to contact their eligible clients to consider whether they wish to take advantage of such a facility whilst these extremely attractive terms still exist,” McGregor told AccountingWEB.
According to the Capitalise, the government focusing on recovery in 2021 and is likely to move to finance grant schemes via the Local Enterprise Partnerships and the enterprise bodies in the devolved nations to support the creation of new jobs.
“We have begun to predict what the new loan (EFG+ as it has been described) may look like and terms are unlikely to include the restriction on Personal Guarantees,” said McGregor. “Commercial lending is still available across other products and lenders if clients aren’t meeting the viability criteria for CBILS.
“Advisers should look to work with their clients’ to assess their true capital needs as we know that tax and VAT deferrals and Bounce Back loan repayments will bring added pressure to many thousands of business’ working capital next year. If a further extension is confirmed, this will take the pressure off accountants during January and allow them to look at their clients’ cashflow projections for next year in more detail.”
The extended furlough scheme will continue to offer 80% towards employee wages for unworked hours and will end on 30 April in order to provide employees with job certainty into the New Year.
Employers must still pay wages, NICS and pensions for hours worked and NICS and pensions for hours not worked. Eligibility criteria will remain the same.
The Coronavirus Job Retention Scheme has been further extended until the end of April 2021.
This means that furloughed employees will continue to receive 80% of their usual salary for hours not worked until the end of April. #PlanForJobs
— HM Treasury (@hmtreasury) December 17, 2020
The Treasury was set to review the CJRS policy in January “to decide whether economic circumstances are improving enough to ask employers to contribute more”.
But the review was brought forward today to “allow businesses to plan ahead for the remainder of the winter and the New Year”.
AccountingWEB contributor Kate Upcraft summed up the feelings of payroll professionals bracing themselves for further calculations. “Welcome to another tax year doing furlough calculations, Rishi’s Xmas present to payroll professionals,” she tweeted.
A fourth Self Employment Income Support Scheme grant (SEISS) will be made available from February to April 2021.