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NEWS: Chancellor announces updated Covid-19 financial support

Today Rishi Sunak MP, The Chancellor of the Exchequer, set out how the government will continue to support jobs and the economy, as the pandemic presents on-going challenges for all aspects of society. With more details to follow in the coming days, the Chancellor has confirmed: 

  • Both the Coronavirus Job Retention scheme (CJRS) and the Self-employed Income Support Scheme (SEISS) will close with new options in place
    • These will both come to an end over the autumn but replaced with new options as outlined below.
  • Job Support Scheme
    • From 1 November, employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and the government will pay one third of the employee’s usual pay.
    • Government contributions are capped at £697.62 per month. 
    • Using this scheme means employees will receive at least 77% of their pay, where the government contribution has not been capped. 
    • The scheme will run for six months and is for all small and medium sized businesses, while larger business will be required to demonstrate that their businesses has been adversity affected by Covid-19. 
  • SEISS Grant Extension 
    • This grant will only be available to those who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to Covid-19. 
    • The scheme will run from November 2020 - April 2021 (six months) and will be in the form of two taxable grants. 
    • The initial grant will cover a three-month period from the start of November 2020 to the end of January 2021. The initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering three months' worth of profits, and capped at £1875 in total. 
    • The second grant will cover a three-month period from the start of February 2021 to the end of April. The level of this grant has not been confirmed yet.
  • Bounce back Loan Scheme extension (BBLS)
    • The borrower does not need to make any repayments for the first twelve months, with the government covering the first twelve months' interest payments. Under the new Pay as you Grow options, borrowers will all offered the choice of more time and greater flexibility for their repayments.
  • Pay as you grow
    • All businesses borrowing under the BBLS will have the option to repay their loan over a period of up to ten years. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months, or to pause their repayments entirely for up to six months.  
  • Coronavirus Business Interruption scheme Loan extension (CBILS) 
    • CBILS lenders can now extend the term of a loan up to ten years, to provide flexibility for UK-based SME's who may otherwise be unable to repay their loans. 
  • VAT deferral ‘New Payment Scheme’
    • Businesses which deferred VAT due in March to June 2020 will now have the option to spread their payments over the financial year 2021-22. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. You will need to opt in but all are eligible. HMRC will put in place an opt-in process in early 2021.
  • Enhanced time to pay for self-assessment taxpayers
    • Self-employed and other taxpayers will be given more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020. Taxpayers up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 2 months. So Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.

Liz Bayram, chief executive of PACEY, commented:
“This Winter Economic Plan contains good news for some but by no means all childminders, nurseries and pre-schools. Providers are still dealing with continued under occupancy as well as temporary closures due to suspected Covid-19 outbreaks. Every time a service temporarily closes, a nursery or childminder is likely to make a financial loss that only adds to the sustainability challenges they have faced for many years. We know that many settings will not benefit from this extended support. For example, many registered childminders do not qualify for SEISS; many providers are not keen to take on additional loans and debt if their future sustainability remains uncertain.

“With the Department for Education’s commitment to provide funding for early education entitlements in England at pre-pandemic levels - a life line for many settings - likely to end early next year, PACEY has and will continue to push Government for specific funding and support that recognises the vital role that childcare and early years settings play in supporting children’s development and supporting economic recovery. We remain firmly convinced that what is needed is a long term strategy and underpinning funds for the sector."

The schemes are relevant for England and Wales. ​PACEY will share more information on this additional support when government has shared more details.