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Chancellor amends Winter Economy Plan for Tier 2 & 3 Businesses

On Thursday 22 October the chancellor Rishi Sunak announced further financial support measures for businesses falling within the Tier 2 and Tier 3 levels of UK restrictions.

One of the driving forces behind the decision to expand the government’s winter support scheme comes as a result of certain businesses falling between two stones – seeing a decline in trade and consumer demand, particularly those in hospitality, yet not being eligible for financial ‘lockdown’ support as a result of being open and able to trade.

Today’s announcements include:

New Grant Scheme for Businesses impacted by Tier 2 where not legally required to close

The chancellor confirmed funding will be given to local authorities for them to issue discretionary cash grants to businesses falling within Tier 2, primarily those within the hospitality, accommodation and leisure sectors, up to a maximum of £2,100 per month (i.e. impacted by the restrictions on socializing).  The amount of government funding allocated to each local authority will be determined by the number of impacted businesses within their area (i.e. hospitality, hotels, leisure)

The grant will be available retrospectively for areas which have already been subject to local lockdown restrictions prior to the formal introduction of the ‘tiered’ system, or from being moved from Tier 2 into Tier 3.

  • For properties with a rateable value of £15,000 or under, grants of £934 per month
  • For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month will be available.
  • For properties with a rateable value of £51,000, grants of £2,100 per month will be available

These amounts are the equivalent to 70% of the grant amounts given to legally closed businesses in Tier 3 (Very High Alert), worth up to a maximum of £3,000 per month. Read more here.

The government will also issue Local Authorities with a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.

Expansion of the Job Support Scheme (JSS)

The original requirements of the Job Support Scheme  (the furlough scheme’s successor) which comes into effect on 1 November 2020 saw employers having to contribute 33% of an employees’ salary for unworked hours.  The government have now revised this as follows:

Job Support Scheme ‘Open’

To support Tier 2 (or ‘high alert’) businesses, where employers reduce employees’ hours as a direct result of financial hardship from coronavirus, but where those businesses remain ‘open’ to trade, then employees will receive up to two-thirds of their usual salary.  The government will pay nearly 61.67% of an employees’ wage for hours not worked, up to a maximum of £1,541.75 per month, with the employer required to pay 5%.  Employees must work a minimum of 20% of their normal contracted hours (i.e. 1 day per week instead of 5).

Job Support Scheme ‘Closed’

This scheme remains unchanged. Read more here.

Self Employed Income Support Scheme

Two further taxable grants will be made to support self employed individuals who were previously eligible for grants 1 and 2 earlier this year, and who still meet that eligibility criteria.  The next SEISS grant will again cover a three month period, commencing 1 November 2020 up to end of January 2021, and will be calculated at 40% of three months’ average trading profits, paid in one lump sum to a maximum of £3,750.

The next grant tranche will cover periods 1 February until end of April 2021 – details of this next grant have not yet been made available.

The full Government announcement can be read here.