January 2021 Announcements
Limited Company Director’s Support Scheme
This scheme was launched on 14 January and is open to applications from 6pm on 21 January. It provides an “initial once off” (which suggests, depending upon take up, it may be repeated) taxable grant of £1,000 to local shareholders with a greater than 25% holding, who will earn less than £50k in 2020/21 and for whom salaries/dividends represented at least 50% of income as at 31 March 2020. To be eligible, salaries (including furlough income) and dividends in 2020/21 must be 40% less than would have been the case in the absence of Covid-19.
We suspect this scheme will have very limited application. Consider a director previously “earning” just £25k made up of a salary of £10k and dividend of £15k who is now furloughed as the business has been badly impacted. To be eligible, dividends would now need to be less than £7k. So, total income including the grant would be less than £16k (£8k furlough plus £7k dividend plus £1k grant) or 36% less than previously. So, a director previously taking income of £25k purely as salary would receive furloughed income of £20k at no cost to the company (other than ER NIC) whilst in the example above (which is fairly typical) income falls to £16k and at a £7k cost to the company. So, if the company has retained profits it is probably best to avoid applying for this grant – or to take loans (that need to be repaid) rather than dividends.
Newly Self-Employed Support Scheme
Applications for this scheme close at 6pm 5 February. It provides an initial once off taxable grant of £3,500 to those who started self-employment in 2019/20, whose profits that year were than £50k and for whom profits between 1 March and 30 November 2020 are 40% less than would have been the case in the absence of Covid-19.
This scheme will have very limited application. It was designed to assist those that “fell through the net” and were not eligible for the national SEISS grant.
Localised Restrictions Support Scheme
This scheme covers all businesses “which have been required to close or has had business activities at their premises directly curtailed by the Health Protection Regulations” and, except for wet pubs, were “open to the public and trading at the start of the restriction period set by the Health Protection Restrictions” Three levels of weekly grant are available based on NAV:
NAV up to £15,000: £800 per week
NAV up to £51,000: £1,200 per week
NAV above £51,000: £1,600 per week
The £800 a week grant is available to joint occupants whilst the other grants only apply to sole tenants. If you occupy more than one eligible premises, you may apply for support in respect of each one. You must complete a separate online application for each separate premises that you consider may be eligible for support. At present the grant covers the 6-week period 26 December 2020 to 5 February 2021. But, if localised restrictions are subsequently extended, support payments will automatically continue. Successful applicants do not need to reapply. Support payments will stop when localised restrictions are ended.
This is a very welcome scheme and will, we suspect, be very widely used.