COVID-19 infections have been rising in the UK. In an effort to combat the increase, we’ve entered a 3-tiered system of varying regulations across the country, depending on the risk level. Today, Chancellor Rishi Sunak announced a new and improved package of support to help businesses affected in tier 2 areas.

The support is in the form of grants and a revised job support scheme. Here’s a look at the improvements and why businesses need this help.

How tier 2 is affecting businesses

At present, areas such as London, the North East and Leicester fall under tier 2 restrictions. This means that the risk of infection is high. So if you live in these areas, you can’t mix with anyone from another household indoors but you can meet outside areas of hospitality venues in groups of up to six. As with tier 1 (medium risk of infection), pubs and restaurants must close their doors by 10pm, unless they’re open for takeaway.

In tier 3 areas such as Liverpool, pubs not serving food are closed entirely. People can’t mix with other households indoors or outdoors, either at home or in any hospitality setting. Travel into and out of these areas is also discouraged.

Businesses that have been forced to close are receiving government support. Many industries in tier 2 areas have been vocal about what they see as unfair differences in economic support across the different tiers. Hospitality in particular has been hit hard by the second-tier regulations as they’ve seen demand dip massively, yet aren’t getting government help in line with tier 3 businesses.

For tier 3 regions, the government will pay 67% of workers’ wages if a business is affected by restrictions, up to £2,100 a month from 1 November. This is the ‘Job Support Scheme Closed’. Employers only pay National Insurance and Pension contributions. Some workers can also claim Universal Credit.

However, in tier 2 regions, only the “part-time Job Support Scheme” (JSS) is available once the furlough scheme ends on 1 November. This is more expensive for employers as it requires them to pay 22% of wages as standard on top of at least 33% of regular hours worked, with an extra 22% topped up by HMRC. Until today.

New job support scheme for tier 2

The revised job support scheme will see employer contributions go down to just 5% and the government subsidy double. Employees will be paid up to two-thirds of their regular salary for every hour not worked. The Treasury has promised that this will last for six months, through to the Spring, so business owners can better plan their strategies in the medium-term.

The minimum hours an employee must work to be eligible for the scheme is also being reduced from 33% to just 20% - effectively one day per week. Plus, you can still claim the £1,000 job retention bonus in January if you keep previously furloughed workers on.

Grants for tier 2 businesses

Councils will distribute grants for businesses that have been adversely affected by tier 2 restrictions. These are aimed at the accommodation, hospitality and leisure sectors. Businesses will get up to £2,100 for every month they’re subject to tier 2 restrictions.

Although not quite as generous as the tier 3 grants, they are still equivalent to 70% of that amount. Importantly, these grants are retrospective and can cover the impact felt by restrictions since August. There are about 150,000 businesses in England that could benefit from these grants.

Grants will be calculated according to rateable value of properties in the following way:

  • £15,000 or under will be entitled to £934 per month
  • £15,000 - £51,000 will be entitled to £1,400 per month
  • £51,000 will be entitled to £2,100 per month

Extra help for the self-employed in tier 2 regions

The profits covered by the soon to be available self-employed grants are increasing from 20% to 40%. This means that anyone eligible to claim these grants could now receive up to £3,750, instead of £1,875. This grant will support the self-employed from November to January. We’ll update you with details on the next one when it’s announced, due to cover February to April 2021.

You can find out what areas fall under which tier here.

For more information and advice to keep your business going whatever tier you’re in, head to our COVID-19 Impact Support Hub.