Chancellor of the Exchequer Rishi Sunak has extended the furlough scheme by an additional month.
Government will now continue to pay 80% of the salary of employees for hours not worked until the end of April.
Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.
Mr Sunak said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“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.”
Businesses will also be given until the end of March to access the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme. These had been due to close at the end of January.
The schemes have already provided over £68 billion in guaranteed loans, and helped to keep afloat business in all sectors of the UK economy who have been impacted by coronavirus.
Business Secretary, Alok Sharma, said: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
London Chamber of Commerce and Industry welcomed the extension, but compelled Government to extend the business rates holiday into the next financial year to provide more certainty for London’s businesses.
Richard Burge, LCCI Chief Executive, said: “The impact of Covid-19 restrictions, the potential of Brexit economic impact, and economic benefit from vaccine roll-out unlikely to be seen before the Spring at earliest, all amount to a perfect storm for the economy in Q1 2021.
“The ability for businesses to plan their outgoings is vital to both survival and recovery, so we welcome the Chancellor providing certainty about the terms of furlough until the end of April, and also the availability of government guaranteed loans until the end of March. It is provisionally pleasing to hear that there will also be a replacement loan scheme beyond March also.
“But, with recovery in mind, the end of the business rates holiday will soon loom large. Particularly with high rate costs in London. We urge the Chancellor to provide further certainty for 2021 recovery by extending the rate-holiday period.
“The Government must also increase available grants to the hospitality and cultural sector – who are now faced with overheads yet limited ways in which to generate revenue, and many have no way to trade at all.
“So many such businesses in London have spent huge sums of money getting themselves covid secure, stocked and reopen – only to be shut within weeks, through no fault of their own.
“The ability to recover is also dependent on banks, and their pace of delivery of the government loan schemes. The retail banks need to continue to demonstrate that they understand their role in helping businesses to survive in order to play a part in the UK’s recovery from Covid-19. When all this is over, we will judge the banks on their willingness to support a nation in crisis.”