Last week saw the Chancellor outline a Winter Economy Plan as the Country continues to fight the Coronavirus (COVID-19) pandemic. The plan confirms the end of the furlough scheme in October 2020 but introduces a new Job Support Scheme and an extension to the Coronavirus Self-employment Income Support.
There was also additional assistance announced covering the extension of business loans, VAT cut and VAT deferral.
Job Support Scheme
The new Job Support Scheme (JSS) replaces the Coronavirus Job Retention Scheme (CJRS), and will be introduced from 1 November 2020 to assist businesses which are likely to face lower activity over the winter months due to coronavirus.
Under the scheme, which will run for 6 months until 30 April 2021, the government will contribute up to one-third towards the wages of employees who work fewer hours than normal due to decreased demand. The level of government support will be calculated based on employee’s usual salary, capped at £697.92 per month.
Employees must work at least 33% of their usual hours, and employers will continue to pay the wages of staff for the hours that they work. For hours not worked, the government and employer will each pay one-third. This means employees working 33% of their normal hours will receive at least 77% of their usual pay.
The JSS will be open to all businesses across the UK even if they have not previously used the CJRS. Large businesses will however have to meet a financial assessment test and need to show that their turnover has fallen as a result of the crisis.
The government has also stated that they will review the minimum hours threshold after the first three months of the scheme.
Employers will be able to be make claims online through Gov.uk from December 2020, with grants payable on a monthly basis in arrears.
Support for the Self-Employed
The Chancellor also announced that the Self-employment Income Support Scheme (SEISS) will be extended to support viable traders who are facing reduced demand over the winter months due to coronavirus.
An initial taxable grant will be provided to those who are currently eligible for SEISS and will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.
Self-Assessment Tax Payment Deferrals
HMRC have announced that Self-Assessment Income Tax payers, with up to £30,000 of liabilities due, will be able to benefit from an additional 12 month extension under the HMRC time to pay facility, meaning payments on account deferred from July 2020, and those due in January 2021, could be deferred until up to January 2022.
Business Loans Extended
Businesses who took out a Bounce Back Loan will be able to repay those loans through a ‘pay as you grow’ scheme, which will enable the length of the loan to be extended from 6 to 10 years. This is likely to cut monthly repayments by nearly half. In addition, interest-only periods of up to 6 months and payment holidays will also be available to businesses.
Support will be provided by the government to give Coronavirus Business Interruption Loan Scheme (CBILS) lenders the ability to offer borrowers an extension on the length of the loans from a maximum of 6 years to 10 years if it will help the business to repay the loan.
In addition, the Chancellor also announced that the application deadline for all coronavirus loan schemes, including the Future Fund, would be extended until 30 November 2020.
VAT Cut Extension
The temporary 15% VAT cut for the tourism and hospitality sectors will be extended for a further two months until the 31 March 2021.
Businesses who deferred their VAT bills until March 2021 will now be given further breathing space through the New Payment Scheme, which will provide the option to pay back the VAT in smaller instalments. Rather than paying a lump sum in full at the end of March 2021, businesses will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
We will provide further details on the latest announcements as they become available.
Our Current working arrangement – We remain ‘Open for business’
Our staff have returned to office based working on a rota basis, each attending two days a week, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
If you would like more information about any of the matters raised this week please speak to your usual contact at the firm.
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