On 24 September, Chancellor Rishi Sunak announced a series of new measures to support businesses and employees affected by the ongoing coronavirus situation. These include a new Job Support Scheme, an extension to the Self-Employment Income Support Scheme, more time to pay VAT and tax owing from Self Assessment, and an extension to the hospitality VAT rate cut.
We summarise the key initiatives that form the government’s ‘Winter Economy Plan’ below.
Job Support Scheme
A new Job Support Scheme will run for six months from 1 November 2020 to support businesses that are facing lower demand through winter due to coronavirus.
Under the scheme, the government will contribute towards wages for employees who are working fewer than normal hours.
How it works
The employer will pay the employee for the hours that they work. For the hours they do not work, the employer and the government will each pay one third of their usual wages (capped at £607.92 per month).
The business must still pay National Insurance and Pension contributions.
In summary, the employee must work at least 33% of their usual hours and will receive at least two thirds of their usual wages for the hours not worked.
IMPORTANT: An employee must have been registered on the Payroll on or before 23 September to be eligible.
Please read the Job Support Scheme factsheet for full details, eligibility criteria and examples of how the scheme will work.
Self-Employment Income Support Scheme (SEISS) Grant extension
This will provide critical support to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but facing reduced demand due to COVID-19.
The extension will provide two grants paid in two instalments, each covering a three-month period.
The first grant will be worth 20% of average monthly profits for 3 months, capped at £1,875 in total.
Extension to the reduced VAT rate for Hospitality and Tourism
The government reduced the VAT rate for hospitality and tourism businesses in July as part of its measures to support the sector. The lower rate of 5% VAT will remain in place until 31 March 2021.
VAT Deferral New Payment Scheme
This applies to those businesses that deferred VAT payments due between 20 March and 30 June 2020. These payments should be paid by 31 March 2021, however under the new scheme, businesses can choose to spread the payments in equal instalments up to 31 March 2022. Please speak to us for advice on paying VAT.
Self-Assessment Self-Serve Time to Pay Scheme
The government allowed taxpayers to defer payment of their July 2020 Self-Assessment payment on account until 31 January 2021. This means that for many the January payment (covering the deferred second 20/21 payment on account, any balancing payment and first 21/22 payment on account) will be higher than usual.
If you are struggling to pay in full by 31 January, you can set up a Time to Pay payment plan for up to 12 months with no need to speak to HMRC.
Individuals with tax debts over £30,000 will be automatically approved for a Time to Pay plan of up to 12 months or can apply for more time to pay in full.
Extension to the Bounce Back Loan Scheme (BBLS)
All UK businesses that borrowed under the BBLS, will have the option to repay their loan over a period of up to 10 years, reducing the average monthly repayments by almost half.
The can also choose to make interest-only payments for periods of up to six months (they can do this up to three times), or pause their repaymentsentirely for up to six months (they can do this once and only after making six payments).
Extension to the Coronavirus Business Interruption Loan Scheme (CBILS)
The government intends to allow CBILS lenders to extend the term of a loan up to 10 years.
Coronavirus Job Retention Scheme (furlough scheme)
October is the final month for the current furlough scheme. From 1 October, HMRC will pay 60% of an employee’s usual wages (capped at £1,875 per month). The employer must top up the government contribution so that the furloughed employee receives at least 80% of their usual wage. Find out more here.
If we have been processing furlough claims for you, please ensure you provide your information to our Payroll team in good time ahead of payday.