On 24 September 2020, the Chancellor Rishi Sunak unveiled the Winter Economy Plan, a number of measures designed to help businesses still struggling with the effects of Covid-19. It appears that they not as generous as the help provided in March and April 2020 (principally the Self Employment Income Support Scheme – SEISS – and the Coronavirus Job Retention Scheme – CJRS). However, they may be worth considering in your individual business if you think that they are relevant.
The Job Support Scheme
The Job Support Scheme (JSS) is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for 6 months.
The company will continue to pay its employee for time worked. However, the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the JSS will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
More detailed information should become available in due course.
The following is an example of how the cost of an employee working will be split between the Government and the employer, depending upon how many hours the employee works.
VAT Support: Deferred VAT and the New Payment Scheme
If you had a VAT bill due between 20 March 2020 and 30 June 2020, you had the ability to defer payment until 31 March 2021. The government will give taxpayers the option to spread their payments over 11 interest free payments between 1 April 2021 and 31 March 2022, known as the New Payment Scheme. Taxpayers which took advantage of the VAT deferral will need to opt in, and HMRC will put in place an opt-in process in early 2021.
VAT Support: Tourism and Hospitality
The government has announced it is extending the temporary reduced rate of VAT (5%) to 31 March 2021 for this sector. The VAT reduction of 5% for this sector was originally due to be in place for a fixed period of 15 July 2020 to 12 January 2021. This is now being extended to 31 March 2021.
Bounce Back Loans
Under a new ‘Pay As You Grow’ flexible repayment system, businesses will be able to:
- Extend the maximum repayment period from six years to up to 10 years
- Opt for interest-only repayments for up to six months (for up to three times); and
- Suspend repayments for up to six months, after having made at least six repayments.
Coronavirus Business Interruption Loans
The government guarantee for qualifying loans will be extended from six years to up to 10 years.
The deadline for applying for the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, Bounce Back Loan Scheme and Future Fund will be extended to the end of November 2020.
Enhanced Time to Pay for Self-Assessment Taxpayers
HMRC previously announced that taxpayers could opt to defer their second self-assessment payment on account for the 2019/20 tax year if they were finding it difficult to make their second payment on account by the 31 July 2020 deadline. This was due to be paid by 31 January 2021. However, taxpayers with up to £30,000 of Self-Assessment liabilities will be able to agree a plan to pay their tax liabilities over an additional 12 months, i.e. up to 31 January 2022.
Self Employment Income Support Scheme – Extended but Reduced
For self-employed individuals who are still suffering from a loss of business as a result of Covid-19, The Winter Economy Plan contains another two payments of grants under the Self Employment Income Support Scheme (SEISS). To qualify, individuals (sole traders and partners in partnerships) must:
- Currently be eligible for the SEISS (although they do not have to have claimed the previous grants)
- Declare that they are currently actively trading and intend to continue to trade
- Declare that they are impacted by reduced demand due to COVID-19 in the qualifying period, which for the first grant is between 1 November 2020 and the date of claim.
The first new payment of grant will cover the three months from 1 November 2020 to 31 January 2021, and the maximum lump sum payment will be limited to 20% of the individual’s average monthly trading profits for the period, up to a maximum of £1,875. The level of support and cap for the next payment has not yet been set. It is expected that claims for the new rounds of grant will be made through the same HMRC portal as previous grants but HMRC will provide full details about claiming and applications in due course.
Details on the Winter Economy Plan are here.