The Chancellor announced a number of further measures on 24 September 2020, including a new Job Support Scheme which will provide support to businesses for some workers' wages from November following the end of the government’s current furlough scheme on 31 October 2020.
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These include a new Job Support Scheme to cover up to 22% of worker pay for six months, extensions to the current Self-Employment Income Support Scheme and loan schemes, VAT and self-assessment deferrals, and a continuation of the reduced VAT rate for the hospitality and tourism sectors.
Job support scheme
Starting from November, the government’s new Job Support Scheme will cover up to 22% of pay for workers in “viable” jobs for the next six months and will replace the current Coronavirus Job Retention Scheme which is due to end on the 31 October 2020. Sunak told MPs the scheme will give businesses that face depressed winter demand the option of keeping employees in a job on shorter hours rather than making them redundant.
Workers would need to work at least a third of their normal hours to qualify.
Employers will pay staff for the hours they work but for the hours they don’t work, the government and the employer will each cover one-third of the lost pay.
The government’s contribution will be capped at £697.92 per month.
Anyone employed as of 24 September 2020 is eligible, and all small and medium-sized businesses can apply, although larger businesses can only use the scheme if their turnover has fallen during the pandemic.
Employers do not have to have used the furlough scheme previously. Large employers are not expected to have been making capital distributions, such as dividend payments or share buybacks while claiming the grant.
Employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Job Retention Bonus of £1,000 per employee, which will be available in February 2021.
The Self-Employment Income Support Scheme (SEISS) will also be extended from November 2020 to April 2021.
The extension will be in the form of two taxable grants.
The first grant covers businesses affected after 1 November 2020, covering 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits and capped at £1,875.
More details on the second grant will follow.
VAT support and deferral
To support struggling businesses with cash flow, the Chancellor announced that he will give businesses that deferred VAT due in March to June 2020 the option to spread their payments in 11 equal, interest-free instalments over the financial year 2021/22, rather than pay in full at the end of March 2021.
All businesses that took advantage of the VAT deferral can use the new payment scheme.
Businesses will need to opt-in, but all are eligible.
The temporary VAT reduced rate of 5% for hospitality and tourism will now be extended until 31 March 2021.
Self-Assessment Tax deferral
Self-assessment taxpayers will also be given more time to pay taxes due in January 2021 which follows on from the self-assessment deferral provided in July 2020.
Taxpayers with up to £30,000 of self-assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months.
Any self-assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay self-assessment helpline to agree a payment plan.
State Backed Loan Scheme repayment and application extensions
The deadline for new applications to the government’s state-backed loan schemes will be extended until 30 November 2020, and the government is starting work on a new guarantee loan programme to begin in January.
A Pay As You Grow initiative to help companies repay state-backed business loans has also been announced.
The government will give all businesses that borrowed under the Bounce Back Loan Scheme the option to repay their loan over a period of up to ten years instead of the original six years, thereby reducing their average monthly repayments on the loan by almost half.
UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
The government will also allow Coronavirus Business Interruption Loan Scheme lenders to extend the term of a loan up to ten years.
In light of the need for the additional support measures outlined above, the Treasury has confirmed that a planned mid-November Budget has been shelved. However, there will be a November Autumn Statement and financial forecast.
The government is expected to revert to a March Budget and Finance Bill pattern, although this is yet to be officially confirmed.
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The government has extended the Coronavirus Job Retention Scheme to 31 October 2020 and announced the introduction of part time furlough flexibility from 1 July 2020.
From 1 July 2020 onwards, furloughed workers will be able to return to work part-time with employers asked to pay a percentage towards the salaries of their furloughed staff.
The Chancellor also confirmed that part-time working will only be permitted for employers “currently using” the scheme.
More specific details around the implementation of the new phase of the scheme will be made available by the end of May.
Small businesses will be eligible for new loans worth up to £50,000 backed by a 100 per cent government guarantee.
Businesses can apply for a minimum of £2,000 up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months.
No repayments will be due during the first 12 months.
They can apply from the existing network of accredited lenders using a two-page standard online form with no forward-looking business viability tests or eligibility criteria.
The scheme will open from 9am on Monday 4 May 2020, and according to the Chancellor, most loans will be paid within 24 hours of approval.
Please click on the link below for the Government press release on the scheme:
The government has extended the start date for eligibility for furlough to 19 March from the original date of 28 February 2020.
More employees will therefore be able to receive support through the Coronavirus Job Retention Scheme as a result.
The government also confirmed that the scheme is expected to be fully operational next week with the online portal due to go live on 20 April to allow businesses to start filing their returns.
To qualify and to protect against fraudulent claims, individuals originally had to be employed on 28 February 2020.
However, following a review of the delivery system and to ensure the scheme helps as many people as possible, new guidance published today has confirmed the eligibility date has been extended to 19 March 2020 (the day before the scheme was announced).
Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020.
This means that the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020.
For loans over £250,000, personal guarantees will be limited to just 20% of any amount outstanding on the CBILS lending after any other recoveries from business assets.
Lenders were already prohibited from asking business owners to put their house on the line, but today’s changes will provide further reassurance regarding personal assets during this difficult time.
Anyone considering a loan under the scheme should go to their existing bank’s website for details of how to apply as each bank has its own lending criteria.
The government update on the scheme can be found via the link below: