New hope for businesses and workers impacted by the coronavirus across the UK
With new restrictions in place and the Coronavirus Job Retention Scheme (CJRS) ending on the 31 October 2020, businesses urge for further financial support from the government. This call out was also backed by the Bank of England boss, Andrew Bailey, who also piled pressure on Rishi Sunak. Following the recent Winter Economy Plan from the government, The Chancellor appears to have listened to evidence from businesses and acted decisively, and steps in with new jobs lifeline and financial support to businesses.
- New Job Support Scheme
- Extension to Self-employment income support scheme (SEISS)
- More time to pay Income Tax Bills
- Application to coronavirus loan schemes extended
- Pay as you grow scheme on loan repayments
- VAT reduction within the Hospitality & Tourism sectors to be extended
- Deferred VAT bills to be paid in instalments
THE JOB SUPPORT SCHEME
From 01 November 2020, the furlough scheme will be replaced by Job Support Scheme (JSS) to support employees at risk of being made redundant once the CJRS ends and will run for 6 months. Under this scheme, employees will have to work at least 33% of their usual hours. The employer will then pay 1/3 of the remainder, as well as the government. However, this grant will be capped at £697.92 per month. Additionally, employer can also claim the Jobs Retention Bonus provided furloughed staff are kept on the JSS until the start of February 20201.
Under the JSS, employees working 33% of their normal hours with a gross monthly salary of £3,156.58, will receive at least 77% of their gross pay.
Example
|
Month Gross Pay
|
3,156.58
|
|
33% of usual hours
|
1,041.67
|
33% x £3,156.58
|
|
Employer's contribution
|
697.92
|
(£3,156.58 x 67% x 33%)
|
|
Government Contribution
|
697.92
|
(£3,156.58 x 67% x 33%) capped at 697.92
|
|
2,437.51
|
|
Percentage of normal pay
|
77%
|
£2,437.51 / £3,156.58
|
SEISS GRANT EXTENTION
The self-employment income support scheme (SEISS) will now remain opened for new applications until 30 April 2021 as opposed to 19 October 2019. The grant under this scheme will come into two taxable grants;
- 20% of average monthly profit, paid in a single instalment for the three months from 01 November 2020 to 31 January 2021, and capped at £1,875 in total.
- The level of the second grant covering another three months period from 01 February 2021, is yet to be reviewed by the government and will be set in due course.
MORE TIME TO PAY INCOME TAX BILLS
The Government has allowed self-assessment taxpayers a further extension from HMRC on the “Time to Pay” self-service facility meaning payments from July 2020, and those due in January 2021, can be deferred until January 2022.
NEW LOANS APPLICATION
The Chancellor has confirmed that the four existing business loan schemes will remain open for new applications until 30 November 2020, extended from 30 September 2020.
The business loan schemes include:
“PAY AS YOU GROW” SCHEME ON LOAN REPAYMENTS
In addition to the extension for new applications of the business loan schemes, the Chancellor has also increased the repayment terms of BBLS and CBILS from the maximum six years to 10 years, nearly halving the average monthly repayment. In addition, interest-only repayment for up to six months as well as payment holidays will be made available.
VAT REDUCTION WITHIN THE HOSPITALITY & TOURISM SECTOR
The VAT cut within the tourism and hospitality sectors currently at 5% will continue to run until the end of March 2021 as opposed to December 2020. This is purported to shore-up demand for hard-hit sectors.
NEW PAYMENT SCHEME FOR DEFERRED VAT BILLS
To help affected businesses further with cash flow, a payment plan for deferred VAT bills under coronavirus scheme will now be available. Rather than paying a lump sum to settle the deferred VAT bills by 31 March 2021, businesses will have the option to make 11 smaller interest-free payments through the 2021-22 financial year.
The Chancellor has listened to business owners, who are the life-blood of the economy and has continued to extend the much-needed financial support to ensure that businesses will be able to survive this pandemic.