With the future so uncertain plans for a full-scale Autumn Budget were scrapped by Rishi Sunak and instead he shared details of his Winter Economy Plan yesterday. Please read on for a summary of the key points and takeaways…
JOB SUPPORT SCHEME
The Chancellor confirmed that the furlough scheme is ending on 31 October as originally planned and will be replaced by the Job Support Scheme for 6 months starting 1 November 2020. The new Job Support Scheme is primarily targeted at small and medium-sized businesses. The replacement schemes basic details are:
- An employee needs to work at least 33% of normal hours. The employer pays for these hours.
- Of the remaining 67% of normal pay, the employer pays 33% and the government pays 33%.
- The subsidies (from employer and government) towards pay for hours not worked are 33% of 67% each – which is equivalent to 22% of 100% each.
- So, where an employee works 33% of normal hours, the employer funds 55% of normal pay and the government funds 22%. The employee will receive 77% of normal pay and forego 23%.
- If an employee works more than 33% of normal hours, the above figures change proportionately (see the examples at the end of this link).
- The level of government subsidy is capped at £697.92 per month.
- The claim will only cover gross pay and will not cover the Employers NI or Pension
- The scheme is open to businesses even if they didn’t previously use the furlough scheme.
- The employee has to have been on the payroll before the 23rd of September and the RTI would have to be filed before this date which for the majority of you would mean that they would have had to be added on the August payroll.
- The government will reimburse the 33% that they will pay meaning that the employer will have to front the cost and the claim can be made after the payroll has been submitted
- Employees cannot be put on notice of redundancy or made redundant during the period that they are on the Job Support Scheme
- More detailed guidance will be issued in due course.
SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
This scheme is being extended for a further six months from November 2020 to April 2021. The basics are:
- To be eligible you must have been eligible for the previous (second) phase of the SEISS grant.
- The claimant must be actively trading but experiencing continuing reduced demand due to Coronavirus.
- The grant will be worth 20% of average monthly profits, up to a total of £1,875 (£625 a month). The assumption here is that the calculation is based on historic profits as previously.
- The grant will be paid in two instalments, one for November to January and one for February to April
- The second instalment may be at a different level to the first however that is to be reviewed
TOURISM AND HOSPITALITY VAT
The current VAT reduction from 20% to 5% is being extended until the end of March 2021. Previously it was due to finish mid-January 2021.
VAT DEFERRAL AND THE NEW PAYMENT SCHEME
Businesses who deferred the VAT payment due for the quarter ended February/March/April 2020 and who are due to pay the deferred amount in March 2021 will be able to apply under the New Payment Scheme to pay the amount due by 11 interest-free monthly instalments.
You will have to opt-in to be able to do so and the process to opt-in is expected to be in place by early 2021
SELF-ASSESSMENT TAX DEFERRAL AND THE NEW PAYMENT SCHEME
The self-employed and other self-assessment income taxpayers will be given more time to pay the tax due in January 2021. Providing the amount due is up to £30,000, taxpayers will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months
PAY AS YOU GROW
The Bounce Back Loan (BBS) and Coronavirus Business Interruption Loan Scheme (CBILS) were initially set with a payback period of six years. There will now be the option to extend this to ten years. This will cut monthly repayments but please remember the loan still needs repaying.
Help and Assistance from Together Accounting:
Our aim, as always, is to provide as much information and assistance to clients as possible.
Please contact a member of the team with any questions or concerns.