Posted by jonathanfullarton - September 25, 2020 2:51 pm Winter Economy Plan

Chancellor Rishi Sunak outlined his Winter Economy Plan to the House of Commons, setting out further Covid-19 measures as we head towards the winter season. 

Here is a summary of the new measures

Support for Jobs

New Job Support Scheme

During his address, the Chancellor announced a replacement to the Coronavirus Job Retention Scheme (CJRS), which ends in October.  The Job Support Scheme will start from November and is designed to:

• help support viable UK employers facing lower business demand due to COVID-19 and,
• to help them to retain their workforce when the ‘furloughing scheme’ ends.

Details of the Job Support Scheme

• The scheme will start from 1 November 2020 and run for six months.
• The scheme is open to all employers with a UK bank account and a UK PAYE scheme even if they have not previously used the furlough scheme.  All Small and Medium-Sized Enterprises will be eligible.  However, large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and should not make any capital distributions (such as dividends), whilst using the scheme.
• Employees must work a minimum of 33% of their usual hours to qualify.
• For every hour not worked the employer and the government will each pay one third of the employee’s usual pay.  The government contribution will, however, be capped at £697.92 per month per person.
• Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped.
• Employers will be reimbursed in arrears for the government contribution.
• Employees on redundancy notice will not qualify.
• Employers can claim both the Job Support Scheme and the Job Retention Scheme bonus.

Eligibility

To be eligible, employees must:  

• be registered on PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020
• work at least 33% of their usual hours. The government will consider whether to increase this minimum hours threshold after the first three months of the scheme.

Further eligibility criteria is available in the GOV‌.UK Job Support Scheme factsheet.

9 October update

Job Support Scheme expanded to firms required to close due to Covid Restrictions

• Under extended measures announced on 9 October, the Job Support Scheme will be expanded to support UK businesses which will be required to close their premises due to coronavirus restrictions
• If a business has to close due to Covd-19 restrictions the government will pay two thirds of employees’ salaries, up to a maximum of £2,100 per month, to protect jobs over the coming months
• In addition, cash grants for businesses required to close in local lockdowns also increased to up to £3,000 per month

SEISS Grant Extension – help for the self-employed

The SEISS Grant Extension will be limited to self-employed individuals who are currently eligible for the Self-Employed Income Support Scheme (SEISS) who are actively continuing to trade but facing reduced demand due to COVID-19.

Details so far

The SEISS Grant Extension scheme will last for 6 months, from November 2020 to April 2021. The grant extension will represent two taxable grants.

The grant will cover a three-month period from November until the end of January 2021. The first grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total. The second grant will cover a three-month period from the start of February until the end of April. Details of the second grant to follow in due course.

For more details you can download the GOV.UK SEISS Grant Extension Factsheet.

Other measures to ease the burden on businesses

Extending the temporary VAT reduced rate for hospitality and tourism

To help support cash flow and viability of over 150,000 UK businesses in these sectors and to help protect 2.4 million jobs the government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, together with supplies of accommodation and admission to attractions across the UK.

New Pay as you Grow Scheme

Rishi Sunak announced a “Pay as you Grow” scheme for businesses, which have previously taken out government, guaranteed loans during the crisis.

Under the Pay as you Grow Scheme the government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce 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 intends to allow CBILS lenders to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.

VAT deferral ‘New Payment Scheme’

The government will give businesses that deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses, which took advantage of the VAT deferral, can use the New Payment Scheme. Businesses will need to opt in, but all will be eligible. HMRC will put in place an opt-in process in early 2021.

Enhanced Time to Pay for Self-Assessment taxpayers

New Self Assessment Self-Serve Time To Pay Scheme

The government will give self-employed and other taxpayers more time to pay taxes due in January 2021, building on 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. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.

If your SA debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use our Time to Pay arrangement but you will need to call HMRC first to agree a payment plan.

If you deferred paying your July 2020 Payment on Account, you will need to pay the deferred amount, in addition to any balancing payment and first 2020/21 Payment on Account, by 3‌1‌‌ ‌‌January 2021. This may be a larger payment than you normally pay in January.

Support for public services

HM Treasury has already approved £68.7 billion of additional expenditure on public services for the immediate response to COVID-19, including £24.3 billion since the Plan for Jobs in July.

This includes:

• £16.4 billion further support for health services, including:
• A further £8.9 billion of spending to support capacity and services in the NHS;
• Over £5 billion for vaccines, including domestic vaccines R&D and manufacturing;
• Over £2 billion additional funding for the government’s Test, Trace, Contain and Enable programme to support the unlocking of the economy. This includes £1.5 billion for preparations for mass testing.
• Over £2 billion additional funding for local government in England, including the more than £500 million increase to support infection control in care homes.
• £60 million for enforcement and compliance, including COVID-19 Marshals and;
• £5.8 billion across other public services, including targeted support for essential public transport and funding for the Department of Work and Pensions, HMRC, Home Office, and Ministry of Justice to support responses to the impacts of COVID-19.

Help for devolved administrations

HM Treasury has also made commitments to the devolved administrations, guaranteeing that they will receive at least £12.7 billion in additional funding this year on top of their Budget 2020 funding.

This is split as follows:

• £6.5 billion for the Scottish Government,
• £4 billion for the Welsh Government and,
• £2.2 billion for the Northern Ireland Executive.

You can download a pdf version of this update below.

More help

If you are a business person and need help with cash flow and running your business during Covid-19 do call your local MFW office who will be able to offer advice and further help.