Coronavirus Support Update - 13 Oct

With today’s announcement from Rishi Sunak, we look at what is available to business through the autumn and into 2021.

JOB SUPPORT SCHEME

The current Job Retention Scheme ends on 31st Oct and will now be replaced by the Job Support Scheme. It will run at least until end of April and its terms reviewed after three months.

The scheme offers a government payment of 22% of an employee’s salary (capped at £697.22 per month) if the employee is working at least 33% of their usual hours at full pay and the employer contributes a further 22.22% of the full salary.

The following sets out a schedule of how this might work for an employee on £3,000 salary per month:

• Employer pays 33% of salary for 33% of usual hours worked - £1,000

• Government pays 22.22% top up for unworked hours - £667

• Employer pays 22.22% top up for unworked hours - £667

• Total pay for employee - £2,334

• Total wage paid by employer - £1,667 *

*The employer is also required to pay the pensions and Employer’s NI on the total employee’s pay.

Restrictions

A number of restrictions were announced with the scheme:

• Employees must not be on redundancy notice

• Employees will be able to come and off the scheme and do not need to work the same hours each week, but each period under the scheme must be at least one week

• Employers have a UK bank account and be running PAYE

• Small and medium size companies are automatically eligible but large companies have additional eligibility criteria

SELF EMPLOYED INCOME SUPPORT SCHEME

A third round of Self Employed Income Support Scheme (SEISS) was also announced.

It is much less generous than the first two rounds. 20% of average monthly profits is now offered capped at £1,875.

It is not yet clear when the scheme will be opened.

A fourth round of the scheme has also been promised to start after 31st January 2021 to be based on tax returns for the 2019-20 tax year.

TAX DEFERRALS

Self Assessment

It was already agreed that July’s payment of Self Assessment (second payment on account for the 2019-20 tax year) could be deferred until 31st Jan 2021.

The Chancellor has now announced that all payments of Self Assessment due on 31st Jan 2021 can now be deferred. These include:

• July 2020 second payment on account for 2019-20 tax year

• Balancing payment of tax for 2019-20 tax year

• First payment on account for 2020-21 tax year

However where previously no action was required to agree a deferral, tax payers must now apply to spread the payments over 12 months.

For tax bills under £30k this will be an online process and automatically accepted. For bills over £30k this will need to be negotiated by phone.

VAT

The payment of VAT liabilities that fell between 20th March and 30th June 2020 were deferred until 31st March 2021.

The Chancellor has offered business to extend this deferral by applying online to spread the repayment over 11 months from Apr 2021 to March 2022.

The VAT rate for hospitality and tourism that had been due to return to 20% from 5% on 13th Jan 2021 will now continue to 31st March 2021.

BOUNCE BACK AND CBILS EXTENSIONS

The deadline for applying for loans has been extended to 30th November.

Repayment terms have been also been relaxed. Repayments plans will now be offered over 10 years with a 6 month interest only period.

This will potentially halve monthly repayments once they fall due.

The Bounce Back Loan has now been rebranded as ‘Pay as you Grow’.