The Winter Economy Plan
The Chancellor has made a series of announcements about ongoing support for businesses suffering because of the coronavirus, intended to help them through the winter.
The Coronavirus Jobs Retention Scheme (CJRS) and the Self Employed Income Support Scheme (SEISS) are both due to finish at the end of October. The Chancellor has confirmed that the CJRS will indeed end on 31 October to be replaced by a very different support scheme, and an amended form of SEISS will continue. The new rules will come into effect on 1 November 2020 and it is intended that they will last until 30 April 2021.
Job Support Scheme
The government will partly subsidise the wages of employees who are not able to work their normal hours because of a lack of demand. To be eligible for the scheme an employee must work at least 33% of their normal hours. If they do, the government will pay to their employer (in arrears) an amount equal to one third of the amount of pay that is lost, capped at a maximum of £697.92 per month. The employer must pay another third of the pay that is lost, and the employee will bear the loss of the other third. This means the employee will be paid at least 77% of their normal pages.
The scheme will run for six months, and it cannot be used for any employees who are on notice of redundancy.
The scheme is available to all small and medium sized businesses (SME), but for larger companies, it is only available if they are able to show that their profits have been adversely affected by the virus. Large companies using the scheme will also be prohibited from paying any dividends during the period the scheme lasts.
Self Employed Income Support Scheme
The SEISS scheme is being extended. There will be two further payments made to all eligible self-employed individuals who are continuing to trade, using the same criteria as has applied to the payments already made. The first of these payments will cover the period from 1 November 2020 to 31 January 2021. This will be for 20% of the average monthly profits made by the business, capped at a maximum of £1,875 for the three month period. A second payment will be made to cover the period from 1 February to 30 April 2021, and the amount of this payment will be confirmed at a later date.
Bounce Back Loans
The term of any of these loans can be extended from the current maximum of six years to a new maximum of ten years. In addition to this, repayment on the loan can be amended to an interest only basis for a period of six months. This can be done a maximum of three times during the term of the loan. It will also be possible to suspend repayments on the loan completely for one period of six months at any time after at least six months of repayments have been made.
Coronavirus Business Interruption Loans
The term of any of these loans can be extended from the current maximum of six years to a new maximum of ten years.
VAT
The current reduction in the VAT rate to 5% on certain supplies relating to the tourism and hospitality industries will be extended until 31 March 2021.
Businesses that have deferred payment of VAT due from March to June 2020 that is currently due for payment in full by 31 March 2020 will be able to pay the amount owed in eleven monthly instalments during the 2021/22 tax year and no interest charges will be incurred as long as payments are made as they fall due. Businesses will have to opt-in to this scheme and details of how to do this will be published in the New Year.
Self-Assessment Tax
The self-assessment tax payment due on 31 July 2020 that has been deferred until 31 January can now be paid by monthly instalments over the year to 31 January 2022 for those taxpayers whose deferred liability is less than £30,000 through the use of the HMRC online service. Those taxpayers with liabilities of more than £30,000 cannot use the online service but can still apply for time to pay using the self-assessment helpline.