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COVID-19: New support for businesses and employees announced

COVID-19: New support for businesses and employees announced

April Foster

The Government has announced today further welcomed measures of financial support to businesses and employees.

Job Support Scheme (JSS)
The existing job retention scheme will end on 31 October 2020 and will be immediately replaced with the new Job Support Scheme, which will run for six months until 30 April 2021.
Key facts:

  • Employees have to work a minimum of 33% of their normal hours.
  • The government will pay 1/3 of unworked hours, capped at £697.92 per month.
  • The employer will pay 1/3 of the unworked hours.
  • Employees will receive at least 77% of their normal pay, where the government contribution hasn’t been capped.
  • The employer will be reimbursed in arrears.
  • The employee must not be on redundancy notice.
  • The scheme is open to all employers, with a UK bank account and UK PAYE scheme.
  • Large businesses will be required to demonstrate their business has been affected by COVID and will not be paying any dividends whilst using the scheme.

Self-employment Grant scheme extension (SEISS)
The scheme will last for a further six months, from 1 November 2020.

 Key facts:
  • Have to be currently eligible for the existing scheme
  • Actively continuing to trade but are facing reduced demand due to COVID
  • Made up of two taxable grant payments
  • The first grant will be for three months to 31 January 2021.  It will cover 20% of the average monthly trading profits for three months, capped at £1,875 in total.
  • The second grant will be for three months to 30 April 2021.  Details of this grant have yet to be decided.

VAT deferral “New payment scheme” 
Those businesses that deferred their VAT liability during the period March to June 2020, will have the option to spread the payment over the year 2021-2022 rather than paying in full by 31 March 2021.  Businesses will need to opt in and HMRC will put the systems in place in early 2021.
Enhanced time to pay for self-assessment tax payers 
The government will allow more time to pay the tax due in January 2021, building on the deferral option provided in July 2020. 
Tax payers with a liability of up to £30,000 will be able to use HMRC’s self-service time to pay facility, securing a plan to pay over an additional 12 months. This means that tax liabilities that were due by 31 July 2020 will not need to be paid until 31 January 2022.
Extension of the VAT reduced rate in hospitality and tourism sectors
The reduced VAT rate of 5% will continue until 31 March 2021.
Pay as you grow 
Further flexibility has been announced in relation to the bounce back loans.  Businesses will have the option to repay their loan over 10 years.  They will also have the facility to move temporarily to interest only payments for periods of up to six months (can be used up to three times) and they can have a repayment break for up to six months (can be used only once after having repaid six instalments).
Extension to finance schemes 
The government has extended the four existing loan schemes (bounce back loans, business interruption loans, large business interruption loans and future fund) for new applications to 30 November 2020.

We will provide further updates on the above measures as more detailed guidance is published by HMRC.

If you need further support or guidance, please contact your local Moore office