CHANCELLORS COVID-19 UPDATE SEPTEMBER 2020Sep 24 2020
NEW JOB SUPPORT SCHEME ANNOUNCED
On the 24th of September, Chancellor Rishi Sunak announced a new job scheme starting on the 1st of November 2020, this will replace the current job retention (furlough) scheme which ends on the 31st of October 2020.
All small and medium-sized businesses are eligible but larger businesses must prove that their turnover has fallen during the pandemic. Employers can use the new scheme even if they have not previously used the furlough scheme.
The new scheme will last for six months until 30th of April 2021, to be eligible employees will need to work a minimum of 33% of their total hours. Of the remaining hours, the government and employer will pay one third of the wages each.
What does this mean?
- Employers will continue to pay the wages of staff for the hours they work as usual. For any hours not worked, the payment will be split between the employer and government who will pay one third each of their equivalent salary.
- Employees who can only go back to work on a limited basis will still be paid two thirds of the hours they cannot work.
- The level of grant will be calculated on an employee’s usual salary, capped at £697.92 per month.
As an example, an employee working 33% of their hours will receive at least 77% of their pay, 22% paid by the Government and 55% paid by their employer (the “worked” 33% plus 22%).
SELF-EMPLOYED INCOME SUPPORT SCHEME EXTENDED
The current self-employed grant (SEISS) will also be extended on the same basis as the job support scheme.
An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.
VAT CUT FOR HOSPITALITY SECTOR CONTINUES
The reduction in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021.
DEFERRAL OF VAT BILLS
Up to half a million businesses who deferred their VAT bills will be given more breathing space through the new payment scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
SELF-ASSESSMENT TAXPAYER – TIME TO PAY EXTENSION
Approximately 11 million self-assessment taxpayers will benefit from a separate additional 12-month extension from HMRC on the ‘time to pay’ self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
BOUNCE BACK LOAN – FLEXIBILITY TO PAY BACK AMOUNTS BORROWED
More than a million businesses who opted for a bounce back loan will get more repayment time through a new ‘pay as you grow’ flexible repayment system.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years. The chancellor also announced an extension in applications for the government’s coronavirus loan schemes until the end of November.