The Chancellor announced the Coronavirus Winter Economy Plan which aims to support businesses over the winter period as restrictions are once again being increased.  The official Budget has been postponed until next year in view of current uncertainties.  The current Coronavirus Job Retention Scheme ends on 31 October 2020 and the government has introduced the Job Support Scheme from 1 November which will run for 6 months to help keep employees on the workforce:

  • Employers may use the scheme even if they have not previously used the furlough scheme
  • All small and medium sized businesses are eligible whilst larger businesses will need to show that their turnover has fallen during the pandemic
  • The scheme will open on 1st November 2020 and run for 6 months, until April 2021
  • Employees will need to be working for a minimum of 33% of their hours
  • Employers will continue to pay the wages of their staff for the hours they work
  • The Government will pay 1/3 of hours not worked up to a cap, the employer also contributing 1/3
  • The level of grant will be calculated based on the employee’s usual salary, with the Government contribution being capped at £697.92 per month
  • Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough
  • Grant payments will be made in arrears meaning the employer will be reimbursed for the Government’s contribution
  • Class 1 employer NICs and pension contributions will remain payable by the employer
  • Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee
  • Claims for support through the Job Support Scheme can be made online through Gov.uk from December 2020

Self- Employed Income Support Scheme (SEISS)

This is also being extended on the same basis as the job support scheme which means that it will last for six months from November 2020 to April 2021:

  • The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19
  • You do not have to have claimed the previous grants
  • Grants will be paid in two lump sum instalments each covering a three-month period
  • The first grant will cover a three-month period from the start of November until the end of January. The Government will provide a taxable grant covering 20 per cent of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total (based on a profit of £37.5k)
  • The second grant will cover a three-month period from the start of February until the end of April. The Government will review the level of the second grant and set this in due course
  • The grants are subject to Income Tax and National Insurance Contributions
  • If you have been paid the existing grant which didn’t meet all the conditions or was excessive for any reason then you MUST notify HMRC by the later of 20th October 2020 or 90 days after receiving the SEISS

Other support announcements were:

  • Continuation of the VAT cut for the hospitality sector.  The VAT reduction of 5% for the hospitality and tourism sectors will be extended until the end of March 2021
  • Deferment of VAT bills.  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. Instead of paying a lump sum in full at the end of March 2021, they will be able to make 11 smaller interest-free payments during the 2021-2022 financial year
  • Self-assessment taxpayers – an extension for an additional 12-month from HMRC on the “Time to Pay” self-service facility, meaning self assessment payments on account deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022
  • Bounce Back Loans – a longer repayment time through a new Pay as You Grow flexible repayment system which 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
  • Coronavirus Business Interruption Loan Scheme – Lenders are to be given  the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan

The Coronavirus Winter Economy Plan will be welcome by many businesses who would have struggled to continue without at least some assistance, and is in line with keeping people working rather than facing an increasing level of unemployment.  Further details will be released in due course but this does give some welcome certainty to plan for the next few months. You should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”