How do the new Covid support measures alter the prospects for your jobs, staff or businesses?
HERE'S THE SNAPSHOT SUMMARY
JOBS SUPPORT SCHEME TO REPLACE FURLOUGH
There is a Job Support Scheme Factsheet published by the Government – please see attached for the full details, or click the link. We recommend printing this out to refer to if you intend to use the scheme.
1.It will begin on the 1st November 2020 and run for 6 months, ending on the 30th April 2021.
2.It is open to all SME employers with a UK banking facility and UK PAYE scheme in place on or before the 23rd September 2020. Only larger businesses will have to meet a financial assessment test.
3.Employees will need to work a minimum of 33% of their usual or contracted hours for the first 3 months of the scheme (this may be subject to increase by government after 3 months). For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month. The employer can choose to top this up to 100% at their own expense.
5. Employees using the scheme will receive at least 77% of their pay up to the cap of £697.92 per month.
6. Employees can come on and off the scheme, but each period on the scheme must be for a minimum of 7 days (it is not yet clear if this is calendar or working days).
7. The employer will be reimbursed in arrears for the government contribution and claims can be made from December 2020.
8. The scheme does not cover Class 1 employers NIC’s or pension contributions, which remain payable by the employer.
9. The employee must not be made redundant or put on notice of redundancy during the period the employer is claiming the grant for that employee. This is a big difference from the Furlough scheme, which did allow for it to cover redundancy notice periods. This is because the intention of the scheme is to support roles which will remain but are impacted by a reduction in demand due to Covid over the Winter period.
10.Previous use of the Furlough scheme is not a pre requisite of using this scheme.
11.The employee must be on payroll on or before the 23rd September 2020.
12.Employers can use this scheme alongside the January £1000 Job Retention Bonus, if they meet eligibility requirements.
13.Employee agreement, in writing, similar to that required for the Furlough scheme is required.
14.As you would expect, HMRC will be checking on claims to minimise fraud or incorrectly made claims, so be sure to following the full guidance carefully, once it is issued.
Example
Beth normally works 5 days a week and earns £350 a week.
Her company is suffering reduced sales due to coronavirus.
Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
• Her employer pays Beth £140 for the days she works.
• And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
• The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
Hours Employee Worked 33% 40% 50% 60% 70%
Hours Employee Not Working 67% 60% 50% 40% 30%
Employee Earnings (% of normal) 78% 80% 83% 87% 90%
Gov’t Grant (% of normal wages) 22% 20% 17% 13% 10%
Employer Cost (% normal wages) 55% 60% 67% 73% 80%
It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021.
Businesses can benefit from both schemes in order to help protect jobs.
We have a separate blog on the Job Retention Bonus of £1,000 per furloughed worker, which is payable in February
SEISS : - TWO MORE GRANTS FOR THE SELF- EMPLOYED
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 - ensuring our support continues right through to next year.
10 YEAR TERMS FOR BOUNCE BACK LOANS AND CBILS
Applications for the four key loan schemes have been extended to November 30
CBILS, CLBILS, the Bounce Back Loan Scheme and the Future Fund.
Deadline for decisions on applications for BBL and CBILS extended to December 31
Extension of Bounce Back Loan terms to 10 years
Pay As You Grow repayment flexibility with the option of a 6month interest only payment term or payment holiday
Option for lenders to extend CBILS repayments up to 10 year term.
New successor loan programme to be announced which will start in January
TAX DEFERRALS IF NEEDED FOR 2021
RETAIL & HOSPITALITY VAT CUT EXTENSION
Extension on the temporary 15% VAT cut for the tourism and hospitality sectors to March 31 next year.
VAT DEFERRAL INSTLAMENTS
On 24 September 2020, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period.
Instead of paying the full amount by the end of March 2021, you can make smaller payments up to the end of March 2022, interest free.
You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.
Those that can pay their deferred VAT can to do so by 31 March 2021.
If you are still unable to pay the VAT due and need more time, see the guidance about what to do if you cannot pay your tax bill on time you can also contact us by phoning: 0300 200 3835.
More information on the scheme will be available on GOV.UK in the coming months.
For advice and information on other support available use the get help and support for your business guide.
ENHANCED TIME TO PAY FOR SELF-ASSESSMENT TAXPAYERS
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.
The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020.
Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months.
This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
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email our dedicated, support team at covid19@tagac.co.uk