On Thursday 24 September the Chancellor delivered his “Winter Economy Plan”, in lieu of the Autumn Budget which has been cancelled – unsurprisingly, as its nigh on impossible for anyone, individuals, businesses, or countries to budget.
This was very much business focused, and the main announcements are as below. As always, these are headlines, you will need to check details. Also, please note this is a first quick review, so e&oe.
Job Support Scheme – this replaces the Furlough Scheme (Cornonavirus Job Retention Scheme) and runs from 1 November 2020 for six months. During this time where employees are short working, at least 33% of their contracted hours, for the hours not worked the government will contribute one third of the value of the reduced hours, with the employer contributing another third. The employer continues to pay for the hours worked. The Government contribution is capped at £697.92/m.
For example, for someone on £2,000 a month working 50% hours, they would get £1,000 normal pay plus £333 extra from their employer and £333 from the government (paid via employer).
The employer bears the cost Employees NI and pension contributions.
Comment – this equates to a maximum 22% subsidy from Government – better than nothing, but not a huge amount.
Self-Employment Income Support Scheme – the previously “second and final” grant is no longer final!
A third grant is being paid at 20% of average monthly profits for November 2020 to January 2021, up to a total of £1,875 for the three months (so £625/m).
Just to note a couple of things:
- The eligibility is as before – trading 2018/19, profits less than £50,000 and Self Employment more than half of your income
- The reference period of “average monthly profits for November 2020 to January 2021” is really meaningless – its still referenced to historic average profits 2016-17 to 2018-19
A fourth grant will be paid in the spring amount not known – in Governments own words “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”
By the way – the deadline for applying for the Second Loan is 19 October 2020.
Reduced VAT rate for Hospitality – the 5% vat rate is extended to end of March 2020 (was due to end mid January)
VAT Deferral Deferral – for businesses who deferred VAT in Spring/Early summer 2020 and were due to pay this by end of March 2021, the payment can now be spread over 11 instalments.
Self-Assessment Deferral – a “Time to Pay” “Self Service Facility” which will defer Self-Assessment payments originally due in July 2020 or January 2021 to January 2022.
From one of our professional newsletters, apparently “the taxpayer will have to apply for time to pay to spread the tax due over 12 monthly instalments to January 2022. Where the total tax due doesn’t exceed £30,000 the application for time to pay will be agreed automatically when the taxpayer applies using an online form. If the tax due exceeds £30,000 or the taxpayer needs longer to pay, the telephone service will still be available to agree a bespoke payment plan.” – we haven’t been able to verify this to a Government source.
Coronavirus Loan Repayment Flexibility – Flexible extensions to Bounce Back Loans and Coronavirus Business Interruption Loans – for Bounce Back Loans the loan period can be extended from six years to ten years, and options to suspend repayments or move to interest only for up to six months, making the scheme “Pay as you Grow”
The BBL application period is also extended to end of November 2020.
