Date posted: 24th Sep 2020
On 24 September the Chancellor Rishi Sunak announced the government’s latest raft of support for businesses impacted by COVID-19. The measures, collectively referred to as the Winter Economy Plan, include a new job support scheme, further support for the self-employed, extensions and relaxations of the existing government backed loan programmes, and extra time for businesses and individuals to settle deferred HMRC liabilities. The key announcements are detailed below. We will update these pages as more information becomes available.
Job Support Scheme
The Chancellor announced that the existing furlough scheme will end as planned on 31 October. It will be replaced by a job support scheme, which will run for 6 months from 1 November 2020 to 30 April 2021. The key features of the new scheme are:
- Employees must work a minimum of 33% of their usual working hours.
- For every hour not worked, the government will pay one third of the employees, usual pay, capped at £697.92 per month.
- The employer will also pay a further 33% of the usual pay for every hour not worked.
- Employees who are on notice of redundancy cannot be included in claims.
- All SMEs are eligible but large companies must demonstrate that COVID19 has adversely impacted their business to be eligible to claim.
- Large companies will be barred from paying dividends whilst claims are being made.
The government have released a fact sheet providing more details which can be downloaded at here.
Self Employed Income Support Scheme
The existing SEISS scheme will be extended for a further period of 6 months. This will be open to individuals who:
- Are eligible for the existing SEISS scheme;
- Are continuing to actively trade; and
- Are facing reduced demand due to coronavirus.
An initial taxable grant of the lower of £1,875 and 20% of average month profits will be payable to cover November 2020 to January 2021. A further grant, which may be on different terms according to the circumstances prevailing, covering the period from February 21 to April 21 will also be paid.
Income tax self-assessment Time to Pay scheme
Self employed and other individuals who pay income tax under the self-assessment regime will be given more time to pay taxes due in January 2021. Taxpayers with up to £30,000 of self-assessment liabilities due (including those deferred from July 2020) will be able to use HMRC’s self-service time to pay facility to set up a plan to pay over up to 12 months. Those taxpayers not eligible for the scheme can still contact HMRC’s self-assessment Time to Pay helpline to seek agreement of a payment plan.
Deferred VAT – New Payment Scheme
The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments during the 2021-22 tax year. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
VAT reduction for Hospitality and Tourism sectors
The reduction in VAT from 20% to 5% for the hospitality and tourism sector is extended to 31 March 2021.
Bounce Back Loans – Pay as You Grow
The government has announced two key relaxations to the Bounce Back Loans scheme:
- All businesses that borrowed under the BBLS will have the option to repay their loan over a period of up to ten years (up from the original six year period).
- Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
The scheme will be open to new applicants until 30 November 2020. The Chancellor also confirmed that the government are developing plans for a successor loan guarantee scheme to launch in January 2021.
Coronavirus Business Interruption Loan Scheme
The government have announced that the existing scheme, due to end on 30 September 2020 will be extended to 30 November 2020. Furthermore, lenders will be provided with the flexibility to extend the term of the loan from the current six year limit to a maximum of ten years.
Full details on the measure above can be viewed on the gov.uk website – https://www.gov.uk/government/publications/winter-economy-plan/winter-economy-plan
Read more below:
Read more articles from our October 2020 tax news below:
- Still considering an electric company car?
- Errors in furlough claims
- Chancellor’s Winter Economy Plan
- Capital allowances – cliff edge approaching?
- Unlock funds within your company – make a R&D claim
- Retirement age and pension planning
- Get ready for leaving the EU on 1 January 2021