Winter Economy Plan

Rishi Sunak unveils government’s plan to protect jobs and support businesses over the coming months. 

Read the winter plan here

https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan

You can read my factsheet below:

NEW JOB SUPPORT SCHEME

 

Job Support Scheme Factsheet

  1. What is it?
  • The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
  • Now the economy is opening up, we should target support on those businesses that need it most: focusing on those that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.
  • The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
  • Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
  • The scheme will open on 1 November 2020 and run for 6 months, until April 2021.

Further guidance will be published shortly.

  1. Who is eligible?
  2. Employers
  • All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
  • Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
  • Our expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.
  1. Employees
  • Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
  • In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
  • Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.
  1. What does the grant cover?
  • For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month.
  • Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
  • “Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. Full details will be set out in guidance shortly. 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.
  • Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
  1. What does it mean to be on reduced hours?
  • The employee must be working at least 33% of their usual hours.
  • For the time worked, employees must be paid their normal contracted wage.
  • For time not worked, the employee will be paid up to two-thirds of their usual wage.
  • 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.
  1. How can I claim?
  • The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis.
  • Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
  1. HMRC checks
  • HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.
  • Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
  • Our intention is that employees will be informed by HMRC directly of full details of the claim.
  1. Examples
  • 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.

 

SELF EMPLOYED INCOME SUPPORT SCHEME

Two new grants that will be available to self-employed individuals who have previously qualified for the scheme, although they don’t have to have made a previous claim, and who are actively continuing to trade but their business has been reduced due to coronavirus.

As part of the claim, they will need to declare that they are impacted by reduced demand in the qualifying period, which is for the period 1st November to the date of the claim. 

The scheme is extended for a further six months covering the period from November 2020 to April 2021, with the first grant covering the period November to January. This grant will cover 20% of average monthly trading profits and will be paid out in a single instalment covering the initial period of the extension, capped at £1,875 in total. 

The second grant will cover the three-month period from February to April and the level of this grant will be reviewed and set in due course, based on changing circumstances. 

No date announced for the payment of the first grant under the extended scheme as yet, and no details on how to apply have been confirmed. However, a November date is anticipated, with the current portal believed to remain open to facilitate applications. As before, HMRC will look to accountants and bookkeepers to support their clients through the eligibility checking and application process.

As with the previous grants under the same scheme, all payments are subject to tax and national insurance contributions. 

 

TAX CUTS AND DEFERRALS

VAT reduction to 5% for tourism and hospitality is being extended to 31st March 2021.

A New Payment Scheme will be available to businesses who deferred their VAT bills.  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.

A “Time to Pay” service will be available for self-assessment taxpayers.  This means there will be a 12-month extension meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

 

 

 

BUSINESS LOANS

Bounce Back Loans – there will be a new “Pay as you Grow” flexible repayment scheme to allow businesses to repay the loan over 10 years and not the original 6 years.  This will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.

Coronavirus Business Interruption Loan Scheme loans will also be extended from 6 to 10 years.

More businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.

Coronavirus support for businesses

1  VAT PAYMENT HOLIDAY

On 21st March, Chancellor Rishi Sunak announced that The Government will be supporting businesses by allowing them to defer VAT payments for three months.  

The deferral will apply for payments that would normally arise from 20th March 2020 to 30th June 2020, for VAT periods ending February, March and April 2020.

Businesses will be given until April 2021 to pay any liabilities that have accumulated during the deferral period. No penalties or interest will be charged in the deferral period. 

Importantly, HM Revenue and Customs will continue to pay VAT refunds as normal.

What you should do now

The VAT payment holiday will be applied automatically with no application process required. However, you must still file your VAT return as normal as it’s just the payment that is deferred. 

If payments are collected by Direct Debit, businesses are advised to cancel to avoid collection during the holiday period.

Please note – payments due after 30th June will need to be paid as normal

2  CORONAVIRUS JOB RETENTION SCHEME – FURLOUGHED EMPLOYEES

Chancellor Rishi Sunak has pledged that the Government will help businesses financially affected by the coronavirus by paying the wages and safeguarding millions of workers. 

Mr Sunak explained that these “unprecedented measures for unprecedented times” would see HM Revenue and Customs (HMRC) reimburse 80% of workers wage costs, up to a cap of £2,500 per month.

The wage protection scheme will cover the cost of wages, which is related to gross pay, and be backdated to 1st March 2020 (if furloughed from this date) and will initially run for three months but will be extended by the Government if it considers this necessary.  

What you should do now

  • Designate affected employees as ‘furloughed’ workers and notify employees of this change in writing. Employees CANNOT work whilst on furlough leave
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC have intimated this will be available towards the end of April

3  CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME

The Coronavirus Business Interruption Loan Scheme (CBILS) is now available to businesses who need help following disruption to their cashflow as a result of the coronavirus outbreak.

CBILS key features

  • The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years
  • The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender
  • No fee for smaller businesses. Lenders will pay a fee to access the scheme
  • The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments
  • Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
  • At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so
  • The borrower always remains 100% liable for the debt

Is my business eligible for CBILS?

Smaller businesses from any sector can apply for the full amount of the facility. However, to be eligible for a facility under CBILS, any small or medium sized business must:

  • Be UK-based in its business activity, with annual turnover of no more than £45m
  • Have a borrowing proposal which, were it not for the current COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty

What you should do now

Talk to your Relationship Manager at your own bank as this is available via them.

4  BUSINESS RATES AND CASH GRANTS IN SCOTLAND

Economy Secretary Fiona Hyslop has outlined the actions being taken by the Scottish Government to support business during this time:

  • A full year’s 100% non-domestic rates relief for retail, hospitality and tourism
  • £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief
  • £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000
  • 1.6% relief for all properties, effectively freezing the poundage rate next year.
  • Urging local authorities to relax planning rules to allow pubs and restaurants to operate temporarily as takeaways
  • Extending the go live date for the deposit return scheme to July 2022
  • Halting the introduction of the Visitor Levy Bill

What you should do now

HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. You can now call them on 08000 241222. Opening hours are from 8am to 4pm Monday to Friday.

https://www.gov.scot/news/gbp-1-billion-business-support-fund-opens/

5 – TIME TO PAY ARRANGEMENT FOR PAYE PAYMENTS

All businesses in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.  To be eligible, your business must pay tax to the UK Government and have outstanding tax liabilities.

What you should do now

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

6  SSP RELIEF SCHEME

SSP payments will be paid to employees from day 1 if ill due to COVID-19 up to a maximum of 2 weeks.  Businesses must be UK based and is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

 

CORONAVIRUS SUPPORT – SELF-EMPLOYED

1  SELF EMPLOYED INCOME SUPPORT SCHEME

Chancellor of the Exchequer, Rishi Sunak, has announced “one of the most significant economic interventions” from a UK Government with a much-needed Self-Employed Income Support Scheme, protecting the nation’s five-million-strong army of self-employed professionals. The scheme will also apply to members of partnerships.

This scheme will give self-employed individuals a taxable grant worth 80% of average monthly profits, up to £2,500 a month. Payments are expected to be available by the beginning of June as 1 lump sum instalment covering March to May 2020.

The calculations will be based on individuals’ self-assessment tax returns for the last three tax years, where possible, to obtain a fair and reasonable average.

Those with only one year of trading history will have their income based solely on their most recent self-assessment tax return.  If no tax return lodged, individuals are being urged to apply for Universal Credit.

The scheme will be open to all individuals with trading profits up to £50,000 in tax year 2018/19 or an average trading profit of less than £50,000 from earlier tax years, 2016/17, 2017/18 and 2018/19, and where those individuals derive more than half of their income in these periods from self-employment. 

What you should do now

HMRC will identify and contact eligible individuals in the coming days.

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

2  SELF ASSESSMENT TAX RETURNS 18/19 STILL TO BE LODGED

The Chancellor also provided a lifeline for taxpayers that missed the 31st January 2020 deadline for 2018/19 self-assessment tax returns, with taxpayers given a new deadline of 23rd April 2020.

What you should do now

Arrange for your self-assessment tax return to be lodged without further delay.

3  DELAYS TO INCOME TAX DUE VIA SELF-ASSESSMENT

Payments on account for self-assessment taxpayers due on 31st July 2020 have been delayed until 31st January 2021.

4  DIRECTORS OF LIMITED COMPANIES

The Self-Employed Income Support Scheme applies only to the self-employed or members of a partnership, not directors of limited companies.

HMRC has stated that if you are a director of your own company and are paid through PAYE, then you may be able to get support using the Job Retention Scheme instead. This, however, only covers the salary that you take from your limited company and will not include any dividends that you may receive. 

What you should do now

Speak to your Accountant for advice.

5  MORTGAGE HOLIDAY

If you are experiencing financial difficulties meeting your mortgage repayments because of COVID-19, you may be entitled to a mortgage or rental holiday for 3 months. This includes if you are a landlord whose tenants are experiencing financial difficulties because of COVID-19. If you are a tenant experiencing financial difficulties because of COVID-19, the government will ensure you do not face the threat of eviction for at least 3 months:

  • the government has agreed with mortgage lenders that they will offer repayment holidays of 3 months to households in financial difficulty due to COVID-19
  • this will also apply to landlords whose tenants are experiencing financial difficulties because of COVID-19
  • the offer of a payment holiday can be made available to customers who are up to date with payments and not already in arrears
  • emergency legislation will be taken forward so that landlords will not be able to start proceedings to evict tenants for at least a 3 month period. This applies to private and social renters
  • at the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances

What you should do now

Speak to your lender.

6  PERSONAL LOANS OR CREDIT CARD BILLS

If you are experiencing difficulties paying back personal loans or credit card bills as a result of COVID-19, you should read the following information:

  • the Financial Conduct Authority (FCA) called on lenders to use flexibility built into their rules to support consumers, taking into account customers’ individual circumstances. Many major lenders have already made statements to this effect
  • if you are experiencing difficulties paying back loans or credit card bills because of COVID-19, you should talk to your lender
  • if you agree a payment holiday with your lender, they should record these in such a way that will not impact on your credit score

What you should do now

Speak to your lender.

5  LODGING YOUR 19/20 TAX RETURN EARLY

With the COVID-19 pandemic locking down most of the world, your annual income tax return for the 2019/20 tax year will probably be one of the last things from your mind.

However, under these strange circumstances, the earlier your return is lodged, the earlier you will receive a refund if applicable. 

What you should do now

Speak to your Bookkeeper or Accountant .

HMRC has set up a helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. You can now call them on 08000 241222. Opening hours are from 8am to 4pm Monday to Friday.

https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

https://www.gov.uk/guidance/coronavirus-covid-19-information-for-individuals-and-businesses-in-scotland

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