Government announces further measures to assist businesses impacted by COVID-19
Further changes to these schemes were made on 22 October 2020, you can view these here
Today (24 September 2020) the Chancellor of the Exchequer announced several further measures aimed at assisting businesses impacted from COVID-19. These include assistance for employees, the self-employed, VAT deferments and extensions to the VAT cut for the leisure and hospitality sector.
A summary of the measures announced is as follows:
Job support scheme for employees
A new Job Support Scheme will be introduced from 1 November to protect what the Government describes as ‘viable jobs’ in businesses who are facing lower demand over the winter months due to coronavirus.
Under the scheme, which will run for six months, the Government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
Employers will continue to pay the wages of staff for the hours they work, and for the hours not worked, the Government and the employer will each pay one-third of their equivalent salary.
This means that employees who can only go back to work on shorter hours, will still be paid two-thirds of their salary for those hours they cannot work.
The scheme is intended to only support viable jobs. Employees must work at least 33% of their usual hours. The level of grant will be assessed based on an employee’s usual salary, which will be capped at £697.92 per month.
This scheme will be open to all small and medium-sized businesses (larger businesses are only eligible when their turnover has fallen through the crisis) even if they have not previously used the furlough scheme, although those that have used the furlough scheme will also be eligible. Further guidance will be published in due course.
Self Employment Income Support Scheme Grant (SEISS)
The Government is also extending the Self Employment Income Support Scheme Grant (SEISS). A taxable grant will be provided, initially to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to the impact of coronavirus. An initial lump sum will cover three months’ worth of profits for the period from November 2020 to the end of January 2021.
This will be worth 20% of average monthly profits, up to a maximum of £1,875.
A second grant (which may be adjusted to respond to changing circumstances), will be available for self-employed individuals, which will cover the period from February 2021 to the end of April 2021.
Extension to the VAT cut for tourism and hospitality
The temporary cut in VAT from 20% to 5% for the tourism and hospitality sectors will now be extended until the end of March 2021.
A new payment scheme is being launched for businesses who deferred their VAT bills In April 2020. This will give these businesses the option to pay back this VAT bill in smaller instalments. Instead of paying in full at the end of March 2021, these businesses will be able to make 11 interest-free payments during the 2021-22 financial year.
12-month time to pay extension for self assessment taxpayers
A 12-month extension from HMRC on the “Time to Pay” facility will be available to self assessment taxpayer, meaning payments deferred from July 2020, and those due in January 2021, will now only need to be paid by 31 January 2022.
It is understood that those with tax debt of up to £30,000 will be able to set up a payment plan online over 12 months to January 2022, if they are facing difficulties to pay. Those with debts over this amount will need to speak to HMRC to set up the plan.
The January 2021 self assessment tax return will still need to be filled on time by 31 January 2021. in fact, it will be important to understand your liability as soon as possible, especially if you wish to elect to make a Time to Pay arrangement.
Flexibility in paying ‘Bounce Back Loans’
A new Pay as You Grow flexible repayment system is being introduced for those businesses who took out a Bounce Back Loan.
This will include extending the length of the loan from six years to ten. Interest-only periods of up to 6 months together with payment holidays, will also be available to businesses.
The Government also intend to provide Coronavirus Business Interruption Loan Scheme lenders the ability to extend loans lengths from a maximum of six years to ten years, where it will help businesses to repay the loan.
Applications will also be extended for the Government’s coronavirus loan schemes until the end of November. These include the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.
The details for much of these schemes is still emerging and we will provide an update on our website when this has been received. In the In the meantime, further information on how the Government is helping businesses impacted by COVID-19 can be found on their website here.
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