SYNOPSIS
The winter economy plan announced by the Chancellor covers 5 areas of support
- Payroll through shorter term hours – the Job Support Scheme (JSS)
- Extension to the self-employed income support scheme (SEISS)
- VAT reduction extension for the hospitality and tourism sector
- Extension to loan finance (BBLS CBILS) applications deadline
- Measures to assist cashflow by making it possible to extend the time to repay deferred vat and self-employed taxes and repay loans.
Payroll – Shorter Term Hours
Job Support Scheme (JSS)
All small and medium sized employers are eligible.
Employees are eligible provided they were on a Full Payment Submission before 23 September 2020. This means that some newer employees who were not previously eligible for the coronavirus job retention scheme (CJRS) scheme can be entered into the JSS.
There is no requirement for either the employee or employer to have used the coronavirus job retention scheme.
The new scheme starts 1 November 2020 ends in April 2021.
Employees will need to work at least 1/3rd of their usual hours to qualify and the employer must pay employees for the hours worked.
For each hour not worked the employer must pay 20 minutes, the Government pays 20 minutes and the employee is not paid for the remaining 20 minutes.
The Government contribution is capped at £697.92 per month for each employee on the scheme.
The employer will still have to pay the employers’ national insurance and employers' pension.
In essence the JSS provides support to businesses who wish to continue to employ their staff ready for next year but do not expect sufficient demand over the next few months to justify retaining their workforce full time.
The claims portal will open in December 2020 and the grant will be paid monthly in arrears.
You can claim both the new Job Support Scheme and the Job Retention Bonus (JRB) provided you meet the eligibility criteria.
Job Retention Bonus (JRB)
This was announced earlier (in July 2020) to provide a one-off payment to employers of £1,000 for each employee for whom the employer made a valid claim under the CJRS and who remained continuously employed through to 31 January 2021.
Eligible employees must earn at least £1,560 in total for the period between 1 November 2020 and 31 January 2021, with at least one payment being reported through RTI in each month.
Employers will be able to claim the JRB after they have filed their RTI returns for January.
Self Employed – Income Support Scheme Grant
The original scheme closes for the second grant claim on 19 October 2020 but the self-employed may apply if needed for two further grants
Grants are restricted to those eligible under the previous grant schemes regardless of whether you claimed or did not.
You must still be actively trading and intending to continue to trade and be impacted by reduced demand due to Covid-19 in the grant claim period.
There will be two further grants: -
First grant runs from 1 November 2020 to the date of claim.
The grant is capped at £1875.
It is calculated on 20% of average profits for a three-month period.
The calculation of average profits is still based upon trading profits reported on 2016/17, 2017/18 and 2018/19 tax returns.
The second grant runs from 1 February 2021 to the date of claim.
No other information is available about the level of the second grant.
Details of how to claim have not yet been released.
VAT REDUCTION – Hospitality and Tourism Sectors
The temporary reduction in vat to 5% has been extended from 12 January to 31 March 2021.
This applies to: -
Supplies of food and non-alcoholic drinks from pubs, bars, restaurants, cafes and similar.
Supplies of accommodation
Admission to visitor attractions in the UK
LOAN FINANCE
The deadline for applying for Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) has been extended. The new deadline for applications is 30 November 2020.
A bounce back loan can be converted to a CBILS loan, but this is only beneficial if seeking additional finance as the original loan must be repaid.
You can either have a BBLS or a CBILS not both.
The government guarantees 100% of the bounce back loan.
CASHFLOW ASSISTANCE
Loan Repayments
All Bounce Bank Loans (BBLs) can now be repaid over a period up to 10 years.
There is an option to move to interest only payments for up to six months.
- This can only be used three times during the loan period
Can only be used once during the loan period
- Must have paid six repayments before using this option.
- There is an option to pause repayments entirely for up to six months.
Coronavirus Business Interruption Loan Scheme (CBILs) - the intention is that these can also be repaid over up to ten years.
- This involves the government negotiating with the lenders as the government only guarantees 80% of the loan, so watch this space.
VAT Deferral
Those who deferred their March to June 2020 vat payment will have the option to spread the payment (originally the deferred VAT was due to be paid in one lump by 31 March 2021).
You must opt in in order to spread the repayment in 11 equal instalments between April 2021 to March 2022.
No interest is charged on the deferred payments provided they are paid on time.
More details will be announced by HMRC in early 2021.
Self Employed – Time to Pay
Any July 2020 tax (second instalment) that was deferred was originally due for payment in January 2021. This can now be further deferred to be paid over an additional 12 months.
The tax must be fully paid by 31 January 2022.
To be eligible for the extra deferral the tax debt must be less than £30,000.
The deferral claim is made using the online HMRC self-service Time to Pay facility.
NEED MORE ADVICE
If you want more information on these subjects or assistance with cashflows and forecasting please contact us:
Tyler-Waddington
Telephone 01686 639198