On the 25th September 2020, the chancellor took to the house of commons to announce a new round of policies. The new measures were set in place to continue supporting viable businesses and reduce the financial burdens relating to current increased restrictions. The key announcements were as follows:
Job Support scheme (JSS)
This is the direct replacement for the current Coronavirus Job Retention Scheme (CJRS) and is designed to support “viable jobs”, where an employee can work at least 33% of their normal hours.
Who is Eligible?
- The scheme will open on the 1st November 2020 and run for six months. Employers will be able to make a claim on-line through Gov.uk from December 2020.
- All small and medium businesses are eligible, but larger business must show that their turnover has decreased during the crisis.
- The JSS can be claimed even if the furlough scheme has not been used by an employer.
- Employees must be on the employers PAYE payroll on or before 23rd September 2020. This means a RTI submission must have been made on or before 23rd September 2020.
- The employees must work at least 33% of their usual hours. After three months the government will consider whether to increase this minimum hour’s 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.
What does the Grant Cover?
- Grant payments will be made in arrears, reimbursing the employer for the government’s contribution. The grant will not cover Class 1 employers NIC 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. 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.
- 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.
- 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.
- John normally works 40 hours per week and has a monthly salary of £2,000 per month. His hours are 28 hours per week from 1st November to 30th November. This is 70% of his usual hours.
John is paid for his 70% (£2000 x 70%) = £1,400
His employer will pay 10% of his usual salary = £200
Government will also pay 10% = £200
Therefore John will receive £1,800 for November (90%)
The employer will need to pay £1,600 of this (80%)
- Jane normally works three days per week and is paid £70 per day. Her hours from November mean she can only work one day per week. This is 33.3% of her usual hours.
Jane is paid for 33.33% (1 day) = £70
Her employer will pay 22.22% of her usual pay (22.2% of £210) = £46.65
Government will also pay 22.22% = £46.65
Therefore Jane will receive £163.30 per week during November (77.77%)
The employer will pay £116.65 per week (55.55%)
Jane’s example shows the maximum contribution that the government will pay during the scheme.
- The chart below gives further examples:
|Employee Hours||Government Top-up||Employer Top-Up||Total Employer Pay %|
Self Employed Income Support Scheme (SEISS) – Grants Extension
In-line with the new support scheme for employees, the chancellor announced that there will be two further grants under the SEISS scheme over the next six months.
- The first grant will cover the period 1st November 2020 – 31st January 2021 and the second grant will cover the period 1st February 2021 – 30th April 2021.
- The first grant will be based on the SAME criteria as the previous two grants and will pay 20% of average monthly profits. Total grant is capped at £1,875.
- Current information on the second grant will be released in due course.
- Both grants can be claimed (if eligible) even if the earlier grants were NOT claimed.
Clearly the first extension, at 20%, is a significant reduction in support compared to the grants issued (at 80% and 70%) earlier in the year.
It is hoped that the second extension grant might include tax returns submitted for the 2019-20 tax return, and offer some support for those self-employed who missed out on the first three 3 SEISS grants due to starting Self-Employment too early.
Upon further guidance being released, we will update accordingly.
Aside from the two-headline announcement above, there were a range of policies which offer additional support for eligible businesses and individuals:
Bounce Back Loans & Coronavirus Business Interruption Loan Scheme (CBILS)
- Bounce Back Loans can be extended from a repayment term of six years to ten years.
- Businesses can choose to take up to THREE 6-month periods of interest only payments.
- Businesses can request ONE full payment holiday of up-to six months.
- CBILS have also been extended from six years to ten years.
- All extensions will not impact on a business’s credit-rating.
- All loan schemes have been extended to 30th November 2020.
- A new scheme will be announced in January 2021.
This will allow some additional time for businesses continuing to struggle throughout the pandemic.
Further Deferment of Tax Bills
- The deferred VAT payments, which had been due for payment between April and June 2020, were originally deferred so that payments could be paid by 31st March 2021. This has now been changed so that businesses can arrange for these payments to be made over ELEVEN interest-free payments.
- If you are unable to pay your Self-Assessment (SA) bill in full by 31 January 2021, you can set up a Time to Pay payment plan of up to 12 months on-line without speaking to HMRC. If you have SA tax debts of up to £30,000, you will be able to access this Time to Pay facility through GOV.UK and will get an automatic and immediate approval. If your SA debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use the Time to Pay arrangement by calling HMRC.
Extension to 5% VAT Scheme
- For eligible businesses who have been able to reduce their VAT from 20% to 5%, the end-date has been extended from 12th January 2021 to 31st March 2021.
We hope this information helps you and your business plan for the next few months. We will continue to keep you updated on scheme developments over the coming weeks and months.
Please contact us if you would like to discuss any of the above schemes, by emailing firstname.lastname@example.org or calling us on 01869 277973