Since the announcement of the national lockdown six months ago, the Chancellor has been under continued pressure to deliver measures to protect jobs and UK businesses. Today, as the number of Coronavirus cases ramps up and the furlough scheme winds down, further support measures were confirmed as part of a new 3 point ‘Winter Economy Plan’.
1. Jobs Support Scheme & SEISS Grant Extension
There is no change to the existing furlough scheme which will cease, as planned, on 31 October 2020.
The Chancellor has announced a new scheme, the Jobs Support Scheme, which will replace furlough. The new scheme will run from November through to April in a bid to support viable jobs and provide genuine security.
- Employees must work at least 1/3 of their usual hours, which will be paid for by their employer
- For every hour not worked, the employer and the government will each pay one third of the employee’s usual pay, with the government contribution capped at £697.92 per month
- As a result, workers will receive up to 77% of their normal salaries for six months
The scheme is open to all SMEs (even if they have not used the furlough scheme previously), and to larger companies whose turnover has been adversely affected by Coronavirus. To be eligible, an employee must have been employed as of yesterday, 23 September.
Employers wishing to access the Jobs Support Scheme will still be able to claim the Jobs Retention Bonus as a further incentive to keep previously furloughed staff in continuous employment.
To continue support to the self-employed, the self-employed grant will continue on similar terms. The SEISS Grant Extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total. The second grant will cover a three-month period from the start of February until the end of April (details TBC).
2. Government-backed loans & VAT
The government-backed loan schemes have also been extended/amended:
- Bounce back loans: a change of terms has been introduced. The new ‘pay as you grow’ terms mean that businesses can:
- extended their loans from 6 – 10 years
- choose to make interest-only payments
- apply to suspend repayments for up to 6 months
- CBILS: a change of terms means that the government guarantee will be extended to 10 years
- Government-backed loans: deadlines will be extended for government-backed loans (bounce back, CBILS, CLBILS and Future Fund), allowing businesses until 30 November 2020 to apply. A new, successor loan programme is planned to commence in January 2021.
Businesses who opted to defer their VAT bill were expecting to have to pay a lump sum in March. Those businesses will be given the opportunity to spread their VAT bill over 11 payments, with no interest.
From January, self-assessed income taxpayers can also extend their outstanding tax bill over 12 months.
3. Hospitality & Tourism
The VAT cut for hospitality and tourism was due to end in January. Instead, the reduction of VAT to 5% will continue for the sector until 31 March 2021.
How can we help?
If you have new business concerns following the latest restrictions, we’ve outlined some actions you might wish to consider:
- If you are not already in regular contact with your accountant, then you should be – Speak to your advisor to make sure you are taking advantage of relevant funding and support schemes.
- Have you looked at your tax planning options? Contact us for Tax assistance if you would like to conduct a review of your existing affairs.
- Despite government support, are you having to make difficult staffing decisions in your finance team? We offer a fully outsourced, cost-effective solution to cover your accounting and compliance. Get in touch for more information about this service.