It’s been a while since there has been any substantial announcements of new financial support in response to COVID-19, but after a summer spent Eating Out to Help Out, the Chancellor has today announced a new package of measures to support businesses and individuals who may be impacted by the recent rise in COVID cases and resultant partial lockdown measures.
Employment
As reported in our earlier articles, the furlough scheme comes to an end on 31 October 2020. The scheme has enabled employers to claim a grant for part of an employee’s wage if they were kept on the payroll instead of being made redundant. Full details of that original furlough scheme can be found here and here.
As cases are again rising, and some employees are still unable to return to work full time, the Chancellor has announced a new Job Support Scheme which will start on the 1 November and run for six months. The scheme will subsidise the wages of employees who have returned to work but are working fewer hours than normal due to decreased demand or reduced opening hours.
Employers will pay their staff for the hours that they do work, but for the “normal” hours not worked, the government will pay one third of their equivalent pay, and the employer will pay one third. Employees must be working at least 33% of their usual hours, and the grant will be calculated based on an employee’s usual salary, and will be capped at £697.92 per employee per month. Further technical guidance on the details of the scheme is expected to follow and we will provide updated guidance as this emerges.
As announced in Rishi’s summer statement (reviewed here), employers can also benefit from the Job Retention Bonus which provides for a one-off taxable bonus of £1,000, payable in February 2021, for every employee that was previously furloughed under the Job Retention Scheme and is bought back to work and continuously employed through to 31 January 2021. Employees must earn on average at least £520 per month between 1 November 2020 and 31 January 2021. Detailed guidance is expected at the end of September 2020.
Self-Employed
The government also plans to extend the Self Employment Income Support Scheme (SEISS) by providing up to two further taxable grants. This is in addition to the two previous grants that were previously available (details here and here).
The first of the new grants will be payable to those currently eligible for SEISS and who are continuing to trade with reduced demand due to coronavirus. The grant will be paid as a lump sum and will cover the period 1 November 2020 to 31 January 2021. The grant will be worth 20% of average monthly profits, up to a total for the three month period of £1,875.
A second new grant covering 1 February 2021 – 30 April 2021 has also been promised, although the terms of this grant are unknown as we expect the government to reassess the impact on the self-employed in the new year before confirming how this will be paid.
VAT Cut Extension
The temporary VAT cut for the tourism and hospitality industry from 20% to 5% was due to end on 12 January 2021, but this has now been extended to 31 March 2021.
Tax Payment Deferrals
One of first financial support measures announced for businesses at the start of the pandemic was to enable businesses to defer VAT payments that were due between the 20 March 2020 and 30 June 2020 until the 31 March 2021. HMRC are now offering a new payment plan where VAT payments deferred can be repaid in 11 monthly instalments (interest-free) rather than as a lump sum payment. We expect that this will need to be applied for, but details with be confirmed in due course.
Similarly, Self-Assessment payments on account which were deferred from 31 July 2020 to 31 January 2021 can now be extended to 31 January 2022. It is not clear yet if this will be an automatic deferral or if a claim is required, but we will provide further updates as new information becomes available.
Financing
The government previously introduced government-backed financing to businesses impacted by coronavirus in the form of the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans. The maximum term offered for these loans was originally six years, but the government has today announced that businesses will be able to extend the length of the loans to ten years.
Applications under both schemes can now be made up to 30 November 2020, and as the loans are interest free for the first twelve months, can be attractive forms of financing for businesses and should be considered as a way of managing cashflows. Details of the original loan schemes can be found here and here, and if you would like help applying for one of loan schemes, we would be happy to help.
As ever, please do get in touch if you have any questions about the support that is available, or if you have any concerns about the impact COVID may be having on your business or personal finances.
