Additional government support has been announced this week for businesses and employees impacted by coronavirus (COVID-19) across the UK.
This includes a new Job Support Scheme to protect the jobs of millions of people returning to work, extending the Self-Employment Income Support Scheme, extending the VAT cut (from 20% to 5%) for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
Below some of the new measures introduced by the plan:
Job Support Scheme
A new Job Support Scheme will be introduced from 1 November to protect jobs where businesses are facing lower demand over the winter months due to coronavirus (COVID-19).
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 for the hours staff work. For the hours not worked, the government and the employer will each pay one third of their usual wages (capped at £697.92 per month). Employers will need to meet their share of the pay for unworked hours, and all employer National Insurance contributions and statutory pension contributions, from their own funds. This means that employees will receive at least two thirds of their usual wages for the hours not worked.
The scheme is subject to eligibility criteria and it will be open to employers across the UK even if they have not previously applied under the Coronavirus Job Retention Scheme (CJRS), which ends on 31 October.
The Job Support Scheme will start from 1 November and employers will be able to claim in December. Grants will be paid on a monthly basis.
The scheme will operate in addition to the Job Retention Bonus, which offers employers £1,000 for every furloughed employee who is brought back, provided the employee is continuously employed and paid at least £520 a month on average from the end of October 2020 to 31 January 2021. Businesses can benefit from both schemes to help protect viable jobs.
SEISS Grant Extension
The government is continuing its support for millions of self-employed individuals by extending the Self-Employment Income Support Scheme (SEISS) grant. Self-employed individuals and members of partnerships who are eligible for the SEISS and are actively continuing trading but are experiencing reduced demand due to coronavirus (COVID-19), will be eligible for a further SEISS grant to provide support over the winter months.
The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. It will be a taxable grant to cover 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £1,875 in total.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February to the end of April.
Extension to the reduced rate of VAT for Hospitality and Tourism
The government has extended the temporary reduced rate of VAT (5%) to tourist attractions and goods and services supplied by the hospitality sector. This relief came into effect on 15 July 2020 and will now end on 31 March 2021 across the UK.
VAT Deferral New Payment Scheme
Businesses that have deferred VAT payments that were due between 20 March and 30 June 2020, will need to make these payments to HMRC by 31 March 2021. Employers can now use the New Payment Scheme to spread these payments over equal instalments up to 31 March 2022. Alternatively, they can make payments as normal by 31 March 2021 or make Time To Pay arrangements with HMRC if they need more tailored support.
New Self Assessment Self-Serve Time To Pay Scheme
Self-Employed taxpayers who deferred paying their July 2020 Payment on Account, will need to pay the deferred amount, in addition to any balancing payment and first 2020/21 Payment on Account, by 31 January 2021. This may be a larger payment than what usually paid in January.
Self-Employed taxpayers unable to pay their Self-Assessment (SA) bill in full by 31 January 2021 can now set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC. Employers who have SA tax debts of up to £30,000 will be able to access this Time to Pay facility online and will get automatic and immediate approval. If their SA debts are over £30,000, or they need longer than 12 months to repay their debt in full, they will still be able to use the Time to Pay arrangement by calling HMRC.
Changes to the Coronavirus Job Retention Scheme:
From 1 October, HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
Employers will continue to pay furloughed employees 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month and will need to fund the difference between this and the CJRS grant themselves.
The Coronavirus Job Retention Scheme will close on 31 October 2020
For more information on any of the measures introduced by the Winter Economy Plan contact us at: email@example.com