On 24th September, the Chancellor Rishi Sunak outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK. This article goes into detail about the new package of measures designed to protect jobs and help businesses through the uncertain months ahead. Here, we cover the Job Support Scheme, the Self Employment Income Support Scheme, the VAT cut for the hospitality sector, deferral of VAT bills, the time to pay extension for self-assesment taxpayers, Bounce Back Loans and Annual Investment Allowance…
We hope this is all helpful for you.
JOB SUPPORT SCHEME (JSS)
This will be introduced from 1 November and will run for six months.
The JSS will only support those who are working fewer hours than normal; not those who are working no hours.
For the first three months of the new JSS, employees must work for at least one third of their normal working hours after which this minimum threshold will be reviewed by the Government (at the three-month point). Importantly, you must agree reduced working hours with their employees and ensure that the employees are notified in writing.
You will need to pay employees for the hours they work, which must be at least one third of their normal working hours.
You must also pay the employee for one third of the amount of ‘lost hours’ i.e. the hours the employee would normally work but is not working.
The Government will then provide pay for one third of the number of lost hours up to a maximum cap of £697.92 per month.
Your contribution of one third of pay for hours not worked is, however, not subject to a monetary cap. This means that all employees on the JSS will continue to earn at least 77% of their normal wages, where it hasn’t been affected by the Government’s cap.
Employers of any size with a UK bank account and UK PAYE schemes will be able to use the JSS but large businesses will have to meet a financial assessment test to show that their turnover is lower now than before experiencing difficulties from the pandemic. The Government expects that large businesses using the JSS will not be making capital distributions e.g. dividend payments or share buybacks, whilst accessing the JSS grant.
The scheme will be open to you regardless of whether you previously used the JRS to furlough employees before or not. Equally, an employee being placed into the JSS does not need to have been furloughed before but they must have been on the employer’s PAYE payroll on or before 23rd September 2020 – meaning that a Real Time Information (RTI) submission notifying payment to the employee to HMRC must have been made on or before 23rd September 2020.
Claims can be made online from December 2020 but before then the Government are set to release further information on this soon.
SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)
The existing self-employed grant (SEISS) will also be extended on the same basis as the job support scheme.
An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
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 2021 to the end of April.
VAT CUT FOR HOSPITALITY SECTOR CONTINUES
The reduction in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021.
DEFERRAL OF VAT BILLS
The Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period.
Instead of paying the full amount by the end of March 2021, HMRC have confirmed businesses can make smaller payments up to the end of March 2022, interest free.
You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.
If you are unable to pay the VAT due by March 2021 and need more time, you must contact HMRC by phoning 0300 200 3835.
Those that can pay their deferred VAT- should do so by 31 March 2021.
More information on the scheme will be available in the coming months and we will keep you up to date when changes occur.
SELF-ASSESSMENT TAXPAYERS – TIME TO PAY EXTENSION
Self-Assessment Tax payers can apply online for additional support to help spread the cost of their tax bill into monthly payments from 1 October 2020 without the need to call HM Revenue and Customs (HMRC).
The online payment plan service can already be used to set up instalment arrangements for paying tax liabilities up to £10,000, from 1 October 2020, HMRC has increased the threshold to £30,000 for Self-Assessment Tax Payers, to help ease any potential financial burden they may be experiencing due to the coronavirus pandemic.
The increased self-serve Time to Pay limit of £30,000 follows the Chancellor of the Exchequer’s announcement on 24 September to increase support for businesses and individuals through the uncertain months ahead.
As part of his speech, the Chancellor announced that Self-Assessment customers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019 to 2020 and their first payment on account bill for this current tax year in monthly instalments, up to 12 months, via this self-serve tool. Those who need longer than 12 months to settle their tax liabilities are invited to contact HMRC in the usual way.
Currently as agent we cannot access this, therefore you will need to have access to your own government gateway account to sign up online for the payment plan.
Alternatively, you can call the self-assessment payment helpline on 0300 200 3822
BOUNCE BACK LOANS – FLEXIBILITY GIVEN TO PAY BACK AMOUNTS BORROWED
Those who took out a Bounce Back Loan will get more repayment time through a new Pay as You Grow flexible repayment system.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The Government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
The chancellor also announced an extension in applications for the government’s coronavirus loan schemes until the end of November.
Further guidance will be issued in due course.
AIA (ANNUAL INVESTMENT ALLOWANCE)
The annual investment allowance (AIA) for buying plant and machinery for business is currently at a level of £1m per annum.
This level is due to reduce after December 2020 back to £200,000 per year (which was the limit prior to the temporary rise in Jan 2019).
These rates will be pro rata for business yearends not ending in December
eg for Mar 2021 financial years the AIA would be £800,000.
This would be split into £750,000 for the period Apr to Dec 2020 and then £50,000 for the period Jan to Mar 2021.