THIS UPDATE WAS PUBLISHED BY HMRC ON 28TH SEPTEMBER 2020:
The Chancellor Rishi Sunak outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK.
The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme, 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
More details can be found on GOV.UK.
- Job Support Scheme
- Self-Employment Income Support Scheme (SEISS) Grant Extension
- VAT cut for tourism and hospitality sector extended
- Pay as You Grow flexible repayment system
- ITSA Self-Serve Time to Pay
- VAT Deferral New Payment Scheme
- Eat Out to Help Out – claim by 30 September
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.
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 of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. This means that employees will be paid at least two thirds of their salary per hour for every hour not worked.
Employees must be working at least 33% of their usual hours and the level of grant will be calculated based on an employee’s usual salary, capped at £697.92 per month.
To be eligible to apply for the grant, employees must:
- be registered on PAYE payroll on or before 23 September 2020
- work at least 33% of their usual hours during the first three months. This level of hours will be reviewed by the Government at a later date for the remaining months.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the Job Retention Scheme, with further guidance being published soon.
Employers must pay at least two thirds of employees’ salary for every hour not worked. Employers will need to fund the difference between this and the grant and pay National Insurance and pension contributions from their own funds.
Claims will open in December and grants will be paid on a monthly basis from this date.
The scheme is designed to sit alongside the Jobs Retention Bonus. Businesses can benefit from both schemes in order to help protect viable jobs.
More information is available on GOV.UK.
Self-Employment Income Support Scheme (SEISS) Grant Extension
The Government is continuing its support for millions of self-employed individuals by extending the SEISS Grant.
Self-employed individuals and members of partnerships who are eligible for the SEISS, and who are actively continuing to trade but are experiencing reduced demand due to COVID-19, will be eligible for a further SEISS Grant to provide support over the winter months.
Grants will be paid in two lump sum instalments each covering 3 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 per cent of average monthly trading 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 – ensuring our support continues right through to next year.
This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self-Employment Income Support Scheme – one of the most generous in the world.
More information is available on GOV.UK
VAT cut for tourism and hospitality sector extended
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
Pay as You Grow flexible repayment system
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
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. These measures will further protect jobs by helping businesses recover from the pandemic.
We also intend 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.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.
ITSA Self-Serve Time to Pay
Many customers deferred their July 2020 Payment on Account, until 31 January 2021. As these customers will need to pay the deferred amount, plus any balancing payment and first 2020/21 payment on account, by 31 January 2021, their January tax bill may be larger than usual.
Any customers who are unable to make these payments in full by January 2021 can set up a Time to Pay payment plan of up to 12 months online without needing to phone HMRC.
Taxpayers with self-assessment tax debts up to £30,000 and who need extra time to pay will be able to access this Time to Pay facility through GOV.UK and can get automatic and immediate approval. Those with self-assessment debts over £30,000, or who need longer than 12 months to repay their debt in full, will still be able to set up a Time to Pay arrangement but they will need to contact HMRC to set it up.
VAT Deferral New Payment Scheme
The Chancellor reiterated that we don’t want businesses to face large bills for their deferred VAT just as the economy is recovering. The New Payment Scheme will help businesses pay their deferred VAT.
All deferred VAT was due to be paid at the end of March 2021. Businesses will be able to make 11 interest free smaller repayments in the 12 months to 31 March 2022. This will benefit up to half a million businesses – on average turning a one-off £60k payment in March, into 11 payments of less than £6k.
For those that opt-in, this means that their VAT liabilities due between 20 March and 30 June 2020, will now need to be paid by end March 2022. Giving businesses the option to defer VAT has been a success: over half a million businesses deferred their VAT payments, a cash injection of around £30bn into the UK economy when it needed it most.
Eat Out to Help Out Scheme – claim by 30 September
Businesses who registered for Eat Out to Help Out have until the end of September to claim for the days they operated the scheme. Claiming is quick and easy, and money will be paid out within five working days.