COVID 19 – Winter Economy Plan [08th October 2020]

Coronavirus Job Retention Scheme CJRS – UPDATE

The existing furlough scheme, comes to an end on 31 October. The Winter Economy Plan the government announced will be introducing a new Job Support Scheme from 1 November 2020.

For employers to participate in the scheme:

• employees will need to work a minimum of 33% of their usual hours
• for every hour not worked, the employer and the government will each pay one third of the employee's usual pay
• the government contribution will be capped at £697.92 per month.

Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped. The employer will be reimbursed in arrears for the government contribution. The employee must not be on a redundancy notice.

The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. It will be open to such businesses even if they have not previously used the furlough scheme.

All small and medium-sized enterprises will be eligible.

The Job Support Scheme will run together with the Jobs Retention Bonus which was announced by the Chancellor in July. The Bonus will provide a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021 and who earns at least £520 a month on average between 1 November 2020 and 31 January 2021. Businesses can benefit from both schemes.

Self-Employment Income Support Scheme (SEISS) grant extension

The Winter Economy Plan the Self-Employment Income Support Scheme (SEISS) will be extended under the name SEISS Grant Extension. The grant:

• will be limited to self-employed individuals who are currently eligible for the SEISS, and
• will be available to individuals who are actively continuing to trade but are facing reduced demand due to COVID-19.

The scheme will last for 6 months, from November 2020 to April 2021.

The 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 first phase 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. The government will review the level of the second grant and set this in due course.

The amount of the first grant under the SEISS grant extension will be significantly less than the grants made under the SEISS.

How to claim. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course

Tax cuts and deferrals

The government has now announced the option for businesses to spread their payments over the financial year 2021/22. Businesses will be able to choose to make 11 equal instalments over 2021/22. All businesses which took advantage of the VAT deferral can use the spreading scheme. Businesses will need to opt in and HMRC will put in place an opt-in process in early 2021.

Business must pay the deferred liability by 31 March 2021, and HMRC will publish details of how to do this in due course. HMRC will not charge interest or penalties on any amount deferred.

Enhanced Time to Pay for self-assessment. Taxpayers were able to defer the income tax self-assessment payment on account for 2019/20, due by 31 July 2020, to 31 January 2021. There are also other amounts due on 31 January 2021 – a balancing payment for the 2019/20 tax year and the first payment on account for the 2020/21 tax year.

Taxpayers with up to £30,000 of self-assessment liabilities due will be able to use HMRC's self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that self-assessment liabilities due in July 2020, and those due in January 2021, will not need to be paid in full until January 2022. Any self-assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC's Time to Pay self-assessment helpline to agree a payment plan.

Internet link: Gov.uk news

Flexibility to the Bounce Back Loan and Coronavirus Business Interruption Loan Schemes.

The Bounce Back Loan Scheme (BBLS) has provided support to many UK-based small businesses. Loans are between £2,000 and £50,000, capped at 25% of turnover, with a 100% government guarantee to the lender. The borrower does not have to make any repayments for the first 12 months, with the government covering the first 12 months' interest payments. Under a Pay as you Grow scheme businesses will have options to:

• repay their loan over a period of up to ten years
• move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times)
• pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).

Coronavirus Business Interruption Loan Scheme. The Coronavirus Business Interruption Loan Scheme provides loan facilities to UK-based businesses with turnover under £45 million. The scheme provides loans of up to £5 million with an 80% government guarantee to the lender. The government does not charge businesses for this guarantee and also covers the first 12 months of interest payments and fees.

The government has allowed CBILS lenders to extend the term of a loan up to ten years. And government is also extending the CBILS and BBLS to 30 November 2020 for new applications.

New grants for businesses affected by local lockdowns

Businesses that are required to shut because of local interventions will now be able to claim up to £1,500 per property every three weeks.

To be eligible for the grant, a business must have been required to close due to local COVID-19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.

Payments are triggered by a national decision to close businesses in a high incidence area. Each payment will be made for a three-week lockdown period. Each new three week lockdown period triggers an additional payment.

Internet link: gov.uk news

New trade arrangements with the EU from 1 January 2021

HMRC has sent letters to VAT-registered businesses in Great Britain trading with the EU, or the EU and the rest of the world. Businesses must prepare for new processes for moving goods between Great Britain and the EU from 1 January 2021.

Measures explained in the letter include:

• making sure they have a UK Economic Operator Registration and Identification (EORI) number
• deciding how they will make customs declarations
• checking if their imported goods are eligible for staged import controls.

Internet link: gov.uk letters