Scheme Extensions & the Job Support Scheme
Rishi Sunak announced a new scheme which is to follow on from the current furlough scheme which is due to end in October. He has also made announcements on other support schemes that have been put in place/extended.
The Job Support Scheme
This scheme begins on 1st November 2020 and will run for 6 months.
- Employees must work at least 33% of their usual hours
- These employees are guaranteed 77% of their usual wage
- The government will pay 22% of this 77%
- The 22% is capped at £697.92 per month
- The government amount will be reimbursed in arrears, the payment will not be paid in advance like the furlough scheme.
- The employees do not need to have been previously furloughed
- The employee must not be on redundancy notice
- All employers with a UK bank account and PAYE scheme are eligible
- All Small to medium size businesses are eligible (SMEs)
- Large businesses need to prove that they have been negatively impacted by COVID-19.
- Large employers are “expected” not to make any capital distributions if they are using the scheme, e.g. dividends.
SEISS Grant Extension
Only those that are currently eligible for this support will be able to access this grant extension. This self-employed person must still be trading actively and the demand for their trade has decreased as a result of COVID-19.
The grant will be issued as two taxable grants.
Grant 1 – For November to January covering 20% of average monthly trading profits. Paid in a single instalment covering 3 months’ worth of instalments. This is capped at £1,875.
Grant 2 – For February to April. The value of this grant has not yet been announced. The government will continue to assess the situation and determine the level of the second grant at a later date.
This scheme has also been extended for another 6 months to April 2021.
VAT cut extension
A VAT cut from 20% to 5% was introduced from 15th July 2020. This support scheme has now been extended to 31st March 2021. This is believed to be a continuation for all businesses in the following sectors:
- Hospitality e.g. restaurants & cafes, but cut is not on alcoholic drinks
- Tourism e.g. B&Bs, Campsites and other accommodation sites
- Attractions e.g. Zoos, Cinemas & Theme Parks
It will be the businesses choice if they want to lower their prices or to use this increased profit margin to help recuperate some of the income they missed out on through closure.
Loan Scheme Support Extensions
The following loan schemes have been extended and are open for applications until 30th November 2020.
- Bounce Back Loan Scheme – Loans between £2,000 and £50,000 and capped at 25% of the company’s turnover. The government has guaranteed 100% to the lender so encourage lenders to support the smallest businesses. Repayments do not need to start for the first 12 months and the government will cover the first 12 months of interest rates. Eligible for the new Pay as you Grow.
- Pay as you grow – Repayment can be over 10 years, almost halving the average monthly repayments. Another available option is for these businesses to temporarily switch to an interest only repayment plan for periods of up to 6 months (maximum of 3 times). A onetime only option is to have a complete pause on repayments for up to 6 months. The government hopes that this will offer more flexibility and adaptability for each individual circumstance.
- Coronavirus Business Interruption Loan Scheme (CBILS) – Loans up to £5million with an 80% government guarantee to the lender. There is no charge to businesses for this guarantee. The first 12 months of fees and interest payments are covered. The government is trying to encourage lenders to extend the term of a loan to 10 years to allow a more flexible repayment option.
- Coronavirus Large Business Interruption Loan Scheme (CLBILS) – Loans up to £200million, capped at 25% of turnover. Also has an 80% government guarantee to lenders.
- Future Fund – Loans from £125,000 to £5million. This is an investment scheme for innovative and fast-growing UK- based businesses. Only available to businesses that have not previously accessed for the Future Fund.
The VAT deferral “New Payment Scheme”. For those who deferred their VAT payment that was due between March and June 2020, there will be an option to spread the payments over 11 instalments across the 2021-2022 financial year. All businesses that used the VAT deferral scheme are eligible, you will need to opt in for the New Payment Scheme in “early 2021”.
Self-Assessment taxes which are due for payment in January 2021 will have an extended payment schedule through Time To Pay. If your tax bill liability is up to £30,000, you will be able to use the self-service Time To Pay. This will allow you to secure a plan that will let you pay this over a further 12 months. So, any Self-Assessment liabilities that are due in July 2020 will need to be fully repaid by the end of January 2022. If you are still struggling to make your payments, then you should ring the Time To Pay helpline on 0880 024 1222 to agree a payment plan.
Other help from 28th September
For those on lower incomes and need to self-isolate, because of the Test & Trace system, will receive a £500 payment.
Businesses forced to close through local restrictions can claim up to £500 per week.
If you have any tax or accounting concerns, get in touch with the experts at Big Hand. We have the knowledge to guide you through any difficult business times. Get in touch with us on 0161 327 2911.