In lieu of an Autumn Budget, the Chancellor recently announced his “Winter Economy Plan” which included further measures to protect jobs and the economy as it seems lockdown measures will be continuing for some time.
Here is a recap of the main points.
Job Support Scheme
From 1st November, the existing furlough scheme will be replaced with the Job Support Scheme. This is a 6 month scheme and any employee who was on the payroll on 23 September will be able to be put on it if the employer chooses to.
Even if you haven’t used the furlough scheme previously, you will be eligible.
- Employees must work a minimum of a third of their usual hours which they will receive full pay for – but can work more than a third
Of the remainder of the usual hours not worked:
- Employer will contribute 1/3
- Government contributes 1/3 (capped at £700 per month)
- Employee is then effectively sacrificing 1/3 for hours not worked
So an employee working the minimum 1/3 of hours would received 77% of their normal pay.
If your business has been required to close due to Covid restrictions the government will pay two thirds of employee’s salaries (or 67%) up to a maximum of £2,100 a month.
Self Employment Income Support Scheme (SEISS)
This scheme has been extended for another 3 months to end of 31 January 2021.
You can only be eligible for this is you were eligible for the second phase of the grant. You must be actively trading but experiencing reduced demand due to coronavirus.
The grant will be worth 20% of your average monthly profits in the year ended 05/04/2019 up to a total of £1,875 (£825 a month).
Bounce Back Loans
There are 3 changes to these loans that were announced.
New applications have now been extended to 30 November so still time to consider if you need to apply.
New and existing borrowers can now repay over 10 years instead of the original 6 years. This will spread the cost to reduce payments – but be aware that this will up to total repayment.
There will also be the option of a payment holiday after the first year.
Local Restrictions Support Grant (LRSG)
This grant is available to businesses that were open as usual, providing services in person to customers on their business premises but who have then been required to close for at least 3 weeks due to local lockdown restrictions. To be eligible you must pay business rates on your premises – local councils may also provide funding for businesses that don’t pay business rates but at their discretion.
If your business is eligible and has a property with a rateable value of less than £51,000, you will receive a cash grant of £1,000 for each 3-week period your business is closed.
If your business is eligible and has a property with a rateable value of £51,000 or above, you will receive a cash grant of £1,500 for each 3-week period your business is closed.
The grant will be extended to cover each additional 3-week period, so if your business is closed for 6 weeks it will receive £2,000 or £3,000, depending on the rateable value of the property.
VAT Deferral Payments
Any business who deferred their VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period, up to the end of March 2022.
The reduced 5% rate for the hospitality and tourism sectors has been extended until 31 March 2021 instead of the original end date of 12 January 2021.
Self-Assessment Tax payment
If you have an “on-account” payment due in July 2020 to Jan 2020, you can now pay these over 12 months during 2021. Once your tax return is submitted, you can use the HMRC Time to Pay tool on your online account to adjust the payments.
A warning through – you will be liable for a 2.6% interest payment on any outstanding balance on 1 February 2021. The scheme is only available for payments up to £30,000.
We strongly advise you to seek appropriate advice before taking action on any of the points listed above.
All information contained in this document are correct at the time of writing. Legislation and regulations may change at any time.
If you are in any doubt, please call us for clarification.
About us: Leggate Associates Limited was formed by Andrew Leggate LL.B FCMA FCA CGMA who has over 40 years of tax and accountancy experience in industry and practice, and the practice is managed by Joanne Leggate FMAAT, ATT (Fellow). Our clients range from building subcontractors to multi-million pound concerns and high net worth individuals all over the UK. Please see our website www.leggateassociates.co.uk or follow @LeggateAssoc on Twitter for occasional updates.
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