COVID-19 Winter Economy Plan September 2020
On 24th September 2020, Rishi Sunak announced several measures, under the banner of “Winter Economy Plan”. These measures either replace or enhance existing measures, designed to assist businesses during this continued Covid19 situation.
Payroll – New Job Support Scheme
From 01st November 2020 there will be a new job support scheme. Employees will need to work a minimum 33% of their usual hours. For every hour not worked, the employer and the government will each pay 1/3 (one third each) of the employee’s usual pay. The government contribution will be capped at £697.92 per month.
The employer will be reimbursed in arrears for the government contribution. The employee must not be on redundancy notice and the scheme will run for 6 months (initially). The scheme is available to all SME’s, but large businesses may be required to demonstrate that Covid19 has affected the business. In addition, HMRC expect (but not legally) for large businesses not to be making capital distributions, such as dividends, if they are using the scheme.
VAT – Extension to Reduced Rate
The reduced rate of VAT (5%) for catering, hospitality and tourism is extended to 31st March 2021. It was originally planned to end 12th January 2021 and so this small extension is welcome, as well as the financial benefit to this sector, ending the reduced rate on the 12th of January would have been administratively difficult for taxpayers to implement and avoids a VAT rate change mid-month.
Businesses which deferred their VAT between March-June 2020 were required to repay that amount by 31st March 2021. There is now an option to spread that repayment over the financial year 2021-2022. Businesses will have to opt in (apply) to use the scheme and HMRC will promote the scheme in the New year and with details on how to register/apply.
Grants – Extension to Schemes
SEISS grant extension – Limited to the self-employed currently eligible for SEISS, the extension is to April 2021. Consisting of two grants, the first covering Nov-Jan will be for 20% of average monthly trading profits, capped at £1,875 in total. Second grant (Feb-Apr 2021) will be advised in due course.
New applications for the following grants have been extended until 30th November 2020 :-
Bounce Back Loan Scheme (BBLS)
Coronavirus Business Interruption Loan Scheme (CBILS)
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
Government have also stated that loans under BBLS and CBILS can be repaid over 10 years and with BBLS, taxpayers can pause repayments entirely (can be used once) or switch to interest only payments for 6 months (can be used three times)
Self-assessment liabilities due in July 2020 need not be paid until January 2022. More details on whether this is automatic or must be applied for/opted in, are expected from HMRC in due course.
Full details of the new measures can be found in this link https://www.gov.uk/government/publications/winter-economy-plan/winter-economy-plan
Please contact Rayner Essex for further information regarding these schemes