Chancellor’s Winter Plan II
***Stop Press***National Lockdown Changes 2 November update***Stop Press***
As you will now know the Government announced a national lockdown effectively for the month of November. As a result of this there are changes to the support packages below which apply to local tiered lockdowns.
The furlough scheme will return and the Government will fund 80% of furloughed employees salaries. The employer will be required to the pay the employers’ NIC and minimum pension contributions. Furlough will be available to any employee who was included in an RTI submission by 30 October 2020 and is not restricted to those furloughed before 30 June.
Two further grants will be made available to Self Employed claimants under the SEISS. Claimants may claim 80% of average profits for November and 40% for December and January, making an overall average of around 55%. The portal will open for the November claims on 30 November. The cap will be £5,160 for the 3 month period. Qualification isn’t yet confirmed but it is expected to be similar to the initial grants made over the summer.
A fourth grant is expected to be made in February although details are not yet available.
Changes to Business Support Announced 22 October 2020
The Chancellor Rishi Sunak has made a further announcement about changes to the various support packages for business.
Support for Employers
Under the Furlough scheme the Government currently pays 70% of salary for staff unable to work either full or part time. Employers pay a minimum of 10% plus the employers’ national insurance and pension contributions, as well as salary for any hours worked. The government share reduces to 60% from 1 October and ends on 31st.
Employers and workers alike have been wondering what will happen from 1 November and today we found out.
The Job Support Scheme opens in 1 November and will run for six months to help employers who need to reduce staff hours over the winter. Employees must work at least 20% of their usual hours and the employer pays the wages for this work.
They employer must also fund 5% of the non-worked time. The Government will then fund up to £1,541.75 of the unworked costs.
As an example, an employee earning £1,100 would be paid £807 made up of £264 from the employer and £542 from the government. The employer must fund the employers’ NI and minimum pension contributions which in this example increases the cost to £283.
This scheme is open to all small and medium sized businesses even if they didn’t access the furlough scheme over the summer, although it is believed there will be some level of targeting by sector. Larger businesses will be required to show they have been adversely affected by Covid 19 and will not be able to pay out dividends whilst using the scheme.
Jobs Retention Bonus this is available to employers who furloughed staff and who keep them on payroll at an average rate of at least £520/month for the three months to January 2021, after which the employer will receive a bonus of £1,000 per employee. Employers who qualify for this can also utilise the Job support Scheme.
Self Employed Support Scheme
Today’s announcement extends the Self-employed Grant.
The initial and second grants originally covered only the period March – June 2020. This has now been extended to pay 40% of average profits and the cap has been doubled to £3,750.
The first grant will be payable as a lump sum covering lost earnings for the period 1 November 2020 – 31 January 2021.
The second grant covering the period to April 2021 is confirmed but the level has yet to be announced. These grants are taxable and subject to national insurance contributions.
Additional funding is being made available to Local Authorities to support businesses who are not required to close but who are impacted by the closure of the hospitality sector.
These grants will be a percentage of the £3,000 per month awarded to legally closed businesses and based on the businesses rateable value. Funding will also be made available to other businesses which do not ft into these categories, usually where there is shared accommodation. LA’s will determine the eligibility and level of funding to each business.
Additional support will be made to businesses in Tier 3 areas.
There will also be retrospective grants of up to £,2,100 per month made to businesses in the hospitality, accommodation and leisure industry who are in in high alert areas. These will be made in addition to any Tier 3 grants and to businesses adversely affected who are not legally required to close. These grants will be backdated to the date the area first went into restrictions.
The VAT deferral period is extended beyond March allowing businesses to pay their VAT interest free over 11 instalments during 2021-22. We await further guidance as to how businesses can access this New Payment Scheme
The 15% temporary reduction in the VAT rate for the hospitality sector is extended through to March 2021.
Self-Assessment payments due 31 July 2020 and the payments due in January 2021 now benefit from an interest free deferral to January 2022.
Government Backed Loans
Bounce Back loans will now benefit from an extension to the repayment period from six years to 10. Payment holidays and interest only periods will also be made available.
Lenders under the Coronavirus Business Interruption Scheme will be given the ability to extend loans for up to tax years to help businesses repay.