Chancellor Rishi Sunak decided to abandon his planned Autumn Budget Statement. Instead, he announced several new support schemes to help the economy through the expected second wave. 

PICTURE: SrikanthPeetha/nsplash

Job Support Scheme

Whilst some have called for the extension of the existing furlough scheme, the government has not been keen on this. Their stated argument is that furloughed employees have become “addicted” to furlough and continuing it would make it harder to get them back to work later. Accordingly, the existing furlough scheme will cease on 31st October as planned. 

The replacement for the furlough scheme is the new Job Support Scheme, which will run from 1st November 2020 to 30th April 2021. Employees will be entitled to pay as normal for the hours actually worked. The scheme does not cover employees who do not work at all, but will only cover those who are working for at least one third of their normal hours.  For the remaining hours, the employer will be expected to fund one third and the government will fund one third (to a maximum of £697.92 per month for each employee). This means that the new scheme passes some of the burden  to employees, with employers not “expected” to make up the difference. An employee only working the minimum one
third of their normal hours would only receive 77% of their normal full pay. 

Employers will be expected to pay the Employer’s National Insurance and Pension costs on top of the employee’s gross wage. The initial guidance does not make it clear whether these will be calculated on only the amount the employer is funding (the hours actually worked and one third of the balance) or will include the government funded element as well. 

The scheme covers any employees that were employed as at 23rd September 2020. Employees do not have to have previously been furloughed to be eligible for inclusion in this scheme. Employers cannot start redundancy procedures for any employees under this scheme. Small and medium-sized businesses automatically qualify for the scheme. Large businesses need to demonstrate a fall in turnover from the lockdown to make use of it. 

Self-Employed Income Support Scheme

To mirror the extended provisions for the employed, the grants for the self-employed are also being extended for six months. An additional grant of 20% of average profits from 2016/17 to 2018/19 will be available soon, with
a further unspecified grant available in February 2021. 

The qualifying criteria for the new grants match those of the previous self-employed grants. 

• Average profits under £50,000
• Self-employed profits more than 50% of total income
• Trade is ongoing
• Trade affected by coronavirus

A self-employed person will not have needed to claim the earlier grants to claim the new grants, provided they meet the above criteria.

Time to Pay for Deferred Tax

It was possible to defer two different tax payments earlier this year. VAT-registered businesses could defer the VAT due between 23rd March 2020 and 30th June 2020. This payment could be deferred to 31st March 2021. Self-Assessment taxpayers could defer their second payment on account, originally due 31st July 2020, to 31st January 2021. 

Whilst payments of these deferred amounts will still need to start on the revised dates, it will be possible to spread the payments further. These amounts can be spread over 11 months instead of being due as a lump sum. For Self-Assessment payments, it will be possible to spread the balancing payments over 11 months as well. 

Unlike the initial deferral, taxpayers will need to make an application to take advantage of these special Time to Pay arrangements. 

Amendments to support loans

Two government guaranteed loans have been made available during the pandemic. Coronavirus Business Interruption Loans (CBILs) are 80% guaranteed. The government also covers interest and fees on these for the first 12 months. Bounce-back loans, limited to a maximum of £50,000 are backed 100%. No interest or repayments are due on these loans for the first 12 months. 

Originally the maximum period for these loans was 6 years. Under the revised plans it will be possible to extend both of these loans to 10 years. It will also be possible for businesses suffering severe difficulties to have 6 month interest/payment holidays during the course of these loans. 

Extension of Reduced VAT rate

To assist businesses in the tourism and hospitality sector, the VAT rate for relevant businesses has temporarily been reduced to 5%. This was originally set to revert to the normal VAT rate of 20% on 31st January 2021. This has now been extended to run to 31st March 2021. 

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