24 September 2020
On 24 September the Chancellor announced the latest in a long line of measures, designed to assist businesses and individuals through the Coronavirus pandemic. The Chancellor once again highlighted that the Government’s primary economic goal is to support jobs, and while he fell short of extending the furlough scheme past its planned end date of 31 October, he did announce a new ‘Jobs Support Scheme.’ That, and the other measures announced, are outlined in more detail below:
1.Jobs Support Scheme
Starting from 1 November for six months, the aim of the Job Support Scheme is to keep employees in their jobs on shorter hours for businesses that are facing lower demand due to the pandemic. This scheme is available to all small and medium sized businesses. Larger businesses are eligible if their turnover has reduced and these larger businesses will have to meet a financial assessment test.
Employers will continue to pay staff for the hours that they work, but for any hours not worked, the employee will receive two thirds of their normal pay. The Government and the employer will each pay a one third share of the employee’s equivalent “lost” salary. To qualify, employees must be working at least 33% of their usual hours. The grant will be calculated based on employee’s usual salary, capped at £697.92 per month. For example if an employee normally earns £2,000 per month, and they are now working half of their normal hours (so earning £1,000 in normal pay), two thirds of the £1,000 “lost” pay will also be payable, which will be funded £333 by the employer and £333 by the Government, resulting in £1,666 total pay for the employee.
There is no requirement for the employees under the Jobs Support Scheme to have been furloughed previously. Further guidance will be published in due course.
2.Self Employment Income Support Scheme extension
The Self Employment Income Support Scheme has been extended for those who are currently eligible (although they do not have to have claimed the previous grants) and are actively continuing to trade, but are facing reduced demand due to the pandemic. This extension will provide two grants and will last for six months, from November 2020 to April 2021, with each grant covering a three month period. The first grant will be based on 20% of average monthly trading profits and will be capped at £1,875. The level of the second grant has not yet been decided so the Government will confirm this in due course.
Self Employment Support Fact Sheet
3.Coronavirus loans – Pay as you Grow
Bounce Back Loan terms have been extended from six years to ten, in order to reduce monthly repayments. Interest-only periods of six months and payment holidays will also be available. CBILS lenders will also have the ability to extend the length of loans from a maximum of six years to ten years. Importantly, the Chancellor highlighted that these changes would not affect the borrower’s credit rating.
As well as this, applications for CBILS and Bounce Back loans have been extended to the end of November 2020.
4.Tax deferrals
This will help those businesses that deferred their VAT payments earlier in the year. Via the New Payment Scheme, those businesses will have the option to pay back the VAT due in smaller instalments. Rather than making a lump sump payment in March 2021, the scheme will allow business to make 11 smaller interest-free payments during the 2021-22 financial year.
As well as this, those who deferred self assessment payment in July 2020, including those with self assessment payments due in January 2021 will now not need to pay until January 2022.
5.Hospitality and Tourism VAT
The VAT rate of 5% which was recently introduced for for hospitality and tourism businesses was due to end in January 2021, but has now been extended to the end of March 2021.
We await further details from the Government about how some of these schemes will be implemented, so please keep an eye on our website which will be updated as and when we receive further details.
