Winter Economy Plan

Today the Chancellor, Rishi Sunak, outlined his plan to provide further support to businesses over the coming winter months. The plan will see an end to the Coronavirus Job Retention Scheme (CJRS) but will provide a new scheme, the Job Support Scheme, which aims at supporting only viable jobs. Additionally, plans were announced for the extension and added flexibility of many existing schemes.

Job Support Scheme

With the Coronavirus Job Retention Scheme set to end on 31 October 2020, the Job Support Scheme will be introduced from 1 November 2020 to further support employers and to keep their employees attached to the workforce. Key points and requirements:

• Employees will need to work a minimum of 33% of their usual hours to be eligible for the scheme.
• For every hour not worked the employer and the government will each pay one-third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month.
• For an employee working exactly 33% of their usual hours, they will be paid 77% of their wages. This will be made up of the 33% paid by the employer plus 2/3’s of the 67% of hours not worked which will be split 1/3 each between the employer and the treasury. This results overall in the employer paying 55% and the treasury paying 22%.
• Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped.
• The scheme will run for 6 months from 1 November 2020.
• The employer will be reimbursed in arrears for the government contribution.
• The employee must not be on a redundancy notice.
• The scheme is open to all employers with a UK bank account and a UK PAYE scheme.
• All Small and Medium-Sized Enterprises (SMEs) will be eligible.
• Large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and the government expects those large employers will not be making capital distributions (such as dividends) while using the scheme.

Self-Employment Income Support Scheme (SEISS) Grant Extension

The grant extension will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19. The scheme will last for 6 months, from November 2020 to April 2021.

The extension will be in the form of two taxable grants.

• The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
• The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.

VAT deferral ‘New Payment Scheme’

For businesses that deferred VAT due in the period March to June 2020, there will be the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. Businesses will need to opt-in, but all who used the VAT deferral scheme are eligible. HMRC will put in place an opt-in process in early 2021.

Enhanced Time to Pay for Self-Assessment taxpayers

More time will be provided to the self-employed and other taxpayers who used the Self-Assessment deferral provided in July 2020. Taxpayers who deferred the July 2020 payment to January 2021 will be eligible to use HMRC’s self-service Time to Pay facility to secure a plan to pay any Self-Assessment bill due on 31 January 2021 over an additional 12 months. Only taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use the online Time to Pay service via the GOV.UK website for automatic and immediate approval. For SA debts that are over £30,000, or you need longer than 12 months to repay your debt in full, then you will still be able to use the Time to Pay arrangement however you will need to call HMRC to arrange.

Extension of access to finance schemes

The deadlines for arranging government backed loans has been extended to 30 November 2020. The four loans available to businesses are Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Future Fund.

Pay as you Grow for the Bounce Back Loan Scheme (BBLS)

Additional repayment flexibility has been provided for those businesses who have borrowed under the BBLS which include:

• the option to repay the loan over a period of up to ten years which will reduce average monthly repayments,
• the option to move temporarily to interest-only payments for periods of up to six months (an option which can be used up to three times);
• or to pause repayments entirely for up to six months (an option which can only be used once and only after having made six payments).

CBILS Loan extension

The government intends to allow CBILS lenders to extend the term of a loan up to ten years.

Extension of the temporary VAT reduced rate for hospitality and tourism

The temporarily reduced rate of VAT (5%) which was due to end on 12 January 2021 will now continue until 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.