As you will no doubt have seen, the Chancellor announced further measures yesterday, largely to mitigate the end of financial support currently available through the Coronavirus Job Retention Scheme (“CJRS”), which ends in October. Key points from his speech are as follows:
- Introduction of the Job Support Scheme – the scheme somewhat follows the current flexible furlough offering that’s been available since July through the CJRS. The purpose of the Job Support Scheme is to support viable jobs, rather than delaying inevitable redundancies, and will keep employees in jobs on shorter hours.
To claim under the scheme, employees must work (and be paid for) a third of their usual hours. For the remaining hours not worked, the employer will be one third and the government will pay one third (capped at £697.92 per month). This means that employees under the scheme will receive at least 77% of their usual pay. For example, for someone on £2,000 a month working half their hours, they’d get £1,000 normal pay plus £333 extra from their employer and £333 from the government.
The scheme will be available for at least six months, from November, and all small and medium sized businesses are eligible; larger businesses will only be able to claim through the scheme if their turnover has been negatively impacted by COVID-19. The scheme is available to businesses even if they haven’t previously claimed under the furlough scheme.
- Self-Employment Income Support Scheme – the scheme previously ended with a second and final grant last month, covering June – August. The scheme will now be extended for 6 months (November 2020 to April 2021), for individuals actively continuing to trade but facing reduced demand due to COVID-19. The grants will be paid in two instalments, with the first grant covering 20% of average monthly trading profits (capped at £1,875 in total). The level of the second grant is to be decided.
- Business Support Loans – The deadline for applying for a COVID-19 business support loans (Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Coronavirus Large Interruption Loan Scheme and Future Fund) has been extended to 30 November 2020.
Businesses in receipt of a Bounce Back Loan will now have the following additional benefits available to them:
- the option to “pay as you grow”, which could extend the loan term from 6 to 10 years;
- the option to make interest only payments for periods of up to 6 months (this option can be used 3 times); and
- the option to suspend repayments entirely for a period of 6 months (this option can only be used once and after making at least 6 payments).
Note that the above additional measures will not impact on a businesses’ credit rating.
- VAT and Personal Tax Deferrals – Businesses who took advantage of the VAT deferral scheme (to defer VAT payments due between March and June 2020) will have the option to spread their deferred liability over 11 smaller payments, with no interest, rather than falling due in full by 31 March 2021. HMRC will put in place an opt-in process in early 2021.
There will also be the option to spread personal tax payments (for taxpayers will liabilities up to £30,000), falling due on 31 January 2021, over a 12 month payment plan.
- 5% VAT Rate – the temporary 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation and admissions to certain attractions (originally due to end on 12 January 2021) has been extended to 31 March 2021.
If you have any questions please feel free to contact us.