On 24 September 2020, the Chancellor Rishi Sunak unveiled the Winter Economy Plan, a number of measures designed to help businesses still struggling with the effects of Covid-19.  It appears that they not as generous as the help provided in March and April 2020 (principally the Self Employment Income Support Scheme – SEISS - and the Coronavirus Job Retention Scheme - CJRS). However, they may be worth considering in your individual business if you think that they are relevant.

The Job Support Scheme

Important - the Job Support Scheme has subsequently changed, see our later article.

The Job Support Scheme (JSS) is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for 6 months.

The company will continue to pay its employee for time worked. However, the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.

The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.

Employers using the JSS will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

More detailed information should become available in due course.

The following is an example of how the cost of an employee working will be split between the Government and the employer, depending upon how many hours the employee works.

VAT Support: Deferred VAT and the New Payment Scheme

If you had a VAT bill due between 20 March 2020 and 30 June 2020, you had the ability to defer payment until 31 March 2021.  The government will give taxpayers the option to spread their payments over 11 interest free payments between 1 April 2021 and 31 March 2022, known as the New Payment Scheme.  Taxpayers which took advantage of the VAT deferral will need to opt in, and HMRC will put in place an opt-in process in early 2021.

VAT Support: Tourism and Hospitality

The government has announced it is extending the temporary reduced rate of VAT (5%) to 31 March 2021 for this sector. The VAT reduction of 5% for this sector was originally due to be in place for a fixed period of 15 July 2020 to 12 January 2021.  This is now being extended to 31 March 2021.

Bounce Back Loans

Under a new ‘Pay As You Grow’ flexible repayment system, businesses will be able to:

Coronavirus Business Interruption Loans

The government guarantee for qualifying loans will be extended from six years to up to 10 years.

The deadline for applying for the Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, Bounce Back Loan Scheme and Future Fund will be extended to the end of November 2020.

Enhanced Time to Pay for Self-Assessment Taxpayers

HMRC previously announced that taxpayers could opt to defer their second self-assessment payment on account for the 2019/20 tax year if they were finding it difficult to make their second payment on account by the 31 July 2020 deadline.  This was due to be paid by 31 January 2021.  However, taxpayers with up to £30,000 of Self-Assessment liabilities will be able to agree a plan to pay their tax liabilities over an additional 12 months, i.e. up to 31 January 2022.

Self Employment Income Support Scheme - Extended but Reduced

For self-employed individuals who are still suffering from a loss of business as a result of Covid-19, The Winter Economy Plan contains another two payments of grants under the Self Employment Income Support Scheme (SEISS).  To qualify, individuals (sole traders and partners in partnerships) must:

The first new payment of grant will cover the three months from 1 November 2020 to 31 January 2021, and the maximum lump sum payment will be limited to 20% of the individual’s average monthly trading profits for the period, up to a maximum of £1,875. The level of support and cap for the next payment has not yet been set.  It is expected that claims for the new rounds of grant will be made through the same HMRC portal as previous grants but HMRC will provide full details about claiming and applications in due course.

Details on the Winter Economy Plan are here.

On 29‌‌ May the Chancellor, Rishi Sunak, announced more details about the extension to the Coronavirus Job Retention Scheme (CJRS), with the key details outlined below.

Flexible furloughing

From 1‌‌ July 2020, you’ll have the flexibility to bring previously furloughed employees back to work part-time.  The government will continue to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.

You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.

Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the CJRS grant for their full hours under the existing rules.

Employer contributions

From August, the government grant provided through the job retention scheme will be reduced.

If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.

Important dates – what you need to know now

The future of the scheme

In addition to the changes already mentioned, you should also be aware of the following.

Making changes to your claims if you have over-claimed

If you’ve made an error in a CJRS claim which means you received too much money, you must pay this back to HMRC.

HMRC have updated the application system so you can tell them if you have over-claimed in a previous claim.  When you apply you’ll be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You should then keep a record of this adjustment for six years.

If you have made an error in a CJRS claim and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know about your error and pay back any amounts that you have over-claimed. They will update guidance and keep you informed when this is available.

Details can be found here. If you need help, please get in touch.