Chancellor’s Statement – Winter Economy Plan
Following the cancellation of the Autumn Statement (Budget) yesterday, the Chancellor gave a speech in which he outlined his ‘Winter Economy Plan’. This is the government’s plan to protect jobs and support businesses over the coming months, following the announcement of further measures intended to curb the spread of Coronavirus.
Job Support Scheme
The headline announcement was the introduction of the ‘Job Support Scheme’. Intended to support businesses that are facing lower demand, the scheme will see the government top-up wages of employees that are working less hours. It will be introduced on 1st November and will run for six months.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. Of the remaining hours not worked, the employer must contribute 1/3 and the government will contribute 1/3, capped at a maximum of £697.92 per month. This means an employee working 33% of their hours could receive up to 77% of their pay. Employers will not be able to make a claim for employees that they have given notice of redundancy to.
The scheme is open to all business across the UK, even those that have not previously accessed support from the Coronavirus Job Retention Scheme, which will close as previously announced on 31st October 2020. The Job Support Scheme will sit alongside the Job Retention Bonus, meaning you can access both schemes if eligible.
Extension of the Self-Employed Income Support Scheme (SEISS)
The SEISS will be extended in line with the further support offered to employees.
An initial taxable grant will be available to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may yet be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.
Tax deferrals – The New Payment Scheme
VAT – Those businesses that took advantage of the governments offer to defer payment of their VAT payments between March and June 2020 will be given more time to pay. Rather than paying a lump sum in full at the end of March 2021 they will be able to make payment in 11 equal interest-free instalments throughout the 21/22 financial year.
The temporary 15% VAT cut for the tourism and hospitality sectors was also extended to the end of March 2021.
Personal Tax – The Chancellor also confirmed more time to pay for those that are struggling to pay their self-assessment tax liability due on 31st January 2021, including any payments on account deferred from 31st July 2020.
If the liability due to be paid January 2021 is less than £30,000 in total, you can set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC. You will be able to access this Time to Pay facility through GOV.UK and will get automatic and immediate approval. If the amount owing on 31st January 2021 is over £30,000, or you need longer than 12 months to pay the debt in full, you may still be able to use a Time to Pay arrangement by calling HMRC directly.
If you set up a ‘Time to Pay’ arrangement, you will have to pay interest on the tax paid late. Interest will be applied to any outstanding balance from 1 February 2021.
Whilst this additional time to pay will ease pressure on cashflow, it is important to note that this is a deferment and the tax liability is still due. If you can afford to pay this on time you should do so.
Your self-assessment tax return for the period must still be submitted by 31st January 2021. Penalties will apply as usual if you fail to submit your self-assessment tax return by the deadline.
Coronavirus loan schemes
The application deadline for all coronavirus loan schemes has been extended until 30th November 2020.
The government announced changes to the Bounce Back Loan scheme with the introduction of a new Pay as you Grow flexible repayment system. This includes extending the term of the loan from six to ten years, introducing interest-only periods and payment holidays.
We will keep you updated as the government guidance is released, and we receive further clarity from the government.
Published on: 24 September 2020 - By: First Freelance