Winter Economy Plan
Chancellor Rishi Sunak recently announced the following to help support businesses as the pandemic continue to be a major concern.
Self Employed Income Support Grant
Extended from the two previous grants with the same eligibility criteria. It will be paid in two instalments the first covering the period November to January 2021 and worth 20% up to a maximum of £1,875 based on average self-employed profits. The second instalment is for the period February to end of April 2021 the amount of which may be adjusted depending on the economic situation at the time.
Extension to the reduced rate of VAT for Hospitality and Tourism
Introduced originally on 15th July 2020 this reduction in VAT from 20% to 5% is to now be extended until 31-03-2021.
VAT Deferral New Payment Scheme
VAT payments due between 20th March and 30th June 2020 were originally deferred until 31st March 2021 but recognising the ongoing challenges to business demand the vat payment can be deferred until 31st March 2021 being paid in equal instalments. Alternatively, this can still be paid by 31st March 2021 or make a Time to Pay arrangement with HMRC if the business needs more tailored support.
New Self-Assessment Self-Serve Time to pay Scheme
The second payment on account, due 31st July 2020, was automatically deferred and due for payment with the balance by 31st January 2021.This can now be requested to be paid over 12 months from that date by setting up a Time to Pay payment plan online without needing to speak to HMRC. If 12 months is not sufficient a Time to Pay arrangement can be put in place but only after contacting HMRC.
Bounce Back Loans
The term of these has been extended to repayment within 6 years to 10 years with the first year still being interest free. The deadline for applications has also now been extended to 31st November 2020 with amounts from £2,000 to £50,000 being available.
Job Support Scheme
After pressure to extend the furlough scheme the Job Support Scheme, to support viable jobs, has been announced to follow on from the furlough scheme by starting from 1st November.
As long as one third of the normal hours are being worked by an employee in a 7-day period the remaining two thirds will be in part paid for by the government with the balance contributed by the employer and effectively sacrificed by the employee. So, an employee working one third of their normal hours would receive 77% of their normal pay. The employer is responsible for paying national insurance and pension contributions.
Changes to the contracts of employment of affected employees is required to secure agreement. With these retained by the employer should HMRC request to review in due course.
This scheme will run for an initial 6-month period with the first government payment being made in December for relevant periods in November. Grants will be paid to employers on a monthly basis.
If you have any questions or require support with the implementation of any of these initiatives, please do not hesitate to contact us.