Winter Economy Plan review
Sarah Hamilton - November 2nd, 2020
Plans for an Autumn Budget in 2020 have been shelved in view of the pandemic. Instead, on 24 September, (updated 22 and 31 October) the Chancellor outlined his Winter Economy Plan. Key features:-
Job Support Scheme (JSS) – as a result of announcements made 31/10/2020 this scheme has been postponed. See later post for updated information
A new Job Support Scheme introduced from 1 November 2020 to run for 6 months whereby the government will contribute towards the wages of employees who are working fewer than normal hours. In very simple terms the employee must work and the employer must pay for 20% of the normal time. For the time NOT worked, the Job Support Scheme (to replace Job Retention Scheme) will pay 61.67% and the employer is responsible for paying 5% (subject to a cap and subject to various conditions). As before, employers have the option to “top up” payments. The Government are hoping to help employers to keep staff on where there is a good chance there will be a job in the future. As previously announced, there is a £1000 grant for staff who had been furloughed who are retained on the payroll at the end of January 2021 (Job Retention Bonus). Further details of both the Job Support Scheme and the Job Retention Bonus can be found by clicking on the relevant one.
Self Employed Income Support Scheme (SEISS) – see later post for updates
This taxable grant is aimed at those who are self employed facing reduced demand and is an extension of the existing arrangements, (the first claim for 3 months closed 13 July 2020, the second claim, for another 3 months, if your business has been adversely affected after 14 July 2020 had to be claimed on or before 19 October 2020). The extension announced on 24 September (updated 22 October and 31 October 2020*) is a lump sum to cover 3 months’ worth of profits for the period to the end of January 2021 and is worth *55% of average monthly profits (*80% for November and 40% for December and January) up to a total of *£5,160. This grant will be available to claim from *30 November 2020.
We are told that there will be an additional grant (which may be adjusted) to cover the quarter to the end of April 2021 (details to follow)
More information here:- https://www.gov.uk/SEISS
VAT – tourism and hospitality
The cut in VAT rate for the beleaguered tourism and hospitality sectors from 20% to 5% will be extended through to 31 March 2021
Payments of VAT
For those who deferred paying over VAT to HMRC there is a New Payment Scheme giving the option to pay back in smaller instalments, the outline intention is for 11 equal payments over 2021 -22, extending the deadline for full payment to March 2022 (interest free). The taxpaying business has to make an application to take advantage of this scheme.
Self Assessment Taxpayers
HMRC are currently actively contacting self assessment tax payers who took advantage of the automatic deferral of tax due on 31 July 2020 to a payment date of 31 January 2021 encouraging the taxpayer to pay “if they can” in advance of the revised due date.
On the other hand, for those with cash flow difficulties, HMRC have introduced a separate 12 month additional extension under the “Time to Pay” self service facility, effectively meaning payments deferred from July 2020 , and those due in January 2021, can be pushed back to January 2022. Unlike the initial deferral, this delayed payment arrangement will require an application from the taxpayer. It enables taxpayers with personal liabilities of under £30,000 to secure a payment plan with HMRC to pay tax otherwise due on 31 January 2021 over an additional 12 months. Taxpayers using an arrangement to pay tax in instalments will be required to pay interest on any outstanding balance from 1 February 2021.
Bounce Back Loans – see later post- application date extended
This scheme, along with the Coronavirus Business Interruption Loan Scheme and the Future Fund is extended to
30 November 2020 for new applications. Furthermore the repayment arrangements have been made more flexible and kinder to the borrower under the Pay as You Grow system. Notably the loan period is extended from 6 to 10 years and there are options for “interest only” payment periods, and a one time only payment holiday period of up to 6 months. The Bounce Back Loans have attracted publicity recently as the Banks have pointed out that the downside of making the application process easier for the borrower is the risk of fraudulent applications slipping through. Let us hope that this theft of money destined to support the small business backbone of our economy does not happen.
Other more specific measures have been put in place – the Corporate Insolvency and Governance Act has been extended to relieve pressure on businesses dealing with coronavirus.
The pent up demand, stamp duty land tax holiday and the new Working From Home options appear to have boosted the housing market, but it seems there are significant delays between agreement in principle and exchange of contracts. HM Land Registry have issued a new practice guide about changes made to facilitate conveyancing and registration during coronavirus.
The Government are promoting Growth Hubs who may be able to help certain businesses access additional grants specific to their needs. As you will see from the link it would appear that this facility is now fully subscribed in full in the South East. However, if your registered office/business address is in London or away from the South East you may still be able to apply through your local authority.
Please do contact us to discuss any aspects. This is not a normal Budget update but then this is not a normal year. And we still have the impact of Brexit, potential increases in Corporation Tax rates, the alignment of Capital Gains Tax and Income Tax rates and a restriction of tax relief on pension contributions to look forward to (possibly)….