On 24 September 2020 the Chancellor announced measures contained in the UK government’s Winter Economy Plan. The measures include a new Job Support Scheme, extensions to the Self-Employment Income Support Scheme and the loan schemes, deferrals of VAT and self-assessment returns and a continuation of the VAT reductions for hospitality and tourism.
Job Support Scheme
The scheme to be introduced from 1 November 2020 will generally cover around 22% of the wages of workers in “viable” jobs for a period of six months. The previous Coronavirus Job Retention Scheme ends on 31 October 2020.
Under the new scheme businesses with lower demand during the winter months can keep their staff in the job on shorter hours, instead of making them redundant.
To qualify for the scheme employees need to work at least one third of their normal hours. The employers will pay the employees for the hours they work and the government and employer will each cover one third of the lost pay for hours that are no longer worked, with the government’s contribution capped at GBP 697.92 per month.
The scheme is open to all small and medium enterprises (SMEs) and larger businesses may use the scheme if their turnover has fallen as a result of the pandemic.
Self-Employment Income Support Scheme (SEISS)
The SEISS Grant Extension Scheme continues until April 2021 but on different terms to the original SEISS scheme. A first grant will be available covering businesses affected by the pandemic covering the three months beginning from 1 November 2020. The grant will amount to 20% of average monthly trading profits, paid in a single instalment covering three months of profits, but capped at GBP 1,875 in total. A second grant will be available for the following three-month period from February 2021 and further details are to be announced in due course.
VAT Deferral
The businesses that deferred their VAT due in the period from March to June 2020 are given the opportunity to spread their payments in eleven equal instalments during the financial year 2021/22, instead of paying the whole amount in March 2021. The instalments would be interest-free. All businesses are eligible for this deferred payment if they previously took advantage of the VAT deferral but they must opt in.
Deferral of self-assessment tax
The self-employed and other self-assessment taxpayers will be able to defer taxes due in January 2021. Where a taxpayer has self-assessment tax liabilities up to GBP 30,000 HMRC’s self-service Time to Pay facility may be used to obtain a payment plan to pay the liabilities over a further twelve months.
Reduced VAT rates
The temporary VAT reduced rates of 5% for the hospitality and tourism sectors will continue to apply until 31 March 2021.
Loans
The deadline for new applications for the state-backed loan schemes is being extended until 30 November 2020. Beginning in January 2021 there will be a new guarantee loan programme.
All businesses that borrowed money under the government’s Bounce Back Loan Scheme will be given the option to repay their loan over a period up to ten years.
