Update following The Chancellor’s announcements

After a period of quiet, Rishi Sunak has made several important announcements as the Government struggles to balance curbing the effects of the Coronavirus and curbing the effects those curbs have on the economy.

Job Support Scheme for employees

• The JSS will apply from 1st November 2020 only to 'viable jobs';

• Viable jobs mean where employees work at least 1/3rd of their usual working hours;

• The hours they work will be paid for by their employers at their full salary;

• The non-worked hours will be paid 33.3% by the Government (capped at £697.92 per month), 33.3% by the employer and 33% will be unpaid;

• Employers will not be permitted to make employees redundant whilst covered by the JSS.

• Businesses do not need to have made any claims under the previous furlough schemes, although it is unclear from which date they need to have been employed from;

• Employers are able to claim the JSS in addition to the Job Retention Bonus Scheme;

• This new scheme is open to all SMEs.

Self-assessment taxpayers given an extra twelve months to pay

Those in self-assessment were already able to defer their July 2020 payment on account until 31 January 2021, if they were struggling to pay because of coronavirus.

Now the Chancellor is giving individual taxpayers even longer to pay all of the taxes due by 31 January 2021, which is made up of these amounts:

• Second POA 2019/20

• Balancing payment 2019/20

• Capital gains tax 2019/20 (if not paid under 30-day rule relating to residential properties)

• First POA 2020/21

Unlike the deferral in place on 31 July 2020, the taxpayer will have to apply for time to pay to spread the tax due over 12 monthly instalments to January 2022. Where the total tax due doesn’t exceed £30,000 the application for time to pay will be agreed automatically when the taxpayer applies using an online form.

If the tax due exceeds £30,000 or the taxpayer needs longer to pay, a telephone service will still be available to agree a bespoke payment plan.

Further SEISS grants for self-employed

The second SEISS grant, which closes for applications on 19 October was supposed to be the final grant for the self-employed.

But the Chancellor has made it clear that a third SEISS grant will be available to cover 20% of average monthly profits for three months, for those who were eligible for the first and second SEISS grants. This will be capped at £1,875 per taxpayer. It is not clear when applications will open or close for this grant.  

In addition, a fourth SIESS grant will be made available for the three months to cover February to April 2021.

‘Bounce Back Loan’ scheme upgraded to ‘Pay As You Grow’

All the existing coronavirus loan schemes have been extended. Applications for the small and large versions of the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS) and the Future Fund will be open until 30 November, with 31 December set as the new deadline for approvals.

Both CBILS and BBLS loans will be extended to 10-year repayment terms. The £50,000 BBLS package that has channelled £38bn to 1.2m businesses is being rebranded as “Pay as You Grow” and will offer borrowers more flexible repayment schedules, starting with interest-only repayments for up to six months. Struggling businesses will also be able to request six-month repayment holidays.

VAT changes

Alongside the deferral of income tax in July 2020, the VAT payments due in period 20 March to 30 June 2020 were also automatically deferred until 31 March 2021. This deferral would normally represent the payment due for one VAT quarter.

All the businesses who took advantage of that deferral will now be able to spread that deferred VAT payment over 11 equal instalments payable between April 2021 and March 2022. The business will have to apply online for this further deferral. 

In addition, the reduced rate of VAT for the hospitality and tourism sector, which was due to revert to 20% on 13 January 2021 will now apply until 31 March 2021.   

If you would like further help with any of the above, get in touch with your usual Continuum contact or email info@continuum-ltd.co.uk