Dear All,

I am updating you on the latest announcements made by the government last week.  Not all off them will apply to all.  Therefore, if you have any specific questions relating to your circumstances please let us know.
 
JOB SUPPORT SCHEME

The Chancellor confirmed that the furlough scheme is ending on 31 October as originally planned and will be replaced by the Job Support Scheme for 6 months starting 1 November 2020.

The new Job Support Scheme is primarily targeted at small and medium sized businesses (large businesses will have to demonstrate that their turnover is lower due to difficulties from Covid-19).

The basics are:

• An employee needs to work at least 33% of normal hours. The employer pays for these hours.
• Of the remaining 67% of normal pay, the employer pays 33% and the government pays 33%.
• The subsidies (from employer and government) towards pay for hours not worked are 33% of 67% each - which is equivalent to 22% of 100% each.
• So, where an employee works 33% of normal hours, the employer funds 55% of normal pay and the government funds 22%. The employee will receive 77% of normal pay, and forego 23%.
• If an employee works more than 33% of normal hours, the above figures change proportionately. 
• The level of government subsidy is capped at £697.92 per month.
• The scheme is open to businesses even if they didn’t previously use the furlough scheme.
• Who and what can be claimed – please see below:

Employers 

• All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme. 

• Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs). 

Employees

 • Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

 • In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.

 • Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.

What does the grant cover?

 • For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month.

 • Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer. 

• “Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme.  Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough. 

• Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. The expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.

What does it mean to be on reduced hours? 

• The employee must be working at least 33% of their usual hours. 

• For the time worked, employees must be paid their normal contracted wage.

 • For time not worked, the employee will be paid up to two-thirds of their usual wage. 

• Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee. 

How to Claim? 

• The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis. 

• Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.

HMRC checks 

• HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred. 

• Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request. 

• The intention is that employees will be informed by HMRC directly of full details of the claim.

SELF EMPLOYMENT INCOME SUPPORT SCHEME (SEISS)

This scheme is being extended for a further three months from 1 November 2020 to 31 January 2021.

The basics are:

• To be eligible you have to have been eligible for the previous (second phase) of the SEISS grant.
• The claimant must be actively trading but experiencing continuing reduced demand due to coronavirus.
• The grant will be worth 20% of average monthly profits, up to a total of £1,875 (presumably £625 a month). Presumably the calculation is based on historic profits as previously.

A further phase may be announced to cover February, March and April 2021, depending on what happens in the next few months. It hasn’t been stated how this will be calculated.

TOURISM AND HOSPITALITY VAT

The current VAT reduction from 20% to 5% is being extended until the end of March 2021. Previously it was due to finish mid- January 2021.

VAT DEFERRAL AND THE NEW PAYMENT SCHEME

Businesses who deferred the VAT payment due for the quarter ended February/March/April 2020 and who are due to pay the deferred amount in March 2021 will be able to apply under the New Payment Scheme to pay the amount due by 11 interest free monthly instalments.

SELF-ASSESSMENT TAX DEFERRAL AND THE NEW PAYMENT SCHEME

The self-employed, and other self-assessment income tax payers, will be given more time to pay the tax due in January 2021.

Providing the amount due is up to £30,000, taxpayers will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months

PAY AS YOU GROW

The Bounce Back Loan (BBS) and Coronavirus Business Interruption Loan Scheme (CBILS) were initially set with a payback period of six years. This is being extended to ten years.

This will cut monthly repayments…but at the end of the day it’s still a loan and needs repaying.

Summary

This is a lot of information and the government is doing its best in a difficult situation.   If you have any questions please let us know and we shall do our best to assist you.

Best Regards

David Turner