It was widely anticipated that the Chancellor, Rishi Sunak, would introduce a range of new measures to support jobs when the existing furlough scheme closes on 31 October. This is the additional help that is on offer from the Government.
Jobs Support Scheme
Almost 10 million jobs have been supported by furlough, which pays the wages of those who cannot work because of coronavirus. Mr Sunak will not extend furlough in its current form, but will replace it with the more targeted Jobs Support Scheme. This will top-up salaries in firms that can’t take employees back full-time. To be eligible, employees must work at least a third of their normal hours and the employer is responsible for paying the wages for those hours. For the remaining hours not being worked, the government and employer will each pay a third of the wages. The Chancellor says this means that the employee would get at least 77% of their pay.
The scheme is open to small and medium sized businesses (usually defined as firms with 250 employees or less) but large businesses whose revenue has fallen due to coronavirus will also be eligible. The scheme will run for six months from 1 November.
Help for the Self-Employed
The chancellor is extending the self-employed grant on similar terms to the Jobs Support Scheme. A grant will be available to those eligible for the Self Employment Income Support Scheme Grant and this will cover three months’ worth of profits for the period from November to the end of January. It will cover 20% of average monthly profits up to a total of £1,875 and a further grant will be available to the self-employed to cover February to the end of April 2021.
Bounce Back Loans will be extended from six years to 10 which means that monthly repayments will reduce by nearly half. Coronavirus Business Interruption Loan Scheme (CBILS) lenders will also be able to extend the length of loans from the current maximum of six years to 10 years. The chancellor is also extending the deadline for the government’s coronavirus loan schemes to the end of November. Businesses that are struggling can choose to make interest only payments for six months and those “in real trouble” can apply to suspend repayments altogether for six months. According to the Chancellor, we are told that businesses will not see their credit rating fall as a result.
Assistance with Tax
The reduction in Vat from 20% to 5% for the tourism and hospitality industries will be extended from 13 January 2021 to 31 March 2021 and all businesses who deferred their VAT bills will be able to pay back their taxes in 11 smaller interest-free instalments. Previously, deferred Vat bills were due for payment in full by 31 March 2021. There is further help for self-assessment income tax payers who will be able to defer tax payments by a further 12 months to January 2022.
If you would like to discuss how any of these announcements will affect you and your business, please get in touch with your contact at Plus Accounting.
Author: Paul Feist, Director, Plus Accounting
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Date published: 24 September 2020