Below is the latest information (as at 6th October) on a number of measures to assist businesses in financial difficulties due to the disruption resulting from the Coronavirus pandemic.
Further details can be found on the GOV.UK website.
Income Tax – Deferral of Payment
The Government has provided further details on the option to defer income tax due in January 2021.
Individuals who:
- have no outstanding tax returns;
- owe between £32 and £30,000; and
- have no other tax debts or HMRC payment plans set up
can apply online for (and will automatically be granted) a payment plan. This must be completed no later than 60 days from the due date of the tax. Payments will be made by monthly direct debits over a 12 month period and interest will be charged from 1st February 2021.
For amounts over £30,000 or when a period longer than 12 months is requested, HMRC will need to be contacted directly.
VAT
- Businesses who deferred their VAT bills will be able to spread the repayments over 11 interest-free payments up to March 2022. Businesses will need to opt in to this scheme.
- The reduced VAT rate for the tourism and hospitality sectors has been extended to the end of March 2021.
Self-Employment Income Support Scheme (SEISS) Grant Extension
The extension will be limited to those currently eligible for the SEISS (although they do not have to have claimed previously) who are actively continuing to trade but are facing reduced demand due to COVID-19.
There will be two grants in the period November 2020 to April 2021. The first will cover the period 1st November 2020 to 31st January 2021 and will provide a taxable grant covering 20% of average monthly trading profits, capped at £1,875 in total, paid out in a single instalment.
The second grant will cover a three-month period from the start of February until the end of April. The Government will review the level of the second grant and set this in due course.
The grants are subject to Income Tax and National Insurance Contributions.
Full details of how to claim will be provided by HMRC soon.
Job Support Scheme
Although detailed guidance has yet to be published, the Government’s policy paper has outlined how the scheme will operate.
It will open on the 1st November 2020 and run for 6 months. Claims can be made from December 2020 and will be paid on a monthly basis in arrears – that is after the employee has been paid and HMRC notified through the Real Time Information (RTI) submission.
Employees will be paid in full by their employer for time worked, but for hours not worked, the cost will be split between the employer, the Government (through wage support) and the employee (through a wage reduction).
The Government will pay a third of hours not worked capped at £697.92 a month. The grant will not include Class 1 employer NICs or pension contributions and these will remain payable by the employer.
The employer will contribute a third – the Government’s expectation is that employers cannot top up their employees’ wages above the two-thirds level.
In cases where the cap does not apply, this will mean that employees receive at least 77% of their normal wages.
| Hours Employee Worked | 33% | 40% | 50% | 60% | 70% |
| Hours Employee Not Working | 67% | 60% | 50% | 40% | 30% |
| Employee Earnings (% of normal) | 78% | 80% | 83% | 87% | 90% |
| Gov’t Grant (% of normal wages) | 22% | 20% | 17% | 13% | 10% |
| Employer Cost (% normal wages) | 55% | 60% | 67% | 73% | 80% |
The only condition for SMEs is that the employer has a UK bank account and UK PAYE scheme.
For large businesses they will need to show turnover has fallen following COVID-19.
The Government expects that large employers using the scheme will not make capital distributions, such as dividend payments or share buybacks (further details of this will be included in the future guidance).
The scheme is available irrespective of claims made under the Coronavirus Job Retention Scheme and has no impact on eligibility for the Job Retention Bonus.
To be included in the scheme, an employee must:
- be on an employer’s PAYE payroll on or before 23rd September 2020 – that is a Real Time Information (RTI) submission notifying payment to that employee must have been made on or before this date.
- work at least a third of their normal hours for the first three months of the scheme operating. This threshold may increase after this point.
Employees can move on and off the scheme and do not have to work a consistent pattern. However, each period must cover a minimum of seven days.
The scheme will use “usual wages” calculations similar to the Coronavirus Job Retention Scheme. Where staff have previously been furloughed, the calculation of usual pay and/or hours will be based on their underlying contracts, not the amounts whilst on furlough.
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.
HMRC will carry out checks and may withhold or require repayment of claims made fraudulently or based on incorrect information.
Grants for businesses affected by local lockdowns
The Government is to introduce grants of either £1,000 or £1,500 paid every 3 weeks to businesses forced to shut due to local restrictions. The grants are a taxable income and will be in addition to other assistance provided.
The higher level of grants will be available to businesses occupying premises with:
- a rateable value of £51,000 or more; or
- an annual rent of £51,000 or more; or
- an annual mortgage payment of £51,000 or more.
The grants will not be available to businesses still closed at a national level.
Grants will be distributed by Local Authorities which will also receive an additional 5% top up to provide grants of up to £1,500 to businesses not eligible under these criteria.
Extension of Corporate Governance and Insolvency Measures
Measures in the Corporate Insolvency and Governance Act which were to expire on 30th September have been extended:
- AGMs can continue to be held virtually until 30st December.
- The restriction on Statutory demands and winding-up petitions will continue until 31st December.
- Ceasing supply to or requiring additional payments from a company undergoing a rescue process will continue to be prohibited. However, small suppliers remain exempt until 30th March 2021.
- The entry requirements for entering the moratorium procedure will continue to be relaxed until 30th March 2021.
Government supported borrowing
- Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans (BBL) has beeb extended from 6 to 10 years with the option of interest-only periods of up to six months and repayment holidays available.
- The application date for all coronavirus loan schemes has been extended to 30th November 2020.
Statutory Sick Pay
Government guidance has been updated to confirm that from 26th August 2020, employers can claim for employees who have been notified by the NHS to self-isolate before surgery for up to 14 days.
Tax-free childcare extended
The Government has announced that tax-free childcare for parents who have fallen below the minimum income requirement and critical workers who may have exceeded it has been extended to 31st October.
Further details can be found here.
Furloughed Staff – Salary for Redundancy
The Government has announced that it will introduce legislation which will ensure that statutory redundancy pay is calculated based on an employee’s normal pay, rather than furlough pay. This also covers other employment rights that rely on average weekly pay, including notice pay, unfair dismissal, and short-time working.
However, it does not apply to any enhanced redundancy pay under the individual’s employment contract.
More information is expected over the coming weeks. As we know more we will let you know.