COVID-19 : Support from Government for business

We have summarised below for our clients and partners the key measures recently announced by the chancellor to assist business through the next few months. This article is intended only to sign post the assistance that may be available to you.

A copy of the Winter Economy Plan can be found here.

This page was updated November 2020 to reflect the further changes being made.

Fraud Warning: If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to phishing@hmrc.gov.uk and then delete it.

 

Coronavirus (COVID-19) Self-employment Income Support Scheme

Scheme extension

The Self-Employment Income Support Scheme Grant Extension provides two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

The extension will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 55% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £5,160 in total.

The grant will be increased from the previously announced level of 40% of trading profits to 80% for November 2020. This therefore increases the total level of the grant from 40% to 55% of trading profits for 1 November 2020 to 31 January 2020.

The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.

The grants are taxable income and also subject to National Insurance contributions.

The online service for the next grant will be available from 30 November 2020.

 

Job Support Scheme – Will now be introduced once the extended Furlough scheme ends.

To support viable UK employers who face lower demand due to COVID-19, and to keep their employees attached to the workforce, the government will be introducing a new Job Support Scheme when the extended furlough scheme ends.

There are two schemes, one for companies that remain open and one for companies forced to close because of lockdown.

Open

When open a minimum of 20% of an employees normal hours should be worked so those individuals working one day per week will be eligible. Under the JSS Open scheme the government contributes 62% towards the wages of staff for the hours they do not work, whilst the employers pay just 5% plus NICS and pensions contributions. Employees receive a minimum of 73% of their wages.

Closed

Under JSS Closed, which is for businesses legally required to close due to coronavirus restrictions, the government will pay two thirds of each employees’ salary with employers just covering NICs and pension contributions.

Firms who retain staff that have previously been furloughed until the end of January will also receive a £1,000 per eligible employee payment under the Job Retention Bonus. The employer will be reimbursed in arrears for the government contribution under the scheme and the employee must not be on a redundancy notice.

 

Job Retention scheme extension

The extended Job Retention Scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs. The CJRS is being extended until March 2021. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work. As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing. Further details, including how to claim this extended support through an updated claims service, will be provided shortly. The Job Support Scheme will be introduced following the end of the CJRS.

This policy will be reviewed in January 2021.

Eligibility

All employers with a UK bank account and UK PAYE schemes can claim the grant. Employers and their employees do not need to have used the scheme before to claim for periods from 1 November.

What support is being provided and employer costs:

For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.

Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.

As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

There are now monthly deadlines for claims. Claims for period on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday.

 

Support for businesses through deferring VAT and Income Tax payments

VAT

The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.

VAT Returns should continue to be submitted on time.

Temporary VAT reduced rate for hospitality and tourism – The government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to
attractions across the UK.

Income Tax

The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020. Taxpayers with up to £30,000 of Self-Assessment
liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022. Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.

 

Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

How to access the schemeIf you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicate