The chancellor announced extended support for businesses on 24th September 20, as part of his Winter Economy Plan following the cancellation of the Autumn Budget. We provide an overview of the new post furlough support scheme and details on the extension to the Self Employment Grant and VAT Reduction.
Job Support Scheme
The scheme will support employees who are working at least 33% of their usual hours in November, December and January, with a review planned on whether this minimum is increased for the remaining three months. Employees can be ‘cycled’ on and off the scheme and the employer will continue to pay employees for actual time worked.
The cost of hours not worked will be split between the employer and the Government, each paying a third of the usual hourly rate with the monthly government grant being capped at £697.92. This will ensure most employees earn a minimum of 77% of their normal wages.
- The Grant will not cover Employers NICs or Employer Pension Payment.
- Employees cannot be made redundant or put on notice of redundancy whilst their pay is supported
- New short time working arrangements will need to be agreed with staff.
- Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
- The scheme will be open to all businesses, even if they have not previously used the furlough scheme, however staff must have been on a submitted payroll before 23rd September 20.
The government will then pay 1/3 of the £210 the employee would have earnt for the three days they are ‘furloughed’ = £70
Self Employment Income Support Scheme (SEISS)
The Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.
5% VAT for the Hospitality and Leisure Sector
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
Additional Time to Pay
In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
For more information visit: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan