The Chancellor Rishi Sunak has announced additional support from the government to provide certainty to businesses and workers who have been impacted by the coronavirus.
Job Support Scheme
This new scheme will start from 1 November, it is a six month scheme to protect viable jobs in businesses who are facing lower demand over the winter due to COVID-19. It allows employees to work reduced hours and employers will be supported by the government.
Employees must be working a minimum of 33% of their usual hours in the first three months of the scheme, this threshold may then increase. For the hours not worked the employer and the government will pay one third each of the employees usual hourly wage, the government contribution will be capped at £697.92 per month towards the hourly wage. Employees must have been on the payroll on or before 23 September 2020 and been included on an RTI submission on or before that date.
Self Employment Income Support Scheme (SEISS)
This scheme has been extended and will provide two grants and will last for six months, from November 2020 to April 2021. The 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 the start of November until the end of January. The government will provide a taxable grant covering 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
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.
As previously the grants are subject to income tax and national insurance contributions.
Eligibility criteria will apply, including reduced demand due to COVID-19 in the qualifying period.
VAT and Self-Assessment deferral
The temporary 5% VAT cut for tourism and hospitality has been extended until 31 March 2021.
Businesses that deferred VAT due in March to June 2020 will be given the option to spread payments in 11 equal, interest free instalments over the financial year 2021/22. Businesses that took advantage of the VAT deferral can use the new payment scheme by opting-in.
The self-employed and other self-assessment taxpayers will be given more time to pay their taxes which are due January 2021. Tax payers with up to £30,000 of self-assessment liabilities due will be able to use HMRC’s self-service Time to Pay which allows you to pay over an additional 12 months.
All businesses that have borrowed under the Bounce Back Loan Scheme will be given the option to repay their loan over a period of up to ten years. UK businesses will have the option to move temporarily to interest only payments for periods of up to six months, this option can be used up to three times, or repayments can be paused entirely for up to six months, this option can only be used once and has to be after six payments have been made.
The term for Coronavirus Business Interruption Loan Scheme will also be extended to ten years.
Insolvency measures extended
Announced separately from the Chancellor’s statement, the government will extend the Corporate Insolvency and Governance Act which was due to end on 30 September 2020.
Companies will be able to hold virtual AGMs until at least 30 December 2020, statutory demands and winding up petitions will be restricted until 31 December 2020. Termination clauses will still be prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process.
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