Winter Economy Plan-new Covid-19 support schemes
Posted on 27th September 2020 at 11:57
The Chancellor of the Exchequer Rishi Sunak presented his Winter Economy Plan to Parliament on Thursday 24 September 2020 to outline how the government will support jobs and the economy over the coming months.
We have summarised the Key Points from his speech:
1. New Job Support Scheme will open from 1 November 2020 and it will run for 6 months.
Employees will be required to work at least 33% of their usual hours. For the hours not worked, the employer and the government will each pay 1/3 of their usual wages. So employees working 33% of their hours will receive at least 77% of their pay.
To be eligible, employees must:
• be registered on your PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020
• work at least 33% of their usual hours. The government will consider whether to increase this minimum hours threshold after the first three months of the scheme.
In October, HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
The current Job Retention Scheme will close on 31 October 2020 and the new Job Support Scheme will start from 1 November 2020 and you will be able to claim in December. Grants will be paid on a monthly basis.
The Job Support Scheme will be open to employers across the UK even if you have not previously applied under the Coronavirus Job Retention Scheme which closes on 31 October 2020.
2. VAT Deferral New Payment Scheme
If you deferred payments that were due between 20 March and 30 June 2020, then these payments need to be made to HMRC by 31 March 2021.
You can use the New Payment Scheme to spread these payments over equal instalments up to 31 March 2022.
Alternatively, you can make payments as normal by 31 March 2021 or make Time To Pay arrangements with HMRC if you need more tailored support.
3. New Self Assessment Self-Serve Time To Pay Scheme
If you deferred paying your July 2020 Payment on Account, you will need to pay the deferred amount, in addition to any balancing payment and first 2020/21 Payment on Account, by 31 January 2021. This may be a larger payment than you usually pay in January.
If you're unable to pay your Self-Assessment bill in full by 31 January 2021, you can set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC. If you have SA tax debts of up to £30,000, you'll able to access this Time to Pay facility through GOV.UK and will get automatic and immediate approval. If your debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use our Time to Pay arrangement by calling HMRC.
4. Self-Employment Income Support Grant Extension - The extension will provide two grants and 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 the start of November until the end of January. HMRC will provide a taxable grant covering 20 per cent 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. HMRC 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.
How to claim - HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.
5. In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November.
This includes extending the length of the loan from 6 years to 10 years, which will cut monthly repayments by nearly half.
• Please note that borrowers are required to declare that they will use the loan only to provide economic benefit to the business, and NOT for personal purposes.
• A word of caution – Why you cannot just withdraw the Business Loan from the company.
You cannot use the business loan to transfer the money into a personal. If the loan was transferred outside of your company, this can become quite expensive due to the tax implications arising. This will create a director’s loan charge at 32.5% and additional tax arising on the beneficial director’s loan advanced.
Please do get in touch with your usual Chart Accountancy contact if you have questions.
Keep well and safe.
Tagged as: Winter Economy Plan
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