chartered certified accountants
Winter Economy Plan, Everything announced 24th September
The Chancellors Winter Economy Plan statement in Parliament yesterday, announced several new incentives to help businesses through the winter months.
There was a lot to take in, and much has been trailed in the media, so we are being as brief as possible.
JOB SUPPORT SCHEME (JSS)
JSS Scheme starts 1 November 2020 and replaces the current “furlough” scheme, which ends 31 October 2020.
This means employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the Government and the employer will each pay one-third of their equivalent salary.
So an employee working 33% of their hours will receive at least 77% of their pay, 22% paid by the Government, and 55% paid by their employer (the “worked” 33% plus 22%).
Self Employed Income Support Scheme (SEISS) Extended???????
The existing self-employed grant (SEISS) will be extended:
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.
A further 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.
Please be careful, when claiming this grant, to make sure that you satisfy the ‘reduced demand’ test. We anticipate this will be a hot target for HMRC review in any post-Covid era.
VAT cut for Hospitality Sector extension to 31st March 2021???????
The reduction in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021.
DEFERRAL OF VAT BILLS
Up to half a million businesses who deferred their VAT bills in the period from March to June 2020 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 of March 2021, businesses will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
Self-Assessment Taxpayers – Time to pay extension
Approximately 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.
We do not usually like to comment too much on these Covid support schemes for fear of clogging-up the message. We would, however, inject a note of caution in this instance:
The message is, therefore, that we would only recommend you take advantage of these deferment schemes if you have to, because you need to. We see them as being designed to support those who are having real difficulty in paying their taxes. The other fact to bear in mind is that the tax will have to be paid at some point – we do not see Mr Sunak writing off these debts any time soon.
Our recommendation is that if you feel you can afford to pay tax, as it falls due, it would be wise to do so.
Bounce Back Loans (BBLS) - Flexibility to pay back
More than a million businesses who took out a BBLS loan will get more repayment time, through a new ‘Pay as You Grow’ flexible repayment system.
Coronavirus Business Interruption Loan Scheme (CBILS)
The Government also intends to give CBIL lenders the ability to extend the length of loans from a maximum of six years to ten years, if it will help businesses to repay the loan.
The chancellor also announced an extension in applications for the Government’s CBIL schemes until the end of November.
Please feel free to share this information as widely as possible and encourage people, who might benefit from these updates, to register at www.asquithand.co.uk for future updates.
This information is provided free of charge and in good faith, without acceptance of any future liability arising from any action or in-action by any recipient or reader.