The Chancellor, Rishi Sunak, has today delivered a statement to the House of Commons outlining plans to help protect jobs across the UK whilst the country faces a resurgence of coronavirus and a winter of uncertainty. The Chancellor was facing mounting pressure to reveal future changes as many of the schemes and reliefs previously announced are coming to an end including the furlough scheme at the end of October.
It has also been confirmed that the Budget that was expected to be delivered in the autumn will now take place next year. The measures announced today are more clearly focused on keeping the economy ticking over during the coming weeks and months.
The main focus of the Chancellor’s announcements is a new Job Support Scheme and an extension to the Self Employment Income Support Scheme as well as additional flexibilities for businesses who have borrowed money as a result of the pandemic.
Details of these announcements follow:
Job Support Scheme
- A new 6-month scheme starting from 1 November 2020.
- This scheme has been designed to support viable jobs and employees must work at least one-third of their hours, paid as normal, in order to qualify for the scheme. The government and employer will then each cover one-third of any remaining hours the employee is not working.
- Employees will therefore forego one-third of their pay for the hours that they have not been working. This means that employees working the minimum one-third of their hours will still receive at least 77% of their pay.
- The level of the grant will be calculated based on an employee’s usual salary but subject to a cap.
- The Chancellor said that the scheme will be open to all small and medium-sized businesses, but larger businesses will only qualify when their turnover has fallen as a result of the pandemic.
- You can still use this scheme even if you have not previously participated in the Coronavirus Job Retention Scheme.
- The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.
Self-Employment Income Support Scheme extension
- The Chancellor announced additional help for the self-employed based on similar terms and conditions as the new Jobs Support Scheme.
- The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and are currently eligible for SEISS.
- The initial lump sum will cover three months of profits from 1 November 2020 calculated as 20% of average monthly profits, up to a total of £1,875.
- An additional second grant will be available from 1 February 2021 to 30 April 2021, but the level of this second grant amount is subject to review.
Loan deadlines extended
- Businesses that have taken out a Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system.
- This will include an extension in the loan term from six to ten years. There will also be new options for interest-only repayments for up to six months as well as payment holidays.
- The Coronavirus Business Interruption Loans will also have their Government guarantee extended to ten years.
- The deadline for applying for all the Government’s coronavirus loan schemes will be standardised and pushed back until 30 November 2020.
- A new successor loan guarantee programme is also expected to be introduced early next year.
New VAT Payment Scheme
- Businesses had the option to defer the payment of any VAT liabilities due between 20 March 2020 and 30 June 2020.
- The deferred payment was due to be paid in full to HMRC by 31 March 2021.
- The Chancellor has now confirmed that businesses will instead be able to make 11 smaller interest-free payments during the 2021-22 financial year.
Self-Assessment payment deadlines
- Taxpayers that were due to make their second payment on account for the 2019-20 tax year had the option to have the payment due date deferred until 31 January 2021.
- It will now be possible to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility for this payment and also for payments due in January 2021 extending the deadline until January 2022.
VAT reduction for hospitality and tourism sector
- The VAT reduction that was announced as part of the Summer Economic update was scheduled to end on 12th January 2021.
- The end date for the VAT cut has now been extended until 31 March 2021 to give the affected sectors more time to adjust to the difficult trading conditions. This means that VAT charged on food, accommodation and attractions (such as eat-in or takeaway food in restaurants, cafes and pubs, cinemas, theme parks and zoos) will see VAT reduced from 20% to 5% until the end of March 2021.
The new incentives announced today should be welcomed as the government continues to try and cope with this unprecedented pandemic. Managing the economic ramifications are causing great difficulties for many people and businesses across the country. These steps, at least, give affected businesses and individuals a degree of certainty as to the level of government assistance available to them throughout the coming months.
As more details emerge on the various schemes announced today we will update you further.
Source: HM Treasury Thu, 24 Sep 2020 00:00:00 +0100
Mothballing as used in a business sense is usually defined as to stop using a piece of equipment or process, and then storing and preserving mothballed assets for later use.
Many business owners are now faced with marshalling their resources in this way.
There is a temptation to sell off assets that are under-utilised due to the present COVID disruption. If assets are readily converted into cash this sell-off process could make a welcome contribution to cashflow.
Mothballing your entire business is another matter…
If you could stop trading and place all of your business assets – including your work-force – into hibernation, then perhaps you could close your doors and wait-out the coronavirus epidemic.
Unfortunately, most businesses have significant costs that cannot be cancelled. These fixed costs, for example rent, rates and insurances, will need to be paid even if you are closed for business.
But, for those businesses that have limited fixed costs – say businesses run from home – mothballing may be a way to protect your business from extinction while you find other paid-for work to tide you over?
In this way you could reawaken your “sleeping beauty” business when we can once again contemplate business life without the concerns of lock-down, masks and social distancing.
Source: Other Thu, 24 Sep 2020 00:00:00 +0100
It is really difficult to maintain a sense of equilibrium and optimism in these difficult times. Even if you can embrace the notion that everything changes, and they do, the present restrictions on our daily business and home lives seem all consuming and never ending.
Where is the silver lining, the light at the end of the tunnel?
An effective vaccine would help as would additional treatments for those who actually catch coronavirus. But many businesses, indeed whole sectors, are now on their knees as the effects of lockdown and layoffs start to bite.
Which is why standing back to take an objective view of your affairs is so important. Very often it is impossible to see yourself objectively, caught as we are in the concerns of manging each day. If you have a business and are unsure how to react to present challenges then the investment in an independent assessment of your business or personal finances could pay dividends.
And don’t wait until circumstances – your bank, creditors or customers – dictate how you need to react. Take back control and start planning.
Initially, you will need to assess your present situation and then steer activity based on these restrictions in order to preserve your hard-won assets.
We can help. Call now so we can start to consider your options and create a possibility for that journey to reach the light at the end of the tunnel.
Source: Other Thu, 24 Sep 2020 00:00:00 +0100
As our readers will no doubt be aware, the Coronavirus Job Retention Scheme (CJRS) is closing on 31 October 2020. The scheme moved to a more flexible working arrangement from 1 July 2020 to allow employees to resume part-time working and to begin to ease employers away from their reliance on the scheme.
These changes continued with effect from 1 September when government support for the scheme was reduced from 80% to 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work. Employees will also have to continue to cover employers’ NIC and pension costs for the hours the employee does not work. From October 2020, the government support for the scheme will be reduced further to 60%, with state support for furloughed workers reduced to a maximum of £1,875 with the same rules for NIC and pension costs.
Since the furlough scheme was introduced, many employers have been topping up the government support payments. Employers can of course continue to top up employee wages above the relevant percentage caps for the hours not worked at their own expense. This is obviously becoming more expensive as government support for the scheme tapers off. Employers have to pay their employees for the hours worked as normal.
Once the furlough scheme ends, a new Job Retention Bonus will start. The bonus payment has been designed to help encourage employers to bring back furloughed workers. The new bonus scheme will provide a £1,000 bonus payment to employers that bring back an employee that was furloughed, and continuously employ them for at least 3 months after the end of the CJRS..
Source: HM Revenue & Customs Sun, 13 Sep 2020 00:00:00 +0100
There are a number of tax reliefs available for self-employed taxpayers that make a loss carrying on their trade, profession or vocation (collectively referred to as a ‘trade’) and for their share of trading loss for any partnerships they are involved with.
For the 2020-21 tax year, trade losses can be relieved in a number of ways. This includes the following:
- By using the loss to reduce income for the year ended 5 April 2020 and / or 5 April 2019. If there are still trade losses remaining (after your income has been reduced to nil) then you may be able to set-off some or all of the remaining loss against chargeable gains.
- A claim can also be made for losses made in the first 4 years of trade known as early trade losses relief. Taxpayers need to look at the earliest year first (i.e. 2016-17) and use any remaining loss in 2017-18 and then in 2018-19. The time limit for making claims for 2019 to 2020 losses is 31 January 2022.
- Taxpayers can carry forward any loss against future profits of the same trade or income from the company (where you transfer your trade to a company in exchange for shares in that company), or post cessation receipts
- Terminal loss relief is available for businesses that suffer a loss in the last 12 months of trade of a business. Terminal loss relief allows for the carry back of any trading losses that occur in the final 12 months of trading to be set off against profits made during the final tax year or any or all of the previous three tax years.
- Self-employed taxpayers who were previously employed can offset trading losses against employment earnings or other earned income in the current or preceding tax year.
There is also an overall cap on certain Income Tax reliefs. The cap is set at 25% of income or £50,000, whichever is the greater.
Source: HM Revenue & Customs Sun, 13 Sep 2020 00:00:00 +0100
A reminder that home owners and landlords can now access funding to help pay for the cost of energy saving improvements.
In a recent press release the Department for Business, Energy & Industrial Strategy said:
Homeowners and landlords can, since Friday 28 August, see for themselves how the government’s new Green Homes Grant scheme can help make their homes warmer and more energy efficient.
Business and Energy Secretary Alok Sharma today unveiled a new opportunity for consumers to get tips for making their homes more energy efficient, and details of how the Green Homes Grant scheme can make installations cheaper. These will be available on a revamped Simple Energy Advice website.
The site offers a quick energy survey for consumers to see how energy efficient their homes already are, and where improvements can be made. Taking as little as 5 minutes, once completed homeowners and landlords can receive a personalised energy plan.
The Green Home Grants scheme, due to open by the end of September, will allow consumers to obtain funding for up to two-thirds of the cost of the energy saving measures identified – up to £5000 – in the form of new vouchers. Lower income households could be entitled to have as much as £10,000 of the costs covered.
The scheme will cover green home improvements including insulation of walls, floors and roofs, the installation of double or triple glazing when replacing single glazing, and low-carbon heating. These measures could help families save up to £600 a year on their energy bills.
The Simple Energy Advice website then offers people access to fully accredited tradespeople in their area able to carry out the work needed, so they can get quotes ready for when the vouchers become available.
Source: Other Fri, 11 Sep 2020 00:00:00 +0100
If you have access to the internet there are a bewildering number of online resources that you can access to help you manage recurring tasks. This week we have listed a number of these with links to the relevant website pages.
- Book a theory test – https://www.gov.uk/book-theory-test
- Get vehicle information from DVLA – https://www.gov.uk/get-vehicle-information-from-dvla
- Tell DVLA if you have sold, transferred or bought a vehicle – https://www.gov.uk/sold-bought-vehicle
- View or share your driving license information, useful when you hire a car – https://www.gov.uk/view-driving-licence
- Check MOT status of a vehicle – https://www.gov.uk/check-mot-status
- Book your driving test – https://www.gov.uk/book-driving-test
- Check if a vehicle is taxed – https://www.gov.uk/check-vehicle-tax
- Tax your vehicle – https://www.gov.uk/vehicle-tax
- Check the MOT history of a vehicle – https://www.gov.uk/check-mot-history
Another tip for motorists unrelated to the above services is that many insurance companies have been offering discounts to drivers – who because of COVID-19 restrictions have limited mileage on the clock – obviously, the less you drive the lower the risk of claims. Worth a call to your broker or insurance company.
Source: Other Fri, 11 Sep 2020 00:00:00 +0100
New grant support was announced 9 September that offers businesses in areas subject to a local lockdown a measure of financial support. In a news story posted to the GOV.UK website HM Treasury said:
Businesses in England required to close due to local lockdowns or targeted restrictions will now be able to receive grants worth up to £1,500 every three weeks, Chief Secretary to the Treasury Steve Barclay told MPs today. To be eligible for the grant, a business must have been required to close due to local COVID-19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.
Payments are triggered by a national decision to close businesses in a high incidence area. Each payment will be made for a 3 week lockdown period. Each new 3 week lockdown period triggers an additional payment.
Other details published in the same announcement include:
- Any businesses still closed at a national level (e.g. nightclubs), will not be eligible
- If a business occupies a premises with a rateable value less than £51,000 or occupies a property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1000
- If a business occupies a premises with a rateable value of exactly £51,000 or above or occupies a property or part of a property subject to an annual rent or mortgage payment of exactly £51,000 or above, it will receive £1500
- Local authorities will also receive an additional 5% top up amount of business support funding to enable them to help other businesses affected by closures which may not be on the business rates list. Payments made to businesses from this discretionary fund can be any amount up to £1500, and may be less than £1000 in some cases.
- Local authorities will be responsible for distributing the grants to businesses in circumstances where they are closed due to local interventions
- Further eligibility criteria may be determined by Local authorities
- As with other Covid business grants, local grants to closed businesses will be treated as taxable income
It is implied in this announcement that businesses in affected areas will need to contact their Local Authority to secure funding under this new support initiative.
The UK Government has guaranteed that the devolved administrations will receive at least £12.7 billion on top of their March Budget settlements to help them with their response to COVID-19 this year, with £6.5 billion for the Scottish Government, £4.0 billion for the Welsh Government and £2.2 billion for the Northern Ireland Executive. The Barnett formula will apply in the usual way to any additional funding provided to departments in relation to this intervention.
Source: HM Treasury Thu, 10 Sep 2020 00:00:00 +0100
Under the new £2 billion Kickstart scheme, employers will be able to offer young people on Universal Credit and at risk of long-term unemployment, state-subsidised work placements for six months. The Kickstart scheme is available to qualifying 16 – 24 year olds in England, Scotland and Wales.
Commenting on the launch of the scheme in Wales, the Secretary of State for Wales, Simon Hart, said:
We have taken unprecedented action to secure Wales’s economic recovery from the pandemic. More than 500,000 Welsh jobs have been protected through the Job Retention and Self Employed schemes while over 40,000 businesses in Wales have received more than £1.4 billion in loans.
Protecting, supporting and creating jobs is at the heart of our plan for recovery. Aimed at young people, the Kickstart scheme will make sure no-one is left behind as we get the Welsh economy moving again.’
The government will fully fund each “Kickstart” job by paying 100% of the age-relevant National Minimum Wage plus associated employer National Insurance contributions and employer minimum auto-enrolment pension contributions for 25 hours a week.
Businesses of all sizes looking to create quality jobs for young people can apply and there is no cap on the number of places. There will be a simplified application process for employers offering fewer than 30 placements.
The government will also help by paying employers £1,500 to set up support and training for people on a Kickstart placement. The scheme will initially be open until December 2021 but may be extended.
Source: National Assembly for Wales Wed, 09 Sep 2020 00:00:00 +0100
Back in March 2020, as the coronavirus pandemic was just starting the government announced new emergency measures to help those businesses and self-employed people affected by COVID-19 through the Time To Pay service. A dedicated COVID-19 helpline opened on 11 March 2020 and remains available via webchat and phone. HMRC has made up to 2,000 experienced call handlers available to support businesses concerned about meeting their tax liabilities due to coronavirus.
HMRC says that 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.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. Agreements reached with HMRC allow businesses and individuals to pay off their debt by instalments over a period of time.
HMRC will usually only offer taxpayers the option of extra time to pay if they think they genuinely cannot pay in full now but will be able to pay in the future. If HMRC do not think that more time will help a taxpayer then they can require immediate payment and start enforcement action if payment is not forthcoming.
Taxpayers cannot appeal against HMRC’s decision not to grant addition Time To Pay but can make a complaint if they are unhappy about how the way they were treated by HMRC.
Source: HM Revenue & Customs Wed, 09 Sep 2020 00:00:00 +0100