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The Chancellor clearly thought it was time we heard from him again and he needed to act sooner with further initiatives for businesses.
To add to the self employed (SEISS) and employee (CJRS) grant schemes already introduced, the employee Job Support Scheme (JSS) will start from 1 November, to pick up from the end of the CJRS the previous day, and run for the following six months. In addition, your business will receive the previously announced £1k Job Retention Bonus in February for those staff.
The SEISS will similarly be extended to cover a further six months to end of April 2021, also at lower amounts, for the self employed.
There are extensions to VAT and income tax payment due dates and improvements to the BBLs and CBILs terms to help yuor business' cashflow further.
Job Support Scheme (JSS)
As long as employees work at least a third of their ‘usual’ hours, the government and employer will each pay one third of their ‘usual’ pay for their unworked hours, with the government contribution capped at £697.92.
Meaning that the government will pay up to 1/3 of 67%, being 22% of pay (up to the cap) and the employer pays 55%, being 22% plus the 33% for the hours worked.
You may be keen to know where the specific £697.92 came from. It seems to derive from a maximum annual reference salary of about £38k, not far off the £37,500 used for the CJRS.
There isn’t anything to suggest that directors will be treated differently, although we’ll have to wait for further details to know for sure, but clearly on the usual low director salary the JSS has limited value.
Self Employed (SEISS)
The current version SEISS 2.0, opened in August 2020, pays a 3 month lump sum of up to £6,570 being 70% of £3,125 of your average profits.
Today SEISS 3.0 and 4.0 were announced covering November-December-January and February-March-April, respectively. The SEISS 3.0 grant will be for 3 months of 20% of average profits up to a maximum of £1,875.
This is much lower than before, being just under 30% of SEISS 2.0. Interestingly, this is about 90% of the JSS. Perhaps this is some in-built clawback of previously lower national insurance payments? The SEISS 4.0 grant hasn’t yet been announced.
SEISS 3.0 and 4.0 are NOT dependent on claiming SEISS 2.0 or SEISS 1.0 (but you do need to be currently eligible).
Presumably if you were adversely affected, say in August, but business has since picked up, you can’t claim SEISS 3.0 or 4.0. But how to measure ‘reduced demand’ isn’t yet clear. Perhaps a turnover comparison will be required for SEISS 3.0 and 4.0?
Reduced 5% VAT
Proving to be valuable to the hospitality and tourism sector, this reduced VAT will now continue beyond mid January to the end of March 2021. Remember this applies to sales of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions. Do check the details if making a claim to recover VAT for subsistence when travelling for business.
You don’t need to pass this reduced VAT onto your customers, as it may be needed to help keep your staff in their jobs.
If you deferred your VAT and were expecting to pay it in full by next March 2021, you may now spread that payment over 11 instalments during the 2021/22 financial year to end of March 2022.
If you want to do this, look out for details on the ‘New Payment Scheme’ which you’ll need to opt into in early 2021.
Income Tax 31 July 2020 Deferral
Expected to be due by 31 January 2021, these deferrals already made can enter a plan to pay over a further 12 months, with the final payment due by 31 January 2022. This is only available if your income tax is under £30k.
If you want to do this, look out for details on the ‘Self-service Time to Pay’ facility.
Bounce Back Loans – Pay As You Grow
Borrowers will be offered a delay from 6 years to up to 10 years to repay their loan. You can move to interest-only payments for up to 6 months for up to 3 times and pause repayments entirely for up to 6 months but only once during the term.
Similarly a loan under CBILs can be extended from 6 years to up to 10 years.
If you’ve not yet applied for one of these loans, you now have two months until 30 November to do so. Not an easy thing to do for many SMEs, so perhaps these extensions will be persuasive and save some businesses from permanently closing.
At least, there is no Budget this autumn leaving businesses the time and space to focus on surviving the virus and hopefully thriving in the long run.
Please ask your usual On The Spot contact for further assistance.