Self employment Income Support Scheme, extended to April 2021
The grant extension is for self-employed individuals who are currently eligible for the Self-Employment Income Support Scheme and are actively continuing to trade, but are facing reduced demand due to coronavirus (COVID-19)
Two grants to be paid covering 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 1st November until the end of January.
First payment to be calculated at 20% of average monthly trading profits capped at £1,875.
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.
As before, the grants are subject to Income Tax and National Insurance Contributions.
Job Support Scheme, opens on 1 November 2020 and runs for 6 months
HMRC state this is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce.
The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Please see the Job Support Scheme Factsheet at:-
Please get in touch if you are considering using this scheme.
Under previous announcements, businesses were able to defer VAT payments due between 20 March 2020 and 30 June 2020. The deferred liabilities were to be paid by 31 March 2021. Now the VAT can be repaid in 11 instalments, with no interest charged.
The reduced VAT rate of 5% for the hospitality and travel sectors has been extended to 31 March 2021
Self Assessment and enhanced time to pay
Again, under previous announcements, the second income tax payment on account for 2019/2020, due on 31 July 2020 could be deferred until 31 January 2021 and paid along with the balancing payment for 2019/2020 (if one was due).
This has been enhanced and extended to include the following payments that would otherwise be due on 31 January 2021:-
The payment on account already deferred from 31 July 2020
Any balance of income tax payable for the year ended 5 April 2020
Capital gains tax payable for the year ended 5 April 2020 and
The first payment on account towards the 2020/21 income tax liability
You will be given the opportunity to apply to spread the 31 January 2021 payment over 12 monthly instalments ending January 2022.
Where the total tax due on 31 January 2021 doesn’t exceed £30,000, the application for time to pay is expected to be agreed automatically via an online application process.
If the tax due exceeds £30,000 or the taxpayer needs longer to pay, HMRC’s telephone service will be available to agree a bespoke payment plan.
Bounce back loans
The closing application date for Bounce Back loans has been pushed back to 30 November 2020 along with the other loan schemes available.
Under a Pay as you Grow initiative, businesses will be given the option to repay the loan over a period up to 10 years. There are also other options to move to interest only and pause payments. Let me know if you need more information.
This option to extend up to 10 years, will almost half the monthly loan repayments under the original terms.
If you haven’t applied for a Bounce Back Loan, you may want to consider it given the exceptional terms.
The following links take you to the recent Government announcement and for those who have trouble sleeping at night, the Treasury’s detailed policy document.
As always if you want to discuss any of the above please get in touch.