Chancellor's Winter update

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Chancellor's Winter update

4th of October, 2020

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Job Support Scheme

When the Furlough scheme ends on 31 October, there is now the possibility of claiming support under the Job Support Scheme.  This is an entirely separate scheme with different rules and is available irrespective of the eligibility criteria that existed for the Furlough Scheme.

To be eligible for the Job Support Scheme the following must apply:

• The employees must have been on an RTI submission on or before 23 September 2020.  (Employees who were not eligible for the Furlough scheme may now be eligible).

• The employees must work at least 1/3 of their “normal” hours and be paid for this.

• For the not worked hours, the employer must pay the employee for 1/3 of those hours and the Government will match this.  The employee will lose 1/3 of their normal pay for the unworked hours.  In effect the employer will pay for the worked hours and 2/3 of the unworked hours, claiming back 1/3 of the unworked hours from the Government. 

• If the employee works only the minimum 1/3 of hours to be eligible for the scheme and loses 1/3 of the unworked hours, this would mean that the employee receives 77.6% of their normal wage.  However, if the employee works for say, 60% of their normal hours, they would receive 86.6% of their normal wage.  (I can forsee yet another devious spreadsheet needing done to calculate all of this!).

• Employees can cycle in and out of this scheme, but must work for at least 7 days in order for the employer to be able to claim any subsidy and unlike with the furlough scheme, if the employee is not working at all, there is no assistance.

• Employers must notify their staff in writing if the employee’s “normal” hours are to be reduced.

• The employer will need to pay any NI contributions and pension contributions without support from the government

• It is not clear at this stage, but I am presuming, that the new wage calculations will be based on the new National Minimum Wage as effective from 1 April 2020, unlike the Furlough Scheme which was based on the previous National Minimum Wage.

• The amount of the Government Contribution is capped to £697.92 per month (£161.06 per week) for each employee.

• It has been noted that this scheme does incentivize the employer to retain 1 staff member working more hours, than 2 staff members working the same number of hours.

• The £1,000 Job Retention Bonus will still also apply, so that provided employees earn at least £120 per week throughout November, December and January, the employer can claim a one off payment of £1,000 per employee – through a mechanism as yet unannounced, but presumably available from February 2021.

Extension to the Self Employment Income Support Scheme.

• A further payment of 20% of average monthly trading profits for Tax Years 16/17: 17/18: and 18/19 will be paid for the months of November, December and January, up to a cap of £1,875.

• To be eligible the Self employed person must be impacted by reduced demand and must be continuing to trade.

• There will be further announcements about when to claim, but I am assuming the mechanism will be the same as previously.

• If you have not claimed either or both of the earlier grants, but are eligible, you can still claim this grant.

• A further payment is to be announced for the months of February, March and April – presumably at an even lower percentage!

Self Assessment – deferral of 31 July 2020 payment on account

Those businesses who elected to defer the Self Assessment payment on account, would have needed to repay the outstanding amount by 31 January 2021, however this can now be spread over 12 months – to 31 January 2022.  This can be automatically implemented via Gov.UK for debts up to £30,000.  For debts > £30,000, it will be necessary to phone HMRC.  We can advise on this.

Reduced rate VAT for hospitality

• This has been extended to 31 March 2021, instead of finishing in mid January 2021.

Repayment of VAT deferral

• Those businesses who elected to defer VAT payments due between 20 March 2020 and 30 June 2020, would have needed to repay the outstanding amount by 31 March 2021.  Now however, it will be possible to arrange to pay this debt in 12 monthly instalments finishing by 31 March 2022.  We will give details of how to arrange this nearer the time.

Bounce Back Loans and Coronavirus Business Interruption Loans

• For both of these, the Government are offering to extend the loan period from 6 years to 10 years.  This will mean that monthly repayments when they start up (12 months after the loan was taken out), will be almost halved. 

• Presumably the banks who issued the loans, will contact all those who took out the loans to advise of this.

• The Government have also stated that it will be possible to arrange to pay the interest only for a six month period and/or to arrange payment holidays.  Again presumably the issuing banks will contact all those who took out the loans, to advise that bank’s particular interpretation of how this will be available.

• Anyone who has not already taken out either of these loans will still be able to do so up to 30 November 2020 – which is an extension to the initial deadline.

Kick Start Scheme

• This was announced as a UK wide scheme to pay the wages or half the wages of Apprentices, depending on age, however, on further investigation there is a further detail – that the scheme only applies if 30 or more Apprentices are taken on.  This effectively renders the scheme meaningless for Small to Medium sized businesses, however, I have heard from West Lothian Council that they are hoping to become the central scheme provider in order to allow small businesses to take on one or two apprentices under their funding umbrella.  Unfortunately this scheme is not yet in place, so we will notify if anything develops.

£500 bonus for Self isolating

• This is another non-starter as it doesn’t yet apply in Scotland.  Even in England, it is not coming in until 12 October, but there is apparently the possibility of back dating.  Whether similar arrangements become available in Scotland, we will have to see.

• The English scheme is also only available to those claiming some sort of benefits – although working tax credits are included in the definition.

Please get in touch if you need any clarification or further advice!