Updates announced from HMRC 24 September 2020
The government announced further measures to help businesses affected by the ongoing coronavirus crisis.
The key announcement are as follows:
• A new Job Support Scheme to replace the existing furlough scheme
• An extension to the Self-Employed Income Support Scheme for 6 months
• Deferred VAT payments due 31st March 2021 may now be spread over the 21-22 financial year.
• Business Bounce Back Loans can now be repaid over 10 years.
The current Coronavirus Job retention scheme ends 31st October. The new Job Support scheme has been created to help protect “viable” employees after the current furlough scheme ends.
The scheme starts 1st November and will run for 6 months. It is yet to be published on when to apply.
To qualify for the scheme the employee must work at least a third of their normal hours.
The employer pays the employee for the time worked.
For the hours the employees can’t work the cost is split THREE ways- HMRC pays a third, the employer pays a third and the employee loses a third.
The contribution paid by HMRC is capped at £697.92/mth
The scheme is UK-wide – all small and medium-sized businesses are eligible, but larger businesses will be required to prove they’ve been adversely affected by coronavirus. Employers can take part regardless of whether they used the furlough scheme – those retaining furloughed staff on shorter hours can be part of the scheme and still get the job retention bonus announced earlier this summer. Employees cannot be on a redundancy notice while taking part.
The current scheme will be extended, yet it will be at a much lower level than before.
The extension will start in November and last six months. It’ll be paid in the form of two taxable grants – the first will cover from the start of November to the end of January, and the second February until the end of April.
The first grant will cover 20% of trading profits for three months, capped at £1,875. It’ll be paid in a single instalment. The level of the second grant has yet to be set – the Government says this will happen “in due course”
Only those eligible for the current SEISS scheme can apply and you need to have been adversely affected by coronavirus to claim.
Delay VAT payments
Businesses are now able to spread the deferred VAT payment due 31st March 2021 throughout the 2021-22 financial year under the ‘New Payment Scheme’
Business Bounce Back Loans
You have until 30 November to apply for a Business Bounce Back Loan, the deadline was originally 4 November.
New AND existing Bounce Back Loans can now be repaid over 10 years (previously it was six). This will reduce the average monthly repayments on the loan by almost half – though of course, if you do extend the loan, you’ll end up paying more in interest overall. The first year is interest-free and the rest at 2.5%.
You can now take payment holidays and interest-only repayment periods on Bounce Back Loans. Again, this applies to new and existing loans.
You can use the option to move temporarily to interest-only payments up to three times, with each interest-only period lasting up to six months. And you can take one payment holiday over the length of the loan, where you pause repayments entirely for up to six months. You can only use this option once you have made at least six payments. Remember you’ll end up paying more in interest overall if you use one of these options though.
Self Assessment Tax
HMRC have now stated those who have to pay up to £30,000 in tax by 31 January 2021 will be able to use HMRC’s ‘Time to Pay’ service to pay over an additional 12 months. Further updates are due on this.
A temporary VAT reduction for the hospitality and tourism sectors will be extended. The current lower 5% rate was supposed to revert to the usual 20% on 12 January 2021 – that’s now delayed to 31 March 2021.
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