At the end of September 2020, the Chancellor announced a number of new measures in order to support businesses and workers over the next 6 month period. This is part of the government’s Winter Economy Plan.
The primary focus of these new measures is to protect and support viable jobs and businesses through the winter months.
As always, we are here to provide valuable and practical assistance during these difficult times. Please do not hesitate to get in touch if you need us.
JOB SUPPORT SCHEME
The Coronavirus Job Retention Scheme (CJRS) will end on the 31 October 2020.
From 1st November, the new Job Support Scheme (JSS) will cover up to 22% of pay for workers in “viable” jobs for the next six months. The purpose of the scheme is to give businesses that face depressed winter demand, the option of keeping employees in a job on shorter hours rather than making them redundant. We have summarised the main points below:
– The JSS will open on 1st November 2020 and run for 6 months until 30 April 2021.
– All Small and Medium Enterprises (SME’s) will be eligible to access the JSS automatically. An SME is generally defined as a company which meets two out of three of the following – Turnover of less than £25m, fewer than 250 employees, and gross assets of less than £12.5m.
– Larger businesses may still be able to qualify for the scheme but they will have to show that their turnover has been adversely affected by Coronavirus.
– An employee must be on the payroll on or before 23 September in order to qualify for the scheme.
– It is NOT a requirement for the employer or employee to have previously used the old CJRS scheme.
– Employees must actually work at least 1/3 of their ‘usual hours’ in order to access the JSS. The employer will be responsible for paying the wages for all actual hours worked.
– For the hours NOT worked, the Government will pay 1/3 of any hours not worked up to a cap of £697.92 per month. Given that the maximum hours an employee won’t work is 67%, the maximum government contribution will be 22% (ie 1/3 of 67%).
– The employer will also have to pay 1/3 of the hours NOT worked in additional to all employers NIC and pension contributions.
– Employees being paid under the JSS will therefore receive at least 77% of their normal wages with a maximum 22% contribution from the government.
– Employers using the JSS will still be able to claim the Job Retention Bonus if they qualify for it.
– Further detailed guidance will be published in due course.
We can support and assist you with any queries you may have in respect of the JSS and, as with the Furlough Scheme, we can help you make the relevant claims to HMRC as and when required. Please contact our tax team at Afford Bond if you have any queries or, if you would like some worked examples for your particular circumstances.
SELF EMPLOYMENT INCOME SUPPORT SCHEME
The Self-Employment Income Support Scheme (SEISS) will also be extended to cover the period 1ST November 2020 to 30 April 2021. The extension will be in the form of 2 taxable grants:
– The first grant will be available to self-employed individuals affected by Coronavirus after 1st November.
– The first grant will cover 20% of average monthly trading profits, paid out as a single instalment covering 3 months.
– The first grant will be capped at £1,875 in total.
– More details on the second grant will follow shortly.
As was the case with the previous SEISS grants, it is likely that the claims will need to be made by the taxpayer directly. However, we will of course be able to provide you with all the relevant information and guidance when the time comes.
VAT DEFERRAL
The chancellor has also announced that he will give businesses that deferred VAT due in March to June 2020 the option to spread their payments in 11 equal, interest-free instalments starting from April 2021, rather than pay in full at the end of March 2021.
All businesses that took advantage of the VAT deferral will be able to use the new payment scheme, but they will need to ‘opt-in’.
More information on how to opt in will be available from the Government in due course (this is accurate as at 1/10/2020).
SELF ASSESSMENT DEFERRAL
The government have also confirmed that they will give self-assessment taxpayers more time to pay taxes becoming due in January 2021. You will recall that many people deferred their July 2020 tax payment until January 2021.
Taxpayers with up to £30,000 of self-assessment liabilities due will be able to use HMRC’s new online self-service Time to Pay facility (coming soon) to secure a plan to pay over an additional 12 months.
Any self-assessment taxpayer unable to take advantage of the online service can continue to use HMRC’s Time to Pay self-assessment helpline in order to agree a payment plan.
If you need to take advantage of this facility, please don’t leave it too late to contact HMRC. We would strongly advise that you take the appropriate action well before 31 January 2021.
LOAN EXTENSIONS
The Chancellor also announced that the deadline for the government’s state backed loan schemes will be extended until 30 November 2020. In addition, the government is starting work on a new loan guarantee programme to begin in January.
As part of the loan scheme extension measures introduced, the Chancellor also announced a new “pay as you grow” initiative to help companies repay their state-backed loans.
– The government will give all businesses that borrowed under the Bounce Back Loan Scheme (BBLS) the option to repay their loan over a period of up to ten years, reducing their average monthly repayments on the loan by almost half.
– UK businesses will have the option to move temporarily to interest-only payments for periods of up to six months. This option can be used up to three times.
– Alternatively, businesses will be able to pause their repayments entirely for up to six months. This option can only be used once and only after the business has made six payments.
– The government guarantee on Coronavirus Business Interruption Loan Scheme (CBILS) loans will also be extended to 10 years allowing lenders to extend the term of the loan to the same 10 year period. Please remember that it is possible to make applications to other financial institutions if your own bank is proving difficult.
Please consider carefully if your business requires additional support. It may well be that you need to request further funding. Don’t let these loan schemes expire without first considering your ongoing funding requirements.
We understand the information requirements of Banks and can readily assist in providing valuable support for applications, including the style, contents and format of the documents required. Please let us know if you require assistance.
CASH FLOWS – CRITICAL TO YOUR SURVIVAL AND FUTURE SUCCESS
A firm grasp on your cash flows will allow you to take both protective and proactive measures based upon up to date financial information. It facilitates sound business decisions, putting you and your business in the best position to succeed moving forward.
Afford Bond can help by preparing profit and loss account, balance sheet and cash flow projections whether it is to:
– support a CBILS or other finance application
– assess the impact of decreased turnover and slower debt collection
– establish the real working capital requirements in this challenging period and just as important, once things start to return to normal.
We can run ‘what if/sensitivity’ scenario’s so you can establish crucial pinch points in your business and help you react more quickly to changing circumstances.
RESEARCH & DEVELOPMENT TAX RELIEF
Our R&D specialists continue to make claims on behalf of clients. Increasingly we find that R&D tax relief can be claimed by significantly more businesses than perhaps would be expected.
This is an extremely valuable relief that can potentially generate a significant repayment from HMRC. It’s important to note that there are strict time limits for making such claims.
Please contact your lead person at Afford Bond who can arrange a free assessment of your business activities, by our specialist team, with a view to making a claim.
CLAIMING LOSS RELIEF – CORPORATION TAX REFUND
In certain circumstances clients may able to enhance current year losses for expenditure committed to in later periods (post current year end) and achieve a substantial C.T. refund. Accordingly preparing your annual accounts early and filing them with HMRC may well result in a significant benefit to you and your company.
Please speak to your contact at Afford Bond in order to establish if you potentially qualify for this situation.
OTHER ANNOUNCEMENTS
– The Chancellor has confirmed that the temporary reduction of VAT rates from 20% to 5% for the hospitality and tourism sectors would remain in place until 31 March 2021, rather than 13 January 2021 as previously announced.
– Given the need for additional support measures outlined above, the Treasury has confirmed that a planned mid-November Budget has now been shelved. However, there will still be a November Autumn Statement and financial forecast.
– The government have extended the lease forfeiture moratorium for Commercial Landlords to 31 December 2020. This means that commercial landlords are unable to enforce payment of rent arrears up to this date.
– Businesses are now able to sign up to be part of the Governments new Kickstart Scheme. Youngsters on Universal Credit aged between 16-24 can be offered six-month work placements – with wages paid by the government.
– As previously announced, the Government has introduced a “SDLT holiday” for residential property purchases (in England and NI) from 8 July 2020 to 31 March 2021. The change works by increasing the SDLT nil rate band for purchases of residential property from £125,000 to £500,000 for that “holiday” period.
Please remember that we are here to help you consider your options and we will continue to provide valuable support to you and your business throughout these testing times.