As usual the phone has been ringing off the hook – and once again Rishi Sunak is to blame.
The Chancellor unveiled his winter recovery plan yesterday – with plans for how the government will top up the wages of workers and support small businesses through the latest surge in covid-19 cases.
Some are already complaining that the measures don’t go far enough but what’s important to us is to make sure that each and every one of you that is eligible for help, gets it.
So let’s take you through the highlights and how they might give you and your company a boost.
The Jobs Support Scheme
This replaces the Coronavirus Job Retention Scheme (also known as the furlough scheme) and will see workers get three quarters of their normal salaries for six months.
The aim is to stop mass job cuts and support those three million employees who are currently on partial or full furlough leave.
The furlough scheme ends on October 31st and there were fears that on that date, mass redundancies would take place as employers who couldn’t afford those staff would ditch them altogether.
This programme aims to combat that, supporting viable jobs rather than jobs that only exist because the government is subsidising wages.
Under furlough, the government paid 80% of a monthly wage up to £2,500 while this scheme means the government will meet 22% of that wage.
How will it work?
Under the scheme, the government subsidises the pay of employees who are working fewer than normal hours due to lower demand.
All staff eligible will work at least a third of their usual hours and employers will pay staff for the hours they work. For the hours the employee can’t work, the government and employer will each cover a third of their pay. The grant is capped at £697.92 per month.
All small and medium sized businesses will be eligible but larger businesses will only meet the criteria if their turnover has fallen in the crisis.
The scheme starts in November.
Loan repayments – pay as you grow
This is the next bit of big news.
Mr Sunak also announced that that have borrowed money through the government loan scheme will have more time to repay than previously thought.
Businesses that took out the Bounce Back loans now can repay over 10 years rather than six.
What’s more, if you haven’t applied, the time to take the government up on the option has extended to the end of the year.
Repaying your loan over 10 years is a “pay as you grow” idea and allows businesses to reduce their average monthly repayments on the loan by almost half.
Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months - an option which they can use up to three times - or to pause their repayments entirely for up to six months - an option they can use once and only after having made six payments.
This gives companies the flexibility to deal with any cash flow crises or other unforeseen issues which might impact their ability to meet the repayment schedule.
A boost for hospitality
If you are in hospitality, you are likely to be affected by the new 10pm curfew on pubs, bars and restaurants so the government has extended a helping hand in your direction too.
This involves extended tax cuts for hotels, holiday accommodation and some attractions with a temporary 5% rate now due to expire on March 31 instead of January 1st.
And those who are self-employed…
The government recognises the continued impact that COVID-19 has had on the self-employed and has taken action to provide support with an extension to the Self Employed Income Support Scheme grant.
The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.
It will last for six months, from November 2020 to April 2021 and will be in the form of two taxable grants.
The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £1,875.
The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.
On top of this, for those who are self-employed and others who use the income self-assessment programme, there has been an extension to the deadline of tax payments over 12 months from January.
Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over this period.
This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
What about VAT?
Finally, firms can choose to defer VAT taxes which were due in March and pay over 11 smaller repayments without interest.
As usual we are here to help you with any – or all – of the above and will keep you informed of any updates or news on anything that can help you ride through this difficult period. Just drop us a line on email enquiries@kblaccounts.com or call us today on 01394 617594