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This afternoon Chancellor Rishi Sunak announced his Winter Economy Plan. Find out what the changes are and how they will affect you and your business.

The Coronavirus Job Retention Scheme
The governments lifeline ‘Coronavirus Job Retention Scheme’ (CJRS) is coming to an end and being replaced by the ‘Job Support Scheme’, which will run until April 2021.

This works slightly different to the CJRS in that for any time an employee does not work, the employer will pay a third, the government will pay a third (the Government contribution is capped at £697.92 a month) and the employee will be expected to take a third of a wage cut. Employees do not have to have been furloughed or currently using the CJRS to qualify. However, employees do have to have been on their employer’s payroll on or before 23 September to qualify and employees must work 33% of their usual hours.

Small and medium sized enterprises (SME’s) can access the scheme without an application process. Large businesses have to prove that their turnover is lower now than it was before the Coronavirus pandemic. The grant will not cover National Insurance or pension contributions which will be the responsibility of the employer.

What does this mean?
If an employee normally works a five-day week, but they now work only two days a week, their employer will pay them as normal for the two days. With regards to the three days that they are not working; the employer will pay them 1/3, the Government will pay 1/3 and they will suffer a loss of 1/3.

If you are an employer, you need to identify which of your employees have still not returned back to their normal working hours and you don’t expect them to by 1 November. If you believe you have employees who should be on this scheme, please contact our experts to make sure this is the correct decision for you and your business. An important fact to consider is that an employee cannot be made or be given notice of redundancy during the period that they are utilising the grant.

Although the scheme is available from 1 November, the amount cannot be claimed back until December. The amount also cannot be claimed unless the employee has already been paid and the Real Time Information (RTI) has been reported to HMRC.

Self-Employed Income Support Scheme
Rishi also announced that they are extending the ‘Self-Employed Income Support Scheme’, starting in November, this will cover six months, paid in two taxable payments. Each grant will cover 20% of the average monthly trading profits covering three months’ worth of profits and capped at £1,875 in total. You can claim for the grant if you have been adversely affected by Coronavirus from 1 November. You can claim the grant yourself, in the same way that you might have claimed the previous one, however you do not have had to have made a previous claim to now make a claim under this extended scheme.

Bounce Back Loan
Repayments under the ‘Bounce Back Loan’ scheme are now known as the ‘Pay As you Grow’ flexible repayment system, which means that the repayments can be spread over ten years, rather than six. Businesses who are struggling can now opt to make interest only payments and can apply to suspend repayments altogether for up to six months. The application deadline has also been extended; this is now the end of November. If you have any queries on this, please contact your lender.

VAT deferral payment scheme
Also discussed was the VAT deferral payment scheme. The government will give businesses who deferred their VAT between March – June 2020, the option to spread their payments over the financial year 2021/22. Rather than paying in full at the end of March 2021, businesses will be able to choose to make eleven equal installments over 2021/22. Restaurants, hotels and attractions have the option to continue charging 5% VAT until 31 March 2021.

Self-assessment tax payments
Those who deferred their payment on account self-assessment tax payments due in July 2020, and those planning to defer their January 2021 payment, can now defer their payments until January 2022. Full details are not available, but we will update once we have them.

Tax expert and Partner Lucy Metcalf said: “The Chancellor’s latest package of measures, which are centred around protecting viable jobs and avoiding mass redundancies and unemployment, will be welcomed by many; especially those who faced the end of the furlough scheme on 31 October 2020.

“Whilst the announcements go some way to helping employers and those who are able to work going forward, it is disappointing that there are still millions of people who have received little or no support at all, such as those who were newly self-employed in 2019/20. There will also be millions of employees who will now be worried about their position if they are unable to return to work in a part-time capacity.

“Whilst it looks like the virus is not going away quickly, we are in it for the long-haul and David Allen continue to be available to support our clients through these uncertain times. So please do not hesitate to get in touch if you have any queries or we can help in any way.”

If you would like further support, please contact our experts.