Over the past few months since the outbreak of Coronavirus, the government have introduced a raft of measures to support businesses and individuals financially through the pandemic.
In this roundup, we take a look at the main business and financial measures in place at the date of publishing - October 2020.
Tax Payments and Reliefs
VAT Deferral: The Government deferred VAT payment demands for the second quarter of 2020 meaning that businesses would not be required to pay outstanding VAT due up to 30 June 2020. The timeframe for repayment, originally until 31st March 2021, was extended on 21st September 2020. Businesses are now able to opt-in to pay their outstanding VAT in smaller amounts until March 2022.
Deferral of Self-Assessment Payment: Income tax payments due under Self-Assessment on 31st July 2020 will be deferred until 31st January 2021. All self-employed individuals will be eligible. In addition, Self-assessment income taxpayers have also been given the opportunity to spread payments over a 12-month window from January 2021.
Support for Businesses Paying Tax: HMRC have established a dedicated COVID-19 helpline to support businesses and self-employed individuals unable to meet tax demands. Bespoke Time to Pay arrangements will be offered to those businesses with a legitimate need and support their recovery while navigating temporary financial challenges. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulty due to COVID-19.
Temporary VAT reduction for hospitality sector: The Government has introduced a temporarily reduced VAT rate of 5%, down from 20%, for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. The reduction will be introduced from 15th July, and last until 12 January 2021.
Temporary Changes to the Statutory Residence Test: For the period between 1st March and 1st June 2020, any period spent in the UK by individuals working on COVID-19 related activities will not count towards residence tests that potentially bring global earnings within the purview of UK taxation. These changes are designed to allow skilled individuals to come to the UK and help respond to the pandemic. The guidance has not been updated since April.
Stamp Duty Land Tax: A stamp duty holiday has been put in place to help revive the property market. Property buyers will be temporarily exempt from paying Stamp Duty on the first £500,000 of any property price. The increase in the threshold from £125,000 to £500,000 will be in place until the 31 March 2021.
Employment and Self-Employment
Job Support Scheme: The Job Support Scheme will be replacing the Job Retention (furlough) Scheme that ends on 31 October 2020. Employers will continue to pay their employees for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job. The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages (in situations where the cap is not met). The scheme will open on 1 November 2020 and run for 6 months, until April 2021. The Government announced earlier this month that the Scheme will expanded, with the Government to pay two thirds of employees’ salaries and cash grants for businesses required to close in local lockdowns also increased to up to £2,100 per month.
UPDATE: The Job Retention (furlough) scheme has now been extended for at least 1 month into November as a result of the 4 week second lockdown from 5 November to 2 December. Employers will be able to claim 80% of their employees’ wages whilst on furlough.
Job Retention Bonus: The Government will pay employers a £1,000 bonus per employee if they bring someone back to work who was furloughed, on the condition that they are continuously employed through to January. The employee must be paid at least £520 per month on average, from November to the end of January, which is the equivalent of the lower earnings limit for national insurance contributions.
Apprentice and Trainee Bonus Scheme: The Government will provide financial incentives for employers to hire young employees, offering businesses a cash bonus of up to £2,000 per apprentice employed and £1000 per trainee taken on. Further details will be announced in due course.
Plan for Jobs Kickstart Scheme: Employers will be able to offer a six month placement for people aged between 16-24. The Treasury will cover 100% of the National Minimum Wage for each young employee for up to 25 hours a week with employers able to top up the employee’s pay.
Self-employed Income Support Scheme (SEISS): Most self-employed workers qualify for a grant covering a percentage of monthly profits and earnings. The first two phases of this grant (the first three month grant, being 80% of profits and the second three month grant, being 70% of profits) have now passed. The scheme has been extended, however, and will provide two grants and will last for six months, from November 2020 to April 2021. The government announced an update to this on 22 October 2020 which is outlined below:
The first grant will cover a three-month period from the start of November until the end of January and will cover 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total. UPDATE: The government announced that due to the November lockdown, the November-January grant for the Self-Employed Income Support Scheme (SEISS) would be increased to 80% of profits instead of the 40% previously announced for November and the payment date would be brought forward.
As SEISS grants are calculated over three months, the uplift for November to 80 per cent, along with the previously announced uplift to 40 per cent level of trading profits for December and January, increases the total level of the grant to up to 55 per cent of trading profits. The maximum grant will increase to £5,160. And to ensure those who need support get it as soon as possible, payments will also be made more quickly with the claims window being brought forward from 14th December to 30th November.
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.
Finance for Small & Medium Businesses
Coronavirus Business Interruption Loan Scheme: The Coronavirus Business Interruption Loan Scheme (CBILS) was due to end on September 30, 2020, but the deadline for applications has been extended until November 30, 2020.
Bounce Back Loan Scheme: The government’s Bounce Back Loan (BBL) scheme was due to end on November 4, 2020, but the deadline for applications has been extended until November 30, 2020. Designed to help businesses who were ineligible for CBILS, or struggled to meet the lending criteria, Bounce Back Loans are 100% backed by the government - meaning there is no risk to lenders - and the government will also cover the first year’s interest payments.
Other Measures and Support
Financial Support Finder: The UK Government have released a new “support find tool” in the form of a self-assessed questionnaire for businesses and self-employed people across the UK, to allow them to quickly determine what financial support is available to them.
Coronavirus Business Support Hub: Businesses can now access a business support hub which has information for businesses including information about funding and support, business closures, your responsibilities as an employer and managing your business during coronavirus. The hub also includes information for self-employed people and sole traders.
Extension Period for Filing Accounts: An additional three months has been given to file accounts with Companies House to help avoid penalties as businesses deal with the impact of COVID-19. Extensions have also been made for the submission of annual Confirmation Statements.
Contact Us
Please contact us to find out how we can help you with any effects of the pandemic, as well as with your accounts and tax affairs.
