***UPDATED 25/9/20***
WITH THE THREAT of a second UK lockdown looming, the Chancellor has today sprung into action to unveil his “Winter Economy Plan”.
Measures in Mr Sunak’s Plan include a new Jobs Support Scheme, an extension to the VAT cut for some sectors and support for businesses and workers.
At Shipleys Tax we have gathered the most relevant parts of the plan and summarised them below.
Measures in Mr Sunak’s Plan include a new Jobs Support Scheme, an extension to the VAT cut for some sectors and support for businesses and workers.
What is the New Jobs Support Scheme?
- The new Scheme, which is available to all small and medium-sized businesses, will see the Government top up the wages of workers forced to cut their hours due to the pandemic. It is intended to replace the somewhat successful employer furlough scheme.
- Employees will get paid for work as normal, with the state and employers then increasing those wages to cover up to two-thirds of the pay they have lost by working reduced hours.
- This means that employees must work a minimum of 33% of their normal hours (capped at £697.92 per month). For the remaining hours not worked, the government and employer will pay one third of the wages each, meaning that employees working 33% of their hours will receive at least 77% of their pay.
- The idea behind the scheme is that it will enable employers to retain workers on reduced hours, so that employees are not made redundant.
- The Job Support scheme will start from November 2020 and last for six months, taking over from the current furlough scheme, which is due to end on the 31 October 2020.
- It will run alongside the Job Retention Bonus, as well as other initiatives aimed to help get people back into work such as the Kickstart Scheme.
This means that employees must work a minimum of 33% of their normal hours. For the remaining hours not worked, the government and employer will pay one third of the wages each, meaning that employees working 33% of their hours will receive at least 77% of their pay.
Who is eligible for the Job Support Scheme?
To be eligible, employees must:
- be registered on your PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020
- work at least 33% of their usual hours. The government will consider whether to increase this minimum hours threshold after the first three months of the scheme.
The Job Support Scheme will be open to employers across the UK even if you have not previously applied under the Coronavirus Job Retention Scheme (CJRS) which closes on 31 October.
How do you apply for the Job Support Scheme?
No details were provided by Chancellor about how the Job Support Scheme can be applied for. Here at Shipleys Tax we envisage it would work in the same way as the furlough scheme, which would mean that employees would not have to do anything, but instead it will be down to their employer to apply for the scheme.
The Job Support Scheme will start from 1 November and you will be able to claim in December. Grants will be paid on a monthly basis.
Autumn Budget cancelled
Some further good news. Yesterday, the Chancellor announced that there would be no Autumn Budget. Many were predicting that the Autumn Budget would involve tax increases (notable capital gains tax) to help pay for Government schemes that were announced at the beginning of the nationwide lockdown in March. Instead, the next budget is now set to take place in spring 2021.
Self-employment income support scheme
For the self-employed, the grant available for those qualifying has been extended. A further two taxable grants each covering a three month period:
- The first to cover November 2020 to January 2021 will be based on 20% of average monthly trading profits, capped at £1,875.
- The details of the second grant, covering February to April 2021 are to be announced in due course.
Deferred tax bills
- Businesses who deferred VAT payments which were due between 20 March 2020 and 30 June 2020 to 31 March 2021 will now be able to pay these in 11 interest-free instalments.
- Taxpayers who deferred their July 2020 Income Tax payments on account to 31 January 2021 will now be able to pay these over a twelve-month period. This applies to taxpayers with liabilities under self-assessment of up to £30,000. No specific announcement has been made about whether interest will be charged however as this will be under the existing time to pay arrangements it is likely that it will be.
VAT cut
The temporary VAT cut, to 5%, for the hospitality and tourism sectors, was due to end on 12 January 2021 but has now been extended to 31 March 2021.
If you are affected by the above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.