The Chancellor has announced new or extended measures to help businesses survive the winter into 2021. The government will provide grants to cover a portion of wages or self-employed profits, further deferrals of Income Tax and VAT, a continuation of the reduced VAT rate for the hospitality sector and extended guarantees for loans.
Job Support Scheme
This scheme will run from 1 November 2020 to 30 April 2021. To qualify, the employee must have been included on an RTI report submitted on or before 23 September 2020, but not necessarily in a furlough claim.
The employee must work at least one third of their usual hours at their contractual pay. For the remainder of the employee’s contractual hours, the employer must pay 1/3 of usual pay and the government will cover 1/3 (up to £697.20 per month), so the employee forgoes 1/3 pay on their “resting” hours (or more if the cap applies). The employer will have to pay all the employer’s National Insurance and pension contributions on the employee’s pay.
Self-employed income support
Two further SEISS grants (Nos. 3 and 4), each covering three months, will be available to self-employed people who were eligible to apply for SEISS grants 1 and 2, whether they took up those earlier grants or not.
Grant 3 will be paid at 20% of your annual average profits, as calculated from tax returns submitted for the years 2016/17 to 2018/19. To qualify, your business will have to be adversely affected by the coronavirus on or after 1 November 2020. No details have been announced about grant 4 yet.
You will be able to apply to spread your self-assessment liabilities due by 31 January 2021, including any tax deferred from July 2020, over 12 monthly instalments up to January 2022. Where the total tax bill doesn’t exceed £30,000, your online application for deferring the tax will be agreed automatically. If your tax bill exceeds £30,000, or you need longer to pay, you can speak to HMRC to agree a bespoke payment plan.
If you took advantage of the automatic deferral of VAT payable between 20 March and 30 June 2020, that VAT is due to be paid by 31 March 2021. However, you will now be able apply to spread the deferred VAT payment over smaller instalments through until March 2022.
The reduced rate of VAT of 5% for the hospitality and tourist sector will now apply until 31 March 2021.
The repayment period of all coronavirus loans has been extended to ten years and applications for those loans will be open until 31 December 2020.