Today (24 September 2020) the Chancellor, Rishi Sunak, announced brand new measures to deliver urgent support and funding to protect businesses and jobs in light of the latest COVID-19 restrictions, as well as significant extensions to various schemes already in place.
Throughout the announcement, the Chancellor made reference to his key focus throughout the next stage of the Government’s economic plan – supporting viable jobs.
His key measures are outlined as follows.
Jobs Support Scheme
To replace the current furlough scheme (which ends in October), this brand new scheme will come into effect in November for 6 months. The principles are:
– To support viable jobs. Employees must work at least one third of normal hours and be paid for that as normal. The Government will then cover one third of the pay lost by the hours reduction and the employer must fund a further 1/3rd. It is our understanding that out of overall pay, this should calculate as the employee receiving just over 77% of their normal pay of which 55% is funded by the employer and 22% by the Government. The Government contribution will be capped at £697.92 per month.
– SMEs are all eligible. Large companies will only be eligible if their turnover has fallen during the crisis – no details as yet to define ‘large’ or how much turnover needs to have fallen to be eligible, although the Government have said they expect that large employers will not be making capital distributions such as dividends while using the scheme.
– All UK employers will be eligible, even if they have not previously used the furlough scheme, providing they have a UK bank account and PAYE scheme.
– Employers can use this scheme AND claim the Coronavirus Job Retention Scheme bonus as well.
*The ICAEW have provided helpful information on the Job Support Scheme and a breakdown of its features in their recent blog – please click here to view the full article.
Self-Employed Income Support Scheme (SEISS)
The Chancellor confirmed that this existing scheme will be extended to 30 April 2021.
Loan schemes
Also announced were significant changes to the Government’s existing loan schemes. Details below:
– Bounce back loans – A new ‘pay as you grow’ flexibility was announced meaning that businesses can extend payment terms up to 10 years. Businesses can choose a period of interest only repayments and also, if struggling, suspend all repayments for up to 6 months.
– Coronavirus Business Interruption Loan Scheme (CBILS) – Government guarantee to be extended for up to 10 years.
– Application deadline for all loan schemes to be extended (this includes bounce back loans, future fund scheme, Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme). To follow, a successor scheme will be introduced in January.
Tax changes
Finally, amends to current tax legislation have been confirmed, as per below:
– VAT payment deferral – VAT payments due in March can be spread over the forthcoming year with no interest.
– Income tax deferral – For payments due in January, taxpayers who need help have the option of spreading the cost over 12 months if required. No details as to what criteria to be applied have been announced as yet.
– Reduced VAT rate for hospitality and tourism sectors – The original end of this temporary scheme has been deferred from January to 31 March 2021.
Get in touch
For further advice on any of the above announcements, how these may apply to your business, or support with accessing urgent funding, please contact your usual PM+M representative and we’ll be happy to help. Alternatively, please get in touch at enquiries@pmm.co.uk and we’ll direct you to the best person.
The Government’s full announcement / policy paper can be accessed here.
This information is correct as of 24 September 2020. This blog is for general guidance only. Recipients should not act upon any of the information provided without seeking specific professional advice tailored to your circumstances, requirements or needs. Please contact PM+M before making any decisions based on any matters relating to this blog.
