Government improves financial support – will you benefit?
Tuesday 29 September, 2020
Vishal Gulrajani, Financial Adviser in North London, Cheshunt and Goff’s reviews the chancellor’s recent support packages so you understand how it personally affects you or your business.
UK Government financial support for business, employees and self-employed
In the March Budget earlier this year, the chancellor announced significant support for businesses and individuals to financially survive the coronavirus pandemic. This evolved throughout the summer with more support and schemes extended.
Government’s Winter Economy Plan introduced – September 2020
On 24 September 2020, Rishi Sunak announced the Government’s Winter Economy Plan designed to continue to help businesses and individuals in light of the re-introduced social restrictions and the rising coronavirus cases.
Updates to the Winter Economy Plan – October 9th 2020
On 9th October 2020, Rishi Sunak updated the Government financial support package in order to protect the economic impact in the new ‘high risk’ areas where pubs, bars and gyms will close.
Rishi Sunak said that the recently announced Job Support Scheme will be expanded to protect jobs and support businesses required to close their doors as a result of these restrictions.
Updates to the Winter Economy Plan – October 22nd 2020
In response to rising coronavirus cases and forced closures of some regional businesses due to local lockdowns, the Chancellor extended the financial support through the recently announced winter support schemes, so business grants were extended, job support scheme amended, and self -employment income support scheme extended.
Vishal Gulrajani Financial Adviser in North London, Cheshunt and Goff’s Oak said:
‘You can find more details on the latest support package announcement below. Or if you would like personalised corporate or individual financial planning advice please call our Thomas Oliver financial advisers in our Goff’s Oak, Hertfordshire head office on 01707 872000. We offer financial advice to clients in North London, central London, Bedfordshire, Hertfordshire and Essex. Our financial advisors have reviewed the recent UK Government financial support so they can help you understand how these measures affect you. Please remember that this guide is only intended to inform you about the general financial support packages available. We know that some businesses or individuals may not qualify for some of the support, so we always recommend that you check with your own financial adviser first before filling in the necessary forms. If you are looking for financial advice, please call our financial consultants now on 01707 872000. The Chancellor has issued several updates to the Winter Economy Plan, so call us now to find out how you are affected by the recent changes.’
Job Support Scheme
Please note that amendments have been made to the Jobs Support Scheme for anyone working in local lockdowns. For more information refer to the updates to the "Winter Economy Plan" – October 22nd 2020 below.
- This effectively replaces the Coronavirus Job Retention Scheme (more commonly referred to as the “furlough” scheme) which ends on 31 October 2020.
- The Job Support Scheme will be introduced from 1 November 2020 and will last for 6 months.
- The new Scheme apples to all small and medium sized businesses. For larger businesses, they will only be eligible where their turnover has fallen and the government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.
- Businesses are eligible even if they have not previously used the “furlough” scheme.
- Employees will need to work a minimum of 33% of their usual hours.
- For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month.
- Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped.
- The employer will be reimbursed in arrears for the government contribution.
- The employee must not be on a redundancy notice.
- The Scheme does not cover pension contributions and national insurance contributions payable by the employer.
- Details on how employers should calculate the auto-enrolment pension contributions (both employer and employee) under new Jobs Support Scheme will be provided in the next few days.
SEISS grant extension
Please note that amendments have been made to the SEISS grant extension for anyone working in local lockdowns. For more information refer to the updates to the "Winter Economy Plan" – October 22nd 2020 below.
- The existing Self-employment Income Support Scheme (SEISS) is being extended.
- The new grant will be limited to self-employed individuals who are currently eligible for the existing scheme and are actively continuing to trade but are facing reduced demand due to coronavirus (although they do not have to have claimed the previous grants).
- Therefore, individuals who have claimed under the existing scheme’s first grant but have not yet claimed the second grant and are eligible, should do so.
- The new scheme will be introduced from 1 November 2020 and will last for 6 months.
- The extension will be in the form of two taxable grants.
- The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
- The second grant will cover a three-month period from the start of February 2021 until the end of April 2021. The government will review the level of the second grant and set this in due course.
VAT deferral “New Payment Scheme”
- Over half a million businesses deferred VAT payments.
- The government will now give these businesses the option to spread their payments over the financial year 2021-2022.
- Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. Enhanced Time to Pay for Self-Assessment taxpayers.
- The government will now give the self-employed and other taxpayers more time to pay taxes due in January 2021.
- Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self- service Time to Pay facility to secure a plan to pay over an additional 12 months.
- This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Extension of access to finance schemes
The government is extending new applications for the following four business loan schemes to 30 November 2020:
- Coronavirus Bounce Back Loan Scheme
- Coronavirus Business Interruption Loan Scheme
- Coronavirus Large Business Interruption Loan Scheme
- Future Fund
Pay as you grow
- The government will give all businesses that borrowed under the Coronavirus Bounce Back Loan Scheme the option to repay their loan over a period of up to ten years.
- This will reduce their average monthly repayments on the loan by almost half.
- UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
CBILS loan extension
The government intends to allow Coronavirus Business Interruption Loan Scheme lenders to extend the term of a loan up to ten years.
New updates to the Winter Economy Plan announced 9th October 2020
- Firms whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work.
- The government will support eligible businesses by paying two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.
- Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions, a very small proportion of overall employment costs.
- Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.
- The scheme will begin on 1 November 2020 and will be available for six months, with a review point in January 2021. In line with the rest of the Job Support Scheme, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December.
- The scheme is UK wide.
- In addition to expansion of the Job Support Scheme, the government is increasing the cash grants to businesses in England shut in local lockdowns to support with fixed costs. These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously. This could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.
- The devolved administrations in Scotland, Wales and Northern Ireland will benefit from a £1.3 billion increase to their guaranteed funding for 2020-21 - allowing them to continue their response to coronavirus including through similar measures if they wish.
Updates to the Winter Economy Plan – October 22nd 2020
- The Job Support Scheme has been amended to reduce the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will now be eligible.
- Business Grants have been extended to cover to support businesses in high-alert areas which are not legally closed, but which are severely impacted by the restrictions on socialising, (mainly for hospitality, hotel, B&B and leisure businesses). These grants range from £934 per month to £2,100 per month, which is the equivalent of 70% of the grant amounts given to legally closed businesses.
- The Self-Employment Income Support Scheme has been extended so that the first grant, covering the three-month period from the start of November 2020 until the end of January 2021, will cover 40% (up from the original 20%) of average monthly trading profits and will be paid out in a single instalment covering 3 months’ worth of profits capped at £3,750 (up from an original £1,875) in total.
Thomas Oliver financial advisers work with local financial planning clients offering them the best financial advice for their situation. If you want help understanding how the new UK Government measures affect you or your business call our qualified financial planners on 01707 872000.