Covid-19 - Your Business

Lockdown 2.0 – Financial Support Announcements

Furlough Scheme Extended and Further Economic Support announced

Further to the Prime Minister’s announcement about a second national lockdown the government has announced additional financial support.

The Coronavirus Job Retention Scheme (CJRS) (Furlough scheme) has been further extended and will remain open until 31 March 2021 (previously extended on 31 October to 30 November), previously set to close on 31 October. Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme. This means the extended furlough scheme is more generous for employers than it was in September and October.

The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends in March.

The Job Retention Bonus which was due to be paid in or around February 2021 will no longer be paid.

In addition, business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant. Also, £1.1bn is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly. This will be delivered by local authorities as were the original small business and hospitality support grants during the first lockdown.

Businesses required to close in England due to local or national restrictions will be eligible for the following:

  • For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
  • For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
  • For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

Coronavirus Job Retention Scheme (CJRS)

The Government has announced an extension to the Coronavirus Job Retention Scheme (CJRS). The scheme has been operating for some time now and broadly remains similar.

Less than 24 hours after the Treasury published detailed guidance on the Job Support Scheme (JSS), Boris Johnson has announced that this scheme will now be postponed until the extended Coronavirus Job Support Scheme (CJRS) comes to an end, which will not happen until at least March 2021.

Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500.. Then in January 2021, the government will review and decide whether employers should be asked to contribute more during February and March (similar to the situation in September and October this year).

The key parts of the scheme are as follows:

  • The scheme will provide a grant towards the cost of wages of 80%, capped at £2,500 per employee, per month
  • Employers will have to cover the costs of employer national insurance and pension contributions
  • Employers will also be allowed to top up employees wages, but there is no requirement for employers to contribute to the furlough wages (a requirement of the now delayed JSS)
  • The scheme can include all employees who had been included in a RTI submission for the employer on or before 30 October 2020
  • There is no requirement for the employee to have been included in a previous CJRS claim
  • There is no requirement for an employer to have previously submitted a CJRS claim
  • Employees can be fully or flexi-furloughed under the extended scheme
  • Employees who were previously furloughed will continue to have their furlough pay calculated based on existing furlough calculations.
  • Employees who have not been furloughed before will have a different pay/hours reference period which we understand will be based on either:
    • 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on a fixed salary), or
    • 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins (for those whose pay varies)
  • The employee must be on the employer’s payroll by 23:59 on 30 October 2020 (a full payment submission FPS must have been made)
  • HMRC intend to publish details of employers who use the scheme for claim periods from December, and employees will be able to find out if their employer has claimed for them under the scheme.
  • Employee furloughing agreements are required, these may already be held for staff previously furloughed but it is worth checking they are still valid (not time limited or other changes have invalidated them)
  • Employees that were employed and on the employer's payroll on 23 September 2020 who were made redundant or stopped working for their employer after that date, can be re-employed and claimed for under the extended CJRS.
  • There are now monthly deadlines for claims. Claims for period on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday

What you will need to make a claim

  • to be registered for PAYE online
  • your UK, Channel Island or Isle of Man bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
  • the billing address on your bank account (this is the address on your bank statements)
  • your employer PAYE scheme reference number
  • the number of employees being furloughed
  • each employee’s National Insurance number (you will need to search for their number using basic PAYE Tools if you do not have it, or contact HMRC if your employee has a temporary number or genuinely has never had one)
  • each employee’s payroll or employee number (optional)
  • the start date and end date of the claim
  • the full amounts that you’re claiming for including:
  • employee wages
  • your phone number
  • contact name
  • You also need to provide either:
  • your name
  • your Corporation Tax unique taxpayer reference
  • your Self Assessment unique taxpayer reference
  • your company registration number

If you’re claiming for employees that are flexibly furloughed, you’ll also need:

  • the number of usual hours your employee would usually work in the claim period
  • the number of hours your employee has or will work in the claim period
  • you will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period

To make a claim visit Gov.uk website

Unlike the JSS, the CJRS will continue to allow employers to make a claim ahead of paying the employee. In a significant departure from the previous CJRS scheme, employees will only need a 7 day qualifying period, down from 21 days under the old version of the scheme.

More details about making a claim and eligibility

More details 

VAT cut extension

The 15% VAT rate cut to 5% for the tourism and hospitality industries has been extended until March 31 in the winter recovery plan.

VAT deferral

The payments due to 30 June 2020 were originally due to be repaid in one lump sum by 31 March 2021, there is now an opportunity to spread these payments into eleven interest free instalments under plans laid out in the winter recovery plan.

Self Employed Support Scheme

The new self-employed grant will cover 80% (previously announced under the winter recovery plan was 20% and then 40% and then 55%!!) of average monthly profits, up to a total of £7,500 (previously £1,875 and £3,750), spanning November 2020 to January 2021. This continues to be based on the 2019 income as previously based with the same rules and entitlement criteria.

An additional second grant will also be available for self-employed workers to cover February 2021 to the end of April.

The government hasn't said how much this second grant will cover and is likely to issue the details early in the new year.

A “Pay as you grow scheme” – Bounceback Loans

To help businesses whose trading has been hurt by the pandemic. Small firms can extend their bounceback loans for 10 years, from the previous 6 years, which should halve their monthly repayments, and make interest-only payments if needed.

Coronavirus Loan Schemes

The application deadline for all coronavirus loan schemes has been extended to 31 January 2021 (originally 30 September, then 30 November).

Maxwells can assist your business with CBILS funding.

You may have thought that the scheme was simply offering ‘standard’ term loans however there are actually a number of products available under the scheme and they come with a range of benefits such as:

  • No repayments for the first 12 months
  • All fees covered by the government
  • No interest payable for the first 12 months
  • Maximum borrowing of 25% of 2019 turnover (if you have taken a bounce back loan but need more, this can be refinanced)
  • Multiple loans of up to £250K can be taken from different providers with no need for personal guarantees

More information about our funding service is available here: https://www.maxwellsaccountants.co.uk/services/funding

Please get in touch if we can help.

12 Month extension for tax bills for the self employed

Self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022. This is not authomatic and an application must be made online (you will need individual government gateway credentials) – to take advantage of this follow the link: https://www.gov.uk/pay-self-assessment-tax-bill/pay-in-instalments

Business grants

The Chancellor has also announced approved additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas (Tier 2). These grants will be available retrospectively for areas that have already been subject to restrictions.

  • The government is providing additional funding to allow local authorities to support businesses in high-alert level areas (Tier 2) which are not legally closed, but which are severely impacted by the restrictions on socialising. The funding Local Authorities (LAs) will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.
  • LAs will receive a funding amount that will be the equivalent of:
    • For properties with a rateable value of £15,000 or under, grants of £934 per month.
    • For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.
    • For properties with a rateable value of £51,000, grants of £2,100 per month.
  • This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month).
  • Local authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
  • It will be up to LAs to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business
  • Businesses in Very High alert level (Tier 3) areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter case support is being provided through business support packages provided to LAs as they move into the alert level. The government is working with local leaders to ensure the Tier 3 packages are fair and transparent.

The funding will be administered by Local Authorities and only in areas that are subjected to an enhanced Tier alert level, if this affects your business you should seek further information from the appropriate LAs website.

Jobs Support Scheme (JSS)

A new wage subsidy scheme, to encourage struggling firms to keep people on short-term hours, rather than making them redundant was initially announced as part of Richi Sunak’s winter recovery plan, it has been since been extended (9th October) and subsequently amended on 22 October. 

It’s designed to protect viable jobs over next six months after the furlough scheme ends in March 2020.

There are mow two schemes, the JSS – Open and the JSS – Closed.

JSS – Open

Employees must work at least twenty percent of their hours and be paid for them.

Then, they’ll be paid two-thirds of their pay for the remaining hours (with the employer coving just 5% and the government paying 61.67%). The original plan was for the government and the employer to share the burden paying half each so the announcement on 22 October was widely welcomed by businesses who had criticised the previous arrangements citing them as unfit to support viable jobs. Someone who works 20% of their hours would get 73% of their wages. It will cost the employer 23% of an employees salary and the government will cover the remaining 50%.

That means that if someone was being paid National Minimum Wage for 40 hours per week and actually worked 8 hours (20%) then they would be paid £255.78 with the employer paying just £81.39 and the government covering £174.40.

The employer is still responsible for employer national insurance contributions and employer pension contributions.

The Job Support Scheme will be capped at £1,541.75 per month (the previous rules capped it at £697.92 per month). The caps are reduced according to the proportion of hours not worked (the £1,541.75 is based on 80% of hours unworked).

Notably, all small and medium-sized firms are eligible - but large firms are only eligible if their turnover has fallen in the pandemic.

JSS - Closed

The government on 9 October announced an expansion of the Job Support Scheme (JSS), to provide temporary support to businesses whose premises have been legally required to close as a direct result of coronavirus restrictions.

Under this expansion, affected businesses will receive grants towards the wages of employees who have been instructed to and cease work. This will cover businesses that, as a result of restrictions set by government, are legally required to close their premises, or to provide only delivery and collection services from their premises.

The government will pay two thirds of employees’ wages, up to a maximum of £2,100 per month. Employers will not be required to contribute towards wages, but do need to cover employer National Insurance and pension contributions.

You can apply for the JSS (both Open and Closed schemes) even if you haven’t previously used the Coronavirus Job Retention Scheme (CJRS). JSS is available for six months, from 1 November, with payment of grants in arrears from early December. The scheme will be reviewed in January.

If you want to discuss the support package announced in more detail or have any queries, please get in get in touch with your normal point of contact at Maxwells.

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