Briefing 15 – 15th October
With recent announcements from Rishi Sunak on the Government’s Winter Economic Plan, which outlined new as well as extensions of existing support schemes, we thought it was time to update you all.
Coronavirus Job Retention Scheme – CJRS
This scheme is now in its final month, with the scheme now confirmed as ending on 31st October 2020, to be replaced with the Job Support Scheme (JSS), which we will outline below.
During October the CJRS scheme will pay up to 60% of wages, up to a cap of £1,875, for the hours an employee does not work. Employers will pay Employers NIC, Pension Contributions and 20% of wages to make up 80% of the total to a cap of £2,500. This cap is proportional to the hours not worked.
Please be aware that claims under the CJRS scheme MUST be made before 30th November. After this date you will not be able to make submissions for any new or amended claims.
Job Support Scheme – JSS
Designed to support/protect ‘viable jobs’ in businesses facing lower demand due to Covid-19, this new scheme will run from the day the CJRS scheme is closed.
The Government has announced that this scheme will run for six months through to 30th April 2021. The cost of the scheme is split between the employer, the Government and the employee.
Employees must have been in the payroll (and reported under RTI to HMRC) on or before 23rd September.
In order to make the claim, the employee must work at least 33% of their usual hours for the job to be seen as ‘viable’ and therefore eligible under this scheme. The Government will then pay a third of the hours not worked (up to a cap), with the employer also contributing a third. The remaining unpaid third is effectively the employee’s contribution to the scheme. This means that an employee earns 77% of their normal wage where the Government contribution has not been capped.
Please note that there is still some detail to be released by HMRC on what constitutes ‘usual pay’, particularly for those whose pay has changed since March to a new pay arrangement with their employers, and some of the finer details of how the Job Support Scheme will operate.
Claims made under this scheme will be made in arrears.
HMRC have said that they will be checking claims.
For very large businesses there is a more stringent financial assessment test. We do not anticipate that our clients will be affected by this.
The Government example is:
- Beth normally works 5 days a week and earns £350 a week. Her Company is suffering with reduced sales due to Coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
- Her employer pays Beth £140 for the days she works.
- And for the time she is not working (3 days or 60%, worth £210), she will also earn2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
- The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
- The following table shows the split of payroll costs between the Government and the Employer, depending upon what % of the ‘usual’ hours an employee works:
This scheme is by no means as generous as the previous ‘furlough’ scheme and until further guidance is announced it is unclear whether it will be of any tangible benefit to company directors (who may typically be paid a modest PAYE salary, at the National Insurance earnings threshold).
Job Support Scheme Extension
The JSS has been extended to support business across the UK instructed to close their businesses/premises due to Government restrictions:
- This scheme will cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes businesses that are required to provide only delivery and collection services from their premises, or food and drink outdoors from their premises.
- 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. 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 run for the same period as the standard JSS scheme (above). There is a review due in January.
- In line with the rest of the JSS, payments to businesses will be made in arrears, via a HMRC claims service that will be available from early December. Employees of firms that have been legally closed in the period before 1 November are eligible for the CJRS.
- Further guidance on the scheme will be set out by HMRC in due course.
In addition to the above, 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.
We will continue to monitor this situation and encourage any businesses who, after 1st November, believe that they have been forced to close by a Government Department, to contact us for further guidance on this scheme.
Coronavirus Job Retention Bonus Scheme – CJRB
In our last briefing we outlined details of the CJRBS, and for ease we reproduce these now:
Employers will be able to claim for employees who:
· were furloughed and had a Coronavirus Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the Scheme;
· have been continuously employed by the relevant employer from the time of the employer’s most recent furlough claim for that employee until at least 31 January 2021;
· have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI;
· have up-to-date PAYE submission records for the period to the end of January;
· are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim.
For those employees transferred to a new employer under a TUPE, they must have been furloughed and a successful claim made by their new employer in order to qualify.
A one off payment of £1,000 to the employer for each eligible employee will be claimable in February 2021.
The Government have started to release details of how the claim will work, but guidance on how to access the online claim service on Gov.UK is not expected until the end of January 2021.
Steps outlined as needing to be done prior to the claim are:
· To still be enrolled for PAYE online;
· comply with your PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021;
· keep your payroll up to date and make sure you report the leaving date for any employees that stop working for you before the end of the pay period that they leave in;
· use the irregular payment pattern indicator in Real Time Information (RTI) for any employees not being paid regularly;
· comply with all requests from HMRC to provide any employee data for past Coronavirus Job Retention Scheme claims.
We have now been told that if we are your agent for PAYE and do your PAYE online for you, we will be able to claim the CJRB on your behalf.
Claims will open on 15th February 2021 and close on 31st March 2021.
Please remember that this bonus WILL BE TAXABLE when we compute your year-end profits for tax purposes.
If we undertake your company payroll we will make the Job Retention Bonus claim on your behalf.
Self Employed Income Support Scheme – SEISS
Please remember that if you were eligible to claim the second grant under this scheme (for which your business must have been adversely affected due to Covid 19 on or after 14th July 2020) and you have not yet claimed this, you only have until 19th October 2020 (this coming Monday!) to submit your claim.
Please contact us if you are unsure of any aspect of this claim.
In the Winter Economic Plan, Rishi Sunak announced a third and fourth extension to this scheme. This was announced as two grants over a six month period from November 2020 to April 2021.
To claim under this extension you must:
· currently be eligible for the SEISS (although not necessarily have claimed before);
· be currently actively trading and intend to continue to trade;
· declare that you have been impacted by reduced demand due to Covid-19 in the qualifying period (being from 1st November to the date of the claim).
The scheme continues along the same lines as the original SEISS scheme, but the third grant is reduced in size to 20% of your average monthly profits, paid out in a single instalment covering 3 months’ worth of profits.
The first grant period will cover three months from November 2020 to January 2021.
The level of the grant for the three months from February 2021 to April 2021 has yet to be set by Government.
As with the first two grants under this scheme, any amounts received will be taxable income of your business.
Details of how to make the claim have yet to be announced, but it is our expectation of something very similar, if not the same, as the initial grant process.
Reduced rate of VAT
In our last briefing we outlined details of the VAT rate cut applied on most tourism and hospitality related activities, which was originally for the period from 15th July 2020 to 12th January 2021. We are pleased to report that within the Winter Economic Plan this period was extended to now run until 31st March 2021.
A link to the Government guidance is below:
Just as in our last briefing, we would remind businesses that the reduction in the VAT rate is not all encompassing, as previous reductions have been.
For example, a restaurant or café business will need to have a system to record sales of alcoholic drinks (still VAT at 20%) separately from food and non-alcoholic drink sales (VAT at 5%).
Please do contact us if you have any questions on applying this VAT cut in your business.
VAT Deferral Scheme – update
If you deferred VAT payments that were due between 20th March and 30th June 2020, then these payments needed to be made to HMRC by 31st March 2021.
However, you can now use the VAT Deferral New Payment Scheme to spread these payments over 12 equal instalments up to 31st March 2022. Alternatively, you can make payments as normal by 31st
March 2021, or make Time to Pay arrangements with HMRC if you need more tailored support.
More information on the VAT Deferral New Payment Scheme will be available on GOV.UK in the coming months and once we have this we will include details in our next briefing.
Reminders of previous topics (with greater detail found within our earlier briefings):
New Apprenticeships – this scheme continues to run until 31st January 2021 (with claims open until 30th April 2021).
Stamp Duty – the increased Nil Rate Band of Residential SDLT continues to run until 31st March 2021.
Green Homes Grant – vouchers redeemed and improvements to be completed by 31st March 2021.
There is not much making the headlines at the moment, however, with less than 3 months until we leave the European Union, we would expect a flurry of communications to arrive in the near future. We will try and keep you abreast of anything we feel needs your attention as and when we have news, however, we suggest that you sign up for updates from your respective trade groups to ensure you have all the information you need to avoid problems once leaving the EU.