6th November 2020
We’ve created an easy to read contractor’s fact sheet to the temporary package set out by the Government to support struggling businesses in this period of disruption caused by COVID-19.
Job Retention Scheme (Extended until the end of March 2021)
Per the Chancellor’s announcement on 5 November, the government’s Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will remain open until the end of March 2021.
Businesses will be able to bring furloughed employees back to work on a part-time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.
The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions and pension contributions only for the hours the employee does not work.
Job Support Scheme (Withdrawn on 1 November 2020)
A new Job Support Scheme was going to start from 1 November to protect jobs where businesses are facing lower demand over the winter months due to coronavirus (COVID-19). However, due to national restrictions announced on 31 October and effective from 5 November, the scheme has been postponed and replaced by the extended Job Retention Scheme.
Job Retention Bonus (Withdrawn on 5 November 2020)
It was confirmed on 5 November’s announcement that the Job Retention Bonus will no longer be paid in February 2021, as CJRS will be available at that time. An alternative retention incentive will be put in place at the appropriate time.
The bonus was going to be a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31 January 2021.
Self-employment Income Support Scheme (Extended)
The scheme has been extended once again and will be available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.
Who can claim
Those who have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants) and declare that they intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus
- were previously trading but are temporarily unable to do so due to coronavirus
Eligibility reminder; you can claim if you:
- traded in the tax year 2018 to 2019 and submitted a Self Assessment tax return on or before 23 April 2020 for that year
- traded in the tax year 2019 to 2020
- intend to continue to trade in the tax year 2020 to 2021
- carry on a trade which has been adversely affected by the coronavirus
What the Grant extension covers
The extension will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period. The Government are providing broadly the same level of support for the self-employed as is being provided for employees through the Job Support scheme.
The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.
The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.
The grants are taxable income and also subject to National Insurance contributions.
Statutory Sick Pay (SSP)
This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19.
- Employers with fewer than 250 employees will be eligible (number of people they employed as of 28 February 2020).
- Employees will not need to provide a GP fit note.
- The weekly rate is £95.85. If you’re an employer who pays more than the weekly rate, you can only claim up to the weekly rate paid.
- There is a calculator on the Government’s website to work out how much you can claim.
- Coronavirus-related Statutory Sick Pay can be claimed online here.
- Further details on the scheme can be found here.
July’s Self Assessment payments on account may be deferred until January 2021. This is optional; if you are still able to pay you should do so.
This is available to anyone who’s self-employed without any application; simply skip July’s payment.
This is not a grant. You’ll still need to pay the amount in full before January.
If you cannot pay your Self Assessment tax bill
You can set up a payment plan to spread the cost of your latest Self Assessment bill if:
- you owe £30,000 or less
- you do not have any other payment plans or debts with HMRC
- your tax returns are up to date
- it’s less than 60 days after the payment deadline
You do not need to contact HMRC if you set up a payment plan online.
VAT payments due 20 March 2020 to 30 June 2020 can be deferred until 31 March 2021 (continue to pay normally after the deferral period ends).
Available to all VAT registered businesses. No application required – simply hold back VAT payment.
This is not a grant. You’ll still need to pay the amount in full before 31 March 2021.
The deferral does not cover payments for VAT MOSS or import VAT.
Find out how to defer your payments here.
Business Interruption Loan
A new temporary Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
Eligible businesses are UK based, with a turnover of no more than £45m that meet the British Business Bank eligibility criteria. Full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.
The scheme is open for applications at all major banks. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible.
Time To Pay Service
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
Every UK based business that pays tax to the UK Government and has outstanding tax liabilities are eligible.
If you have missed a tax payment or you might miss your next payment due to COVID-19, call HMRC’s dedicated helpline: 0800 024 1222.
Bounce Back Loan Scheme
The Bounce Back Loan scheme will help small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The scheme is open to applications until 30 November 2020.
The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months and a low rate of interest of 2.5% a year for the remaining period of the loan.
Eligible are UK based businesses negatively affected by the coronavirus that were not already in difficulty in December 2019.
The scheme is not available for those that already applied for the Business Interruption Loan.
There are 11 lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the lender’s website. Find a lender via this link.
Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19. However, those businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered the closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy). Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.
If you have any questions please contact us on firstname.lastname@example.org or call 0800 917 9100. If you are a client, your accounts manager will be happy to answer any queries you may have.