James Trowell
Accounting Lead
Posted 4 weeks ago

Digesting the winter economy plan

Image Credit Hello I’m Nik 🎞

Today the Chancellor announced another round of Government support, to support the UK economy through the winter months. 

Below we dig into the detail around the financial support available and any changes to existing support specifically aimed at the self-employed community.

Self-employed income support scheme – extended

The SEISS grant is being extended once more. In terms of who can make a claim, you must:

  • Currently, be eligible for the SEISS (although you don’t need to have claimed any of the previous grants)
  • Declare that you are currently actively trading and plan to continue to keep your business going 
  • Declare that you’ve been negatively impacted by a slow in demand as a result of Covid-19 during the grant periods

The scheme will last for six months, from November 2020 to April 2021. 

As before, the grant will come in the form of two separate taxable grants, each covering a three-month period. The big change is the % of average trading profits it covers.

The first grant, covering the three month period from November until the end of January, will be worth 20% of average monthly profits, capped at £1,875 in total. As before, this will be paid out in a single instalment. 

Details haven’t been released yet for the second grant, covering February to April 2021. So,  we’ll keep an eye out for further guidance and share any information we have.

VAT cut for the hospitality sector has been extended to 31 March

The government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.

Further Extension to Finance Schemes

The government is extending four temporary loan schemes, which have helped over a million businesses to date, to 30 November 2020, These Include:

  • Bounce Back Loan Scheme (BBLS)
  • Coronavirus Business Interruption Loan Scheme (CBILS) 
  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)
  • Future Fund 

For more information around these loan schemes and eligibility criteria check out our previous post here.

Pay as you Grow 

The government will give all businesses that borrowed under BBLS the option to repay their loan for up to ten years, reducing the average monthly repayments on the loan by nearly half. 

Businesses will also have the option to move to interest-only payments for up to 6 months (though you can only do this three times) or to pause entirely their repayments for up to six months (you can do this once and only after you’ve made six payments). 

The idea here is to bring more flexibility to businesses and their circumstances around their business during this time.

VAT Deferral ‘New Payment Scheme’ 

The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the next financial year (2021-2022).

So, rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over the course of 2021-22. 

Businesses will need to opt-in, but everyone who previously deferred payments is eligible. 

HMRC will put a process in place for this in early 2021.

‘Time to Pay’ for Self-Assessment taxpayers

The government will give the self-employed community and other taxpayers more time to pay their taxes due in January 2021 (that’s when you would have had to pay your 19/20 tax bill if you haven’t already done so). 

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 month window. 

That also means that any Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022. 

For Self-Assessment taxpayers that aren’t able to to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s ‘Time to Pay’ Self-Assessment helpline to agree a payment plan.

Job Support Scheme

With the Job retention scheme coming to an end in October. The new job support scheme will come into effect 1st November. Again the aim is to keep employees working in jobs as long as possible. 

The job support scheme can apply to any employee who was on the payroll on 23 September 2020, so it is not restricted to employees who were furloughed at some point between March and October.

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 a third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month.

The employer will be reimbursed in arrears for the government contribution.

The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. All Small and Medium-Sized Enterprises (SMEs) will be eligible.

More detail to come 

This is fresh news today so there is still more detail to follow. We know this is an extremely difficult time, so if you aren’t sure what applies to you or how to claim for any of the schemes – we’d be happy to help. Message the team through the app, or share your questions over on Coconut Bite and we’ll do what we can to help you.

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