Rishi Sunak unveiled today the Government’s plan to protect jobs and support practices in light of the Government’s recently announced restrictions introduced to protect the country from a significant increase in COVID-19 cases.
The main part of the new plan was the establishment of a new job support scheme and extension of the self employment income support scheme (SEISS). The thrust of the Chancellor’s announcement was that the new schemes should support, in his words, ‘viable jobs’ in practices who will suffer from lower demand over the winter months due to the virus.
The new job support scheme (JSS)
The JSS starts from 1 November 2020 and will run for six months. Employers will continue to pay the wages of staff that work (they will need to work at least 33% of their usual hours to qualify) and the Government and employer will each pay one third of the hours they don’t work. Broadly, if an individual works 33% of their usual hours they will get paid c.78% of their usual salary although the level of Government contribution will be capped at £697.92 per month. The JSS will be available to small and medium-sized practices and also to large practices that can demonstrate that they have been adversely impacted by COVID-19. The JSS will be available to businesses that have not taken advantage of the existing furlough scheme and the existing furlough bonus scheme relating to employee retention will continue to be available.
Extension to the self-employment income support scheme (SEISS)
The extension to the SEISS will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19. The scheme will last for six months, from November 2020 to April 2021. The extension will be in the form of two taxable grants which will cover the two three-month periods. The initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering the first three months’ worth of profits, and capped at £1,875 in total. The second grant will cover the second three-month period from the start of February until the end of April although the amount of this grant will be announced in due course
Other measures
The Chancellor announced that the temporary 15% VAT cut for the tourism and hospitality sector will be extended until the end of March 2021. The Government will also allow the VAT payments that have been deferred until March 2021 to be repaid via eleven monthly instalments starting from this date. Self-assessment taxpayers will also be able to agree with HMRC to delay up to £30,000 of tax liabilities that were to have been paid by 31 January 2021 over a further twelve months.
In relation to the bounce back loan scheme (BBLS) and coronavirus business interruption loan scheme (CBILS), the Chancellor has extended the length of the loan from six years to ten. In the case of the BBLS, practices will also be able to take advantage of up to three six-month ‘interest only’ payment periods and a single six-month payment holiday.
Many practices are reviewing their financing arrangements to ensure they can cope with cash flow requirements next year. The announcements today should reduce some of the peak cash flow pressures in March 2021 and beyond.
Clearly, further detailed guidance relating to the above will be provided to clarify the support available, which will need to be reviewed prior to taking advantage of these new measures.
For more information on the changes and advice for your practice, please get in touch with a member of the team below.