Six months on, furlough is coming to an end, but the pandemic isn’t, not yet anyway.
Chancellor Rishi Sunak’s 24 September statement sets out the government’s new approach to protecting businesses and employment over the next six months, with a series of “temporary, timely and targeted” measures that come at an estimated total cost of £12 billion.
Under the new system, we’ll see the UK swapping furlough for German-style subsidy schemes, while aiming to shift the focus of supporting workers from taxpayers to businesses.
In this summary we look at the key themes of the statement across the three areas of employment, loans and tax.
THE KEY TAKEAWAYS
THE PICTURE AT SIX MONTHS
Job Support Scheme
The CJRS will end on 31 October and will be replaced by the Job Support Scheme (JSS) – a six-month scheme that opens on 1 November.
Self-Employment Income Support Scheme
This scheme will be extended for six months from 1 November 2020, but with revised terms.
All four main loan schemes now have an extended closing application date set at 30 November.
Coronavirus Business Interruption Loan Scheme
Lenders will be allowed to extend the term of a loan provided under CBILS to up to ten years, with the same 80% government guarantee.
Coronavirus Large Business Interruption Loan Scheme
CLBILS will continue as is until the end of November.
Bounce Back Loan Scheme
This scheme offers loans of £2,000-£50,000 (capped at 25% of turnover) with a 100% government guarantee.
The existing version has a repayment term of six years, but borrowers don’t have to make repayments for the first year, with the government covering interest payments for that period.
The Chancellor has now announced new ‘Pay as You Grow’ options, which mean:
This scheme, which offers matching convertible loans to innovative businesses will continue unchanged until the end of November.
Covid-19 Corporate Financing Facility
This initiative is run by the Bank of England and is aimed at large businesses. It will stay in operation until 22 March 2021, but for organisations of strategic importance to the UK that have exhausted other options, the government may consider bespoke financial support.
VAT on hospitality and tourism
Back in July the government announced a reduced VAT rate, set at 5%, on food and non-alcoholic drinks from restaurants, pubs, bars and cafés, as well as accommodation and admission to UK attractions. This was planned to continue until 12 January 2021, but has now been extended until 31 March.
Businesses that took the opportunity to defer VAT due in March until June 2020, will now have the option to spread payments over the financial year 2021/22 in 11 equal instalments. This new payment scheme is open to any business that chose to defer, however, it means opting in to a new process that HMRC plans to launch early next year.
More time for Self-Assessment Tax Deferral
Self-employed people and other taxpayers were also given the option to defer payments and they too will now have an extended payment period.
Those with up to £30,000 in self-assessment liabilities can use HMRC’s self-service Time to Pay facility meaning self-assessment liabilities due in July 2020 don’t need to be paid in full until January 2022.
For those who won’t be able to pay their tax bill on time (as well as those who can’t use the online service), HMRC’s Time to Pay Self-Assessment helpline will stay in place to help them to agree a payment plan.
As we move into the second half of this financial year there are clearly still major challenges ahead. The government’s approach has shifted somewhat but many of the schemes we’re now familiar with remain in place, albeit with extended deadlines and revised rules.
As ever, we’re working hard to make sure we’re on top of new developments and will make sure we bring them to you as we learn of them. In the meantime, if you have any questions or concerns, we’re only ever a call away.