05 January 2021
Additional £4.6bn lockdown grants for businesses following third...
Last night the Prime Minister announced that the UK would enter national lockdown for the third time after the country…Read More
Last week HMRC announced the new Coronavirus Job Support Scheme that will help to support the wage costs of employees who are working reduced hours from 1 November. It is intended to run for 6 months until 30 April. We set out below further details of what we know so far about how this scheme will work although further guidance will be issued in coming weeks.
Changes have also been introduced to other aspects of the Government’s support for businesses, which are in brief:
From 1 November, the Government will contribute 33% of the normal hourly wage for hours that are not worked by the employee. The employer will also pay 33% of the normal hourly wage for hours that are not worked, so the employee bears the final 33% as a drop in their income.
The employer will also pay the employee’s normal wage for the hours that the employee works, plus all of the employer’s NIC and pension contributions on the employee’s total earnings; there is no grant support for employer’s NIC and pension contributions under this scheme.
Neither the employer or the employee needs to have previously been involved in a claim under the Coronavirus Job Retention furlough scheme.
There are no financial conditions for SMEs (broadly those with less than 250 employees). However, large businesses will need to demonstrate that their turnover now is lower than it was before the covid pandemic began.
For the first three months of the scheme, the employee must work at least one third of their normal working hours to be included in a claim under this scheme. This threshold will be reviewed after the first three months, and it is designed to ensure that the support is focussed on “viable” jobs.
An employee must have been included in the employer’s RTI submission on or before 23 September, so we have a cut-off similar to that seen in the furlough scheme which will no doubt lead to familiar cases of winners and losers.
Employees can cycle on and off the scheme and do not have to work the same pattern of hours each month. A written short-time working agreement will need to be put in place as it was for flexible furlough, and each agreement must be at least one week in duration. This means an employee’s working arrangements can be changed during a working month.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.
For every hour not worked by the employee, the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month.
As regards the employer topping-up an employee’s pay, the published guidance currently says “Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.”
Claims are payable in arrears – they cannot be made up to 2 weeks in advance of the wages payment date as they can under the furlough scheme.
To be eligible for the additional grants, self-employed individuals must have been eligible for the first SEISS even if they did not make a claim. They must declare that they are still trading and intend to continue to trade, and that their business has been adversely affected by coronavirus.
The first grant covers the three months from November to January and is calculated as 20% of the average monthly trading profits, paid in a single instalment for the three month claim period and is capped at £1,875. As before, this income is taxable for income tax and NIC purposes but is not subject to VAT.
The second grant covers the three months from February to April although the amount of this grant has not yet been set and will be announced at a later date.
If you deferred paying your July 2020 self-assessment payment on account, the deferred amount plus any balancing payment and first 2020/21 Payment on Account, is payable by 31 January 2021.
If you are unable to pay your self-assessment bill in full by 31 January 2021, you can now set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC. If your SA tax debt is up to £30,000, you’ll able to access this Time to Pay facility through the HMRC website and will get automatic and immediate approval. If your SA debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use the Time to Pay arrangement by calling HMRC.
If you have any questions about the update above, please get in touch with us today and one of our advisers will get back to you soon.
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