GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) – UPDATED 30 SEPTEMBER 2020

Well, Lionel Ritchie and the Commodores might have thought it was “Easy”, but following all of the changes to the government support schemes isn’t, so here is our guide to the Chancellor’s latest announcement of 24 September.

VAT deferral

If you deferred your VAT payment for quarters ended 31 March to 31 May 2020, you are no longer required to pay the amount in full by 31 March 2021, but may pay this in 11 interest free instalments between April 2021 and March 2022.

You will need to opt into this. Details of the opt-in will be released by HMRC in due course, but it is likely to be an online application process.

Self-Assessment tax deferral (personal tax)

HMRC previously agreed a deferral of the tax due on 31 July 2020 (the second payment on account for 2019/20) until 31 January 2021. Now, additional deferment has been announced for this, and other balances due 31 January 2021 (the final/balancing payment for 2019/20, CGT for 2019/20, and the first payment on account for 2020/21), with the option to pay over 12 monthly instalments to 31 January 2022. No mention has yet been made of deferring any instalments due 31 July 2021.

If your liabilities are not more than £30,000, and you apply for the payment extension online, it will be agreed automatically. If you owe more than £30,000, or want to ask for a longer payment period, you can still apply via the HMRC telephone service, but acceptance will not be automatic.

New Job Support Scheme

The Coronavirus Job Retention Scheme (CRJS) closes on 31 October 2020, and will be replaced with the Job Support Scheme (JSS), starting 1 November 2020 and running for six months. The stated aim is to support “viable” jobs and employers who face lower demand due to Covid-19, and requires employees to work a minimum of 33% of their usual hours. For every hour not worked, the employer and the government will each pay one third of the employee’s usual pay, with the government contribution being capped at £697.92 per month. Employees using this scheme will receive at least 77% of their pay (if the pay is not subject to the government cap).

Employers will claim in arrears for the government contributions. The scheme does not cover employer national insurance or pension contributions, unlike the original CJRS.

There is no requirement for the employer to have previously furloughed workers under CJRS, and any employees on the payroll (with an RTI submission made) at 23 September 2020 qualify, as long as they are not on redundancy notice then, or during the period of any individual grant claim.

Self Employment Income Support Scheme (SEISS) 

If you were eligible for the SEISS you should have received two payments by now. You have until 19 October 2020 to claim the second grant.

The scheme has now been extended to April 2021 with two further instalments, albeit far less generous than the initial scheme. The third grant will be 20% of your average monthly profits for three months, capped at £1,875 in total. The application deadline is likely to be mid-January 2021. As before, to be eligible, you must be actively continuing to trade, but facing reduced demand or additional costs due to Covid-19. Details of the fourth grant will be released in the coming months.

Reduced VAT rate for hospitality and tourism 

The reduced 5% VAT rate for hospitality and tourism has been extended from 12 January to 31 March 2021, and will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bar, cafes etc, supplies of accommodation and admission to attractions across the UK.

Government backed loans

The government has extended the four temporary loan schemes to 30 November 2020 for new applications. If you are going to, or have already, borrowed under the Bounce Back Loan Scheme (BBLS), you may apply for interest only payments for up to six months, up to three times over the life of the loan. You also have the option to pause the repayments totally for up to six months, after six payments have been made, without it affecting credit ratings.

If you have borrowed under the Coronavirus Business Interruption Loan Scheme (CBILS) you can extend the loan to ten years.

Local Restrictions Support Grant (LRSG)

If you are in an area which is under a local lockdown, which is preventing you from providing your usual in person customer services from your business premises, you may be eligible for the LRSG.  You must occupy a property on which you pay business rates and be required to close down for at least 3 weeks.

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