After the Chancellor’s announcements yesterday, here’s a summary of the main points relevant to small businesses.
Income tax payments due 31 January 2021
For anyone with up to £30,000 of self-assessment tax to pay, you can now set up a time to pay arrangement for the tax due. This means you can pay in 12 monthly instalments, starting in January 2021. This covers all your self-assessment tax, including your 31 July 2020 payment on account, if you did not pay this at the time.
There will be an online application form to trigger the option to pay by instalments. Anyone with tax over £30,000 will be able to call HMRC and arrange their own bespoke payment plain.
Job Support Scheme
You may be aware that the furlough scheme (Coronavirus Job Retention Scheme), will come to an end on 31 October 2020. The £1,000 bonus for each employee that the company retains and pays at least £520 per month from November 2020 to January 2021 remains, and will be paid in February 2020.
The new Job Support Scheme will pay grants to employers who retain staff who were on the payroll on 23 September 2020 but have reduced their hours.
This scheme runs from 1 November 2020 to 30 April 2021.
The government will pay for a third of the hours that they don’t work – this is the difference between their usual hours, and the hours they actually work. The employer must also pay one third for the non-worked hours.
This means that employers would need to pay employees in full for the hours they work, plus one third of their wages for the hours they don’t.
- Employees must work at least 33% of their usual hours
- For the remaining hours they did not work, the government and employer will pay 1/3 each
- Working employees will receive at least 77% of their usual pay with 55% paid by the employer and 22% paid by the government
- Employers will pay the Employers National Insurance and Pension contributions in full on the employees pay
- Monthly claims will be made thought the .gov.uk website only after the employee has been paid
- The government’s contribution is capped at 22% of usual wages and £697.22 per month
Further self-employed grants
There will be 2 further grants for the self-employed (SEISS). They’ll be available to those who were eligible for the first and second grants:
- The third grant for 1 November 2020 to 31 January 2021 will be based on 20% of average monthly trading profits, capped at £1,875
- The fourth grant will be for 1 February 2021 to 30 April 2021. The government will provide details later on what can be claimed.
These grants, unlike the first 2, may be open to those who opened their business after 5 April 2019 and has filed a tax return for the year ended 5 April 2020.
Bounce back loans (BBL)
The Bounce Back Loan scheme has been extended – it is open to applications until 30 November.
The repayment terms have been converted into “Pay as You Grow”. This extends the repayment period from 6 to 10 years, cutting the monthly repayment in half, with optional interest only repayments for 6 months. You’ll also be able to apply to suspend repayments for up to 6 months if your struggling to make repayments.
The interest rate remains at 2.5% APR and is paid by the government for the first 12 months.
VAT repayment terms extended
If you deferred a VAT payment that was due between 20 March and 30 June 2020, you’ll no longer have to repay it in full by 31 March 2021. Instead, there will be an interest-free instalment option to spread payments over eleven months, starting April 2021.
There will be an online HMRC application to allow you to apply to spread the payments.
See also our updated article on Coronavirus help for dentists