Winter Economy Plan: Learn about the Job Support Scheme and additional financial help

In response to a second wave of coronavirus (COVID-19) disruption, the UK government has announced a new series of measures for businesses, as part of its Winter Economy Plan.

Most build on existing measures announced as part of the 2020 Spring Budget, coronavirus government support and Summer Statement announcements.

Below, we provide summaries of each scheme. Full technical details have not yet been released. We’ll update this blog when that happens.

Here are the government schemes and measures that are covered in this article:

Job Support Scheme

Self-Employment Income Support Scheme grant extension

Enhanced Time to Pay for Self Assessment taxpayers

VAT deferral New Payment Scheme

VAT reduced rate for hospitality and tourism extension

Coronavirus Loan Schemes – Pay As You Grow

Job Support Scheme

What is it?

Effectively a successor to the Coronavirus Job Retention Scheme (CJRS), the Job Support Scheme means the government once again pays a portion of an employees wage while, at your request, they remain at home because of reduced demand.

However, the Job Support Scheme’s aim is to protect what the government calls viable jobs – rather than attempting to support all employees, as with the CJRS.

The Job Support Scheme is available from 1 November 2020. This date is the point at which the CJRS ends for employees.

However, the introduction and indeed use of the Job Support Scheme doesn’t affect the potential for employers to claim the £1,000 Job Retention Bonus for every furloughed employee who remains continuously employed all the way through to the end of January 2021.

Nor does the Job Support Scheme only apply to those who have already used the CJRS, or to employees already furloughed. Those businesses that are part-time furloughing employees for the first time can use the Job Support Scheme.

The Job Support Scheme will run for six months, effectively ending with April 2021’s pay run.

Who is eligible?

The employee you claim for must be employed as of the date of the announcement, which was 24 September 2020, and not under a redundancy notice.

In other words, they must have been on your PAYE payroll on or before 23 September and a Real Time Information (RTI) submission notifying a payment to that employee must have been made before 23 September.

For you to be able to claim for them, the employee must work a minimum of 33% of their usual hours, and be paid via the UK PAYE scheme.

The 33% limitation applies for the first three months of the Job Support Scheme, and will be reviewed after this.

It’s not clear if there will be a restriction of the kinds of employee status (that is, employees vs workers), but the CJRS had no such restrictions.

As with the CJRS, there’s unlikely to be a limit on the number of employees you can claim for.

You can cycle employees on and off the scheme to fit with business demands, and there’s no requirement to stick to a particular working pattern. However, the working arrangement you use must cover a minimum period of seven days.

As for business requirements, the new scheme is theoretically open to all businesses operating in the UK and that have a UK bank account, but the focus is on small and medium-sized enterprises (SMEs).

Larger businesses are “required to demonstrate that their business has been adversely affected by COVID-19”, and will have to pass a financial assessment test.

Additionally, the government says it will frown upon large businesses that use the scheme but then make capital distributions (such as paying dividends to investors).

What it covers

Your business pays for the time worked by the employee, which must be a minimum of 33% of their usual hours.

The government and your business will then pay a third each of the employee’s usual pay for the period when they’re part-time furloughed. What’s considered ‘usual pay’ is calculated as it was within the CJRS rules.

A crucial difference compared with the Job Support Scheme compared to the CJRS is that the government payment will not cover Class 1 employer National Insurance contributions (NICs), or pension contributions – although these remain payable by the employer as per normal payroll procedures.

The government says that in situations where the cap on its contributions isn’t breached, the employee will effectively get 77% of their usual pay.

A government note adds: “Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.”

How your business can access it

As with the CJRS, you’ll pay the employee their salary – including the government contribution – and then claim it back from the government.

There are not yet details about how this will be done, but it will probably work in a similar way to the existing CJRS.

You may have to provide details of the employees and their hours worked, plus details such as their payroll number.

Self-Employment Income Support Scheme grant extension

What is it?

The Coronavirus Self-Employment Income Support Scheme (SEISS) is extended for six months beyond October 2020, when it was due to end.

As before, it will provide two taxable lump-sum grants covering two contiguous periods of three months each.

The first grant covers 1 November 2020 until the end of January 2021, and the second will cover from 1 February 2021 to the end of April 2021.

Who is eligible?

Only those who are currently eligible to apply for the SEISS can apply for the new extension grants, which means the grant can be claimed by those who are actively self-employed and trading, and using Self Assessment.

Notably, this means you can carry on with your business as usual, and earn income, while still being able to claim the two new grants.

What it covers

How much you can claim has been reduced compared to the initial scheme.

The first grant will provide 20% of average monthly trading profits, again paid in a lump sum covering three months, but capped at £1,875.

The government hasn’t yet set the amount for the second grant saying it will do so in “due course”.

Our existing SEISS blog explains how the grants are calculated.

How your business can access it

As with the SEISS, you’ll be able to claim online through the SEISS portal.

The government will announce the time periods when you can do so, and will probably contact you via text message and/or email to let you know if you’ve already used the scheme.

Enhanced Time to Pay for Self Assessment taxpayers

What is it?

Those with a Self Assessment tax bill to pay in July 2020 were offered the opportunity to defer it until January 2021 as part of earlier coronavirus measures. Additionally, January 2021’s tax bill can also be deferred.

It will now be possible to apply to pay these payments over a further 12 months, using the existing HMRC Time To Pay facility. In other words, the tax will be paid in full in January 2022 and payments will need to be made monthly until that point.

Effectively, this scheme removes the strict criteria for access to the HMRC Time To Pay scheme, so it can be used by anybody who uses Self Assessment.

Who is eligible?

Anyone who uses Self Assessment and has already deferred their July 2020 tax bill as part of the coronavirus measures, and/or who intends to defer their January 2021 tax bill.

What it covers

Any Self Assessment tax bill from July 2020 and potentially January 2021 that’s less than £30,000 can be deferred in this way.

How your business can access it

Notably, this deferment is not automatically applied. You must contact HMRC’s Self Assessment Payment Problems helpline and request a Time To Pay plan for the July 2020 Self Assessment deferred amount.

VAT deferral New Payment Scheme

What is it?

VAT-registered businesses were already able to defer VAT due for the March – June 2020 period under existing coronavirus measures. The deferred payment was originally due by the end of March 2021.

Businesses can now choose to pay back that amount in 11 payments across the 2021/22 financial year.

Who is eligible?

Those who already made use of the VAT deferral can apply to make use of the scheme.

What it covers

The scheme covers the VAT payment for the period of March – June 2020. It doesn’t cover any other VAT payments, before or after the first wave of the coronavirus disruption.

How your business can access it

You’ll need to opt-in for the scheme. The government says it will announce a portal on the HMRC website in early 2021.

VAT reduced rate for hospitality and tourism extension

What is it?

As part of existing coronavirus measures, the government reduced the VAT rate classification for certain goods and services in the hospitality and tourism industry.

Businesses in these sectors can apply a reduced 5% rate of VAT to supplies of food and non-alcoholic drinks consumed on their premises, or hot takeaway food/non-alcoholic drink, and to holiday accommodation.

Intended to end on 12 January 2021, use of the reduced rate is now being extended to 31 March 2021.

Who is eligible?

The hospitality component applies broadly to restaurants, pubs, bars, cafés and similar premises (including takeaway establishments).

When it comes to hospitality, broadly speaking the reduced rate applies to businesses supplying sleeping accommodation in a hotel (or similar), charging fees for caravan pitches (and associated facilities), or charging fees for tent pitches and camping facilities.

You should check VAT Notice 709/1 or VAT Notice 709/3 if in any doubt about whether your business is included in the measure, or consult an accountant or other tax specialist.

What it covers

Food and non-alcoholic drinks, and holiday accommodation as discussed above.

Again, check the VAT Notices if in any doubt about what the reduced rate applies to, or consult an accountant or other tax specialist.

How your business can access it

This is one measure that you must apply yourself in your accounting software by applying the 5% VAT rate to the supplies mentioned above.

Coronavirus Loan Schemes – Pay As You Grow

What are they?

The government created a number of government-backed loan schemes as part of the coronavirus measures. These offered very attractive interest rates and long repayment times.

Examples include the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The Winter Economy Plan means the loans receive extensions in terms of availability, and a new Pay As You Grow scheme means repayment terms are both extended and made easier.

Who is eligible?

Those who have or are intending to take out any of the loans mentioned above.

What they cover

There are two key measures that enhance the coronavirus relief loans.

• The first is an extension for new loan applications to 30 November 2020. This applies to all the existing loan schemes.
• The second measure applies to the BBLS and is entitled Pay As You Grow.

The government is extending its backing for loans up to 10 years, meaning businesses can now choose to repay their BBLS loans over that period. Existing loans can be extended to this period. The government says this can halve the monthly repayment amount.

Additionally, those who have BBLS loans will have the option of switching to interest-only payments for periods of up to six months, which can be used on three separate occasions as required.

It’s also possible to pause repayments entirely for six months on a single occasion (although only after six payments have been made).

Those who have used the CBILS also get a repayment extension option of up to 10 years, although this doesn’t officially fall under the Pay As You Grow scheme.

Making use of Pay As You Grow will not affect credit ratings.

How your business can access them

You should speak to your loan provider about the new measures should you wish to take advantage of them.

Conclusion on winter coronavirus measures

The new measures in the Winter Economy Plan are very attractive and should be investigated by your business even if the impact you’re facing because of coronavirus is relatively mild.