The Prime Minister has announced tougher national restrictions in England to come into effect from Thursday 5 November.

What does this mean for businesses?

To reduce social contact, the Government has ordered certain businesses and venues to close for an initial 4 week period.

This page summarises what we know so far. We will keep this page updated with the latest information wherever possible.

Always refer to https://www.gov.uk/coronavirus for the very latest updates and advice.


  • Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme, known as the furlough scheme, has been extended and will now remain open until end of March 2021, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500.

Employers will only contribute employers National Insurance and Pension Payments – but that will be reviewed in January and employers could be asked to contribute more. Based on an example of the full £2,500 allowance being claimed under full furlough, employer costs will be in the region of £310/month per employee.

How will the extended Coronavirus Job Retention Scheme work? >>

For information on claiming wages through the scheme >>

 

  • Job Retention Bonus

As the Furlough scheme has been extended to March 2021, this bonus payment will not be paid in February as previously announced.

The Government has said that they will look at a possible replacement once the Furlough scheme has ended.

  • The Job Support Scheme (JSS)

As the furlough scheme has been extended until the end of March, there is currently no indication on whether the previously announced Job Support Scheme will be delayed or withdrawn.

 

  • SEISS grant extension

The grant is being extended from November 2020. The grant will be increased to 80% of trading profits up to £7,500.

No change to eligibility criteria and applications open 30 November 2020.

SEISS should only be claimed by those with a business which has been adversely affected by Covid-19.

Find out if you are eligible and how much you can get >>

  • More time to pay income tax bills

Any of the 11.7 million of self-assessed income taxpayers who need extra help can also now extend their outstanding tax bill over 12 months from January 2021.

The Government has handed the self-employed and other taxpayers more time to pay taxes deferred from July 2020 and those due in January 2021, building on the payments on account deferral in July 2020.

Taxpayers with up to £30,000 in self-assessment liabilities due in January 2021 will be able to use HMRC’s time-to-pay facility to pay over an extra 12 months.

In practice, those who deferred their payments on account in July 2020 will not need to settle their bill in full until on or before 31 January 2022.

 

  • Loans extension for struggling firms

The Chancellor has now confirmed that new applications for four existing business loan schemes have been extended to the end of January 2021. These include:

  • CBILS
  • Coronavirus large business interruption loan scheme
  • Bounce-back loans (BBL)
  • The future fund

The Chancellor has also increased the repayment terms of BBLs and the CBILS by offering the choice of extending the repayments from six to ten years, sharply reducing monthly instalments for around 1.6m UK businesses.

 

  • Hospitality & tourism VAT rate

On 8 July 2020, the Government cut the standard rate of VAT for businesses operating in the hospitality and tourism sectors from 20% to 5%, initially from 15 July 2020 until 12 January 2021.

This temporary reduction for the businesses severely affected by forced closures and social distancing measures due to the coronavirus has been extended until 31 March 2021.

This applies to the same organisations that make supplies of hospitality, hotel and holiday accommodation and admission to certain attractions, and their advisers.

“Maintaining the 5% VAT rate for hard-hit sectors promises to shore-up demand for firms that are especially struggling,” said Mike Cherry, chairman at the Federation of Small Businesses. “Extending the deadline for deferrals of VAT bills will also help avoid a cliff-edge in the future.”

 

  • Option to split deferred VAT bills

Businesses that deferred their VAT payments between 20 March and 30 June 2020 will no longer have to pay a lump sum on or before 31 March 2021.

Instead, the Government is offering the option to split this repayment into smaller, interest-free payments over the course of 11 months – potentially benefiting up to 500,000 firms.

 

  • Support for Mortgage Borrowers

Mortgage payment holidays are being extended for homeowners financially affected by the COVID-19 pandemic.

The Financial Conduct Authority (FCA) is proposing to extend the availability of payment deferrals for borrowers who are experiencing financial difficulties due to the pandemic. Under the new proposals, those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total.

Those who currently have an initial payment deferral will be eligible for another payment deferral of up to three months.

The FCA also revealed those who have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to three months. Under the new rules, borrowers would have until 31 January 2021 to request a payment deferral from their mortgage provider.

 

  • How will the UK pay for this?

Chancellor Rishi Sunak will deliver a one-year Spending Review in November, the Treasury has announced (date to be announced).

The Treasury abandoned plans for its long-term comprehensive spending review, amid ongoing economic uncertainty caused by COVID-19.

This spending review will aim to provide departments with “the certainty they need” to tackle the coronavirus outbreak, while further supporting jobs in 2021/22.

 

In this year of uncertainty your business will be facing some unique challenges.  With so many changes to taxation and grants and with other measures having been introduced, it can be confusing to keep on top of your entitlements and indeed, obligations. 

Please do get in touch if you would like to receive some guidance or advice that is specific to your business and your circumstances.

Lambert Chapman Chartered Accountants

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