Posted on 6 November 2020
It’s another day and another version of the Chancellor’s Winter Economy Plan has been announced. This is the fourth iteration of the plan so far.
The packages announced coincide with the start of the second national lockdown and are designed to address some of the problems that the new restrictions will place on individuals and businesses. Changes have been made to the Coronavirus Jobs Retention Scheme (CJRS) the Job Retention Bonus (JRB) the Self Employment Income Support Scheme (SEISS) and some assistance has been given to businesses in England that are forced to close due to the new tighter restrictions.
Coronavirus Jobs Retention Scheme
The CJRS has been extended. Originally it was due to cease at the end of October 2020. It was then extended until 2 December 2020 but now it has been further extended until 31 March 2021.
The extended scheme will enable employers to furlough employees full-time or to use the scheme for any amount of time or shift pattern. Importantly, there will be no requirement for employers to contribute to wages paid for hours not worked (unlike the Job Support Scheme). The employer will, however, have to pay the national insurance and employer pension contributions for unworked hours.
In terms of its operation, the extended scheme will work in the same way as the “old” CJRS and claims can be made from Wednesday, 11 November 2020. Any claims for November must be submitted no later than 14 December 2020 and subsequent claims have to be submitted within 14 days from the end of the month which is the subject of the claim.
For an employee to be eligible, he or she must have been on the payroll at 30 October 2020 and the employer must have made a PAYE submission to HMRC between 20 March 2020 and 30 October 2020 showing earnings paid to the employee.
Some employees who had been furloughed up to 31 October 2020 were made redundant when the scheme originally came to an end. Under the extended scheme those employees can be re-employed and claimed for under the CJRS. To qualify the employee must have been on the payroll on 23 September 2020 and the employer must also have made PAYE submissions from 20 March 2020 to 23 September 2020 notifying payment of earnings to those employees.
Job Retention Bonus
Because the CJRS is being extended to the end of March, the JRB which would have been paid in February has now been scrapped. There is a commitment from the Chancellor to provide another job retention incentive “at the appropriate time”.
Self Employed Income Support Scheme
The third grant under the SEISS, covering the period from November 2022 January 2021 has now been increased to 80% of trading profits. This is the third time the percentage has been increased. Many will recall that originally the grant covered only 20% of trading profits.
It is very important to be aware that to be eligible for the third grant the claimant must declare that the self-employed business has been impacted by reduced demand due to coronavirus restrictions. For the previous two grants the business had to have been adversely affected by restrictions in any way. For the third grant there must actually have been reduced demand, so self-employed individuals will not be able to claim the third grant on the basis that they were not able to work because they were forced to self-isolate.
The opportunity to claim the grant has been brought forward by two weeks and claims can be made from 30 November 2020.
A fourth grant covering February to April 2021 will be made but further details are yet to be published and at this stage the percentage of profits for the fourth grant is not yet known.
Financial assistance for businesses in England
English businesses which are forced to close because of either the new national or local restrictions will be eligible for a payment capped at £3,000 a month. The government’s press release indicates that the intention is to enable closed businesses in the retail, hospitality and leisure industries to be able to pay their rent.
Friend Partnership will update you with more detailed information as and when it becomes available but if you have any questions or require any further information in the meantime please contact David Gillies, our Tax Partner on 0121 633 2000 or by email to email@example.com