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Mel’s COVID-19 Update: 28th October 2020
Plan for Jobs: Chancellor Increased Financial Support for Businesses and Workers
The government announced on the 22nd October that they will increase the amounts and reach of its winter support schemes.
In recognition of the challenging times ahead, the Chancellor said he would be increasing support through the existing Job Support and self-employed schemes and expanding business grants to support companies in high-alert level areas.
H M Treasury states that open businesses which are experiencing difficulty will be given extra help to keep staff on as the Government will increase contributions to wage costs under the Job Support Scheme, and business contributions drop to 5%.
Business grants are expanded to cover businesses in particularly affected sectors in high-alert level areas.
Grants for the self-employed doubled to 40% of previous earnings.
Job Support Scheme (JSS)
When originally announced, the JSS – which starts on 1 November, saw employers paying a third of their employees’ wages for hours not worked and required employees to be working 33% of their normal hours.
The announcement on the 22nd October reduces the employer contribution to those unworked hours to 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer £44.
The announcement on the 22nd October increases the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750.
The Chancellor also announced their approval for additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas.
These grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.
These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who are not legally required to close but have been adversely affected by local restrictions.
The Latest Indicators for the UK Economy and Society
The Office for National Statistics has announced its latest experimental data on the economy which shows nearly half (48%) of currently trading businesses reported that their turnover had decreased below what is normally expected for this time of year. This is not a surprise given the Pandemic.
So, if you are running a business and turnover is down, what should you be doing to ensure resilience?
Clearly we are living in tough times and it makes sense to take advantage of Government supports both directly such as the job retention and new support schemes, deferring tax and using bounce back loans. There are also grants available to help firms with Brexit changes for import and export administration.
We have helped many businesses apply and claim these supports and if you need any assistance please contact us.
Business planning for the unknown can be very difficult but there are some practical steps you can take to minimise potential disruption to your business:
- Review your Budgets and set realistic and achievable targets for the remainder of 2020 and into the early part of 2021.
- Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
- Use ‘bottom up’ budgeting where everyone in the business gives input on areas over which they have control – target a 10% cost saving.
- Review and flow chart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
- Encourage team members to suggest ways to streamline and simplify processes (e.g. sit down and brainstorm about efficiencies and cost reduction).
- Put extra effort into making sure your relationships with your customers are solid.
- Review your list of products and services and eliminate those that are unprofitable or not core products/services.
- Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
- Agree extended payment terms with all suppliers in advance.
- Pull everyone together and explain the business strategy and get their buy-in.
Please talk to us about cash flow planning for the next six months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.
Latest News on Government Supports
Self-Employment Income Support Scheme (SEISS)
The service is now closed for the Self-Employment Income Support Scheme and you can no longer make a claim for the second grant.
There is a new online service to check the status of SEISS payments. Use this if you think the grant amount is too low or HMRC have asked you to update your details for your claim.
Defer your Self- Assessment payment on account due to coronavirus (COVID-19)
This webpage allows you to check what you need to do after 31 July 2020 if you choose to defer your second payment on account for the 2019 to 2020 tax year.
You had the option to defer your second payment on account if you were:
- Registered in the UK for Self-Assessment and
- Finding it difficult to make that payment by 31 July 2020 due to the impact of coronavirus
You can still pay your deferred July 2020 payment on account any time up to 31 January 2021. There will be no interest or penalty as long as you pay in full by that date.
Job Retention and Bonus Schemes
The Treasury has published its Direction in relation to the Coronavirus Job Retention Scheme and Job Retention Bonus Scheme. This is the first step in the Treasury instructing HMRC to be responsible for the payment and management of these schemes. We will issue further guidance to our clients once the details are known. The Job Retention Scheme will apply from 1 November and if your business intends to apply for this support, please contact us and we can estimate your claim in advance and help you make the claim to HMRC.
These 14 guides cover a range of different types of work. Many businesses operate more than one type of workplace, such as an office, factory and fleet of vehicles. You may need to use more than one of these guides as you think through what you need to do to keep people safe. Priority actions are outlined at the top of each guide. The latest changes are guides for Performing Arts – updated guidance on thinking about risk (section 1) and managing performances (section 3).
This document sets out guidance for apprentices, employers, training providers and assessment organisations in response to the impact of coronavirus (COVID-19). This has been updated to contain guidance for “Local outbreaks”.
The Job Support Scheme Starts 1 November
The Job Support Scheme (JSS) provides different types of support to these businesses so they can get the assistance according to their situation. Businesses that are open but facing decreased demand can get support for wages through “JSS Open”. Those businesses that are legally required to close their premises as a result of coronavirus restrictions set by one or more of the four governments of the UK, can get the support through “JSS Closed”.
The JSS starts on the 1 November 2020 and runs for 6 months, until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved. Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
From 8 December, employers will be able to claim salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May.
Further guidance on the steps that employers need to take to calculate and make a claim to the Job Support Scheme will be published by the end of October. We will update you when the information is made available.
How will the JSS scheme work and who is eligible?
An employer can claim the JSS Open and JSS Closed grant at the same time for different employees, however, an employer cannot claim for a single employee under both schemes at the same time.
Employers will be able to access the Job Support Scheme if they have enrolled for PAYE online and they have a UK, Channel Island or Isle of Man bank account.
Additional eligibility criteria will apply depending on whether the employer is claiming a JSS Open grant or JSS Closed grant.
Eligible employers will be able to claim the Job Support Scheme grant for employees who were on their PAYE payroll between 6 April 2019 and 23 September 2020.
Employers facing decreased demand (JSS Open)
For businesses facing reduced demand the JSS Open scheme will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.
The government has announced that it will increase the scale of support available to employers through JSS Open above what was initially announced, in order to protect more jobs.
The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked - this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
Employers who are legally required to close their premises (JSS Closed)
Employers who have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK are eligible for JSS Closed.
This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/or drink outdoors.
Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.
Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place. Employers will not be able to claim JSS Closed to cover periods after restrictions have lifted and the business premises are legally allowed to reopen. They may then be able to claim JSS Open if they are eligible.
Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.
Eligible employers will be able to claim the JSS Closed grant for employees:
- Whose primary workplace is at the premises that have been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK
- That the employer has instructed to and who cease work for a minimum period of at least 7 consecutive calendar days
Support for the Self-employed has been Extended
The Government has announced more support will be available for the self-employed in the form of two grants, each available for three-month periods covering November 2020 to January 2021 and February 2021 to April 2021.
To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:
- Have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
- Declare that they intend to continue to trade and either:
- Are currently actively trading but are impacted by reduced demand due to coronavirus
- Were previously trading but are temporarily unable to do so due to coronavirus
The first grant will cover a three-month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant covering 40% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £3,750 in total.
The second grant will cover a three-month period from 1 February 2021 until 30 April 2021. The Government will review the level of the second grant and set this in due course.
The grants are taxable income and also subject to National Insurance contributions.
HMRC will provide full details about claiming and applications in due course and we will update you when the guidance is available.
During COVID-19 I want to ensure that everyone is as up to date as possible with regards to Government changes and support that impacts businesses. Please note that this update is correct as of the date of sending (28th October 2020).