Further to Rishi Sunak’s announcements yesterday please see a summary of the measures proposed. As before, devil will be in the detail, most of which we are still waiting on, but we will do our best to pass on. As before, we will of course do our best to support you and answer any questions you do have, however I would ask for those of you who use our payroll services, please continue to pass us information / questions in plenty of time as we are experiencing pressure in that department as you can hopefully appreciate.

Job Support Scheme (Furlough replacement, but not furlough!)

Rishi Sunak announced the six-month Jobs Support Scheme to follow on from the coronavirus furlough scheme and begins on November 1. Employees must work at least one third of their normal hours and be paid as normal. The government will then top up, covering one-third of pay lost by reducing hours, the business owner will cover another third and the employee will take a 33 per cent pay cut. The level of government grant will be calculated based on an employee’s usual salary, capped at £697.92 per month. Only full-time staff will be eligible for the Jobs Support Scheme. The Jobs Support Scheme is designed to support full-time staff where there is not enough demand to justify them working a five-day week. Mr Sunak told MPs he would strike the finely judged balance between managing the virus and protecting “the jobs and livelihoods” of people across the country. The chancellor previously made clear he did not want to extend the £39bn furlough scheme to keep people in so-called “zombie jobs” that no longer really exist.

More on part-time workers here

Pay As You Grow

The chancellor also announced that Bounce Back Loans will be rebranded as Pay As You Grow loans, extending loans from six to 10 years, nearly halving monthly repayments. Struggling businesses need only pay interest and payments could be suspended for up to six months without affecting their credit rating. And applications for all four coronavirus support schemes will be extended to the end of November. The four loan schemes have already backed £59bn in lending to companies through government guarantees.

VAT cut extended to March

Up to 500,000 business that deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

The chancellor also announced that the VAT cut for the hospitality and tourism industry to 5 per cent, due to expire in January, has been extended until March 31

Self-employed Income Support Scheme extended

The chancellor has also extended the Self-employed Income Support Scheme (SEISS) again, providing a taxable grant to those already eligible for the scheme. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January 2021. This is worth 20 per cent of average monthly profits, up to a total of £1,875. A further grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

By Simon Jilks FCCA
Director, Ivybridge Accountants