Spring Budget 2020

“Getting it done” was the constant refrain of Chancellor Rishi Sunak during his first Budget, delivered on 11 March 2020. An ironic phrase given this budget was originally scheduled for November 2019. The original Budget being delayed by the election. Of course, that original Budget was due to have been delivered by Sajid Javid who resigned from Government just four weeks ago.


Here are some of the key points from our detailed newsletter.

f
TAGS
H

Winter Economy Plan

Rishi Sunak announced his Winter Recovery Plan on 24 September 2020.

This package of measures is designed to limit the impact of the current pandemic on the UK economy.

Below we have set out the various measures. Do not hesitate to contact us if you need help with any of these measures.

Job Support Scheme

The current Furlough scheme for employers to use to assist with paying employees comes to an end on 31 October 2020. To try and assist businesses that cannot get their staff back to work fully, the chancellor has designed the Job Support Scheme. The government want to try and keep people in work rather than them being made redundant and then becoming a burden on the state.

The scheme only supports viable jobs so the employee must be working at least one third of their usual hours. If at least one third of the usual hours are worked, the government will match one third of the employees usual wage subject to a cap of £697.92 per month with the employer also matching one third of the usual wage.

Employers National Insurance and pension contributions will remain payable in full by the employer.

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

The scheme is open to all employees on a company payroll reported to HMRC on or before 23 September 2020.  Employees who qualify will receive a minimum of 77% of their usual wage as a result of the scheme. 

Employers will be funding a minimum of 55% of wage costs plus all of Employers NIC and pension contributions.

Further more specific details will be published by the Government shortly.  

This scheme is open to all employers not just those that have previously used Furlough.

The scheme runs from 1 November 2020 until 30 April 2021.

Self employed Grant

Those taxpayers that are self employed are going to get a similar grant to the two previously announced in line with the Job Support Scheme above. This is less generous than the previous schemes because it is only for 20% of usual income up to a maximum of £1,875.
The scheme runs from 1 November 2020 to 28 February 2021.

As with the previous schemes self employed individuals have to claim this when the portal opens and demonstrate they have been adversely impacted by Covid-19

Cash Flow Support to loan schemes

In March and July the chancellor announced government backed loans known as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan (BBL).

Many businesses have taken advantage of these loans which give interest free periods and government backing to some or all of the loan. If you have a cash flow issue and are eligible and have not applied yet we do suggest you approach your bank to see what is available.

The good news is that the terms of the loan and the government backing have increased today, as follows:

Bounce Back Loans

These were initially for a 6 year period - one year interest free (covered by government) and 5 years at 2.5% with capital repaid. What has changed to today is:

  • Loan term extension up to 10 years, from 6.
  • Companies can elect to switch to interest only and repay all of the capital at the end.
  • These changes will not impact the credit scores of companies.

Coronavirus Business Interruption Loan Scheme

These loans were initially for 6 years with an 80% government guarantee to the bank. This guarantee is now extended to 10 years.

For both BBL and CBILS the loan application deadline has been extended to 30 November 2020, from 31 October 2020 so there is still time to apply.

Tax Payment deferrals

There were two further tax payment deferrals announced.

VAT

VAT registered businesses were able to defer paying their VAT liabilities that were due between 20 March 2020 and 30 June 2020. This deferred amount was to be paid on 31 March 2021. What was announced today was a scheme that enables those businesses to pay this deferred amount over 11 smaller interest-free payments during the 2021-22 financial year rather than in one lump on 31 March 2021.

Self Assessment

The government have already allowed all personal tax payers to defer the 2nd payment on account for the 2019/2020 tax year, due on 31 July 2020 to 31 January 2021. Today they went further and announced a new “Time to Pay” self-service facility, meaning payments due in January 2021, will now not need to be paid until January 2022.

Both of these measures should have significant positive impacts on the cash flow of businesses and individuals.

VAT cut extension for Hospitality and Tourism sectors

Back in July the chancellor announced a VAT cut for the Hospitality and Tourism sectors from 20% to 5%. this was designed to run out on 12 January 2021. However the cut will continue until 31 March 2021 to try and support those businesses in one of the hardest hit sectors.

The usual Autumn Budget has been postponed. Presumably this move is because the Government have no fix on how much these schemes are going to cost and the impact on public finances. One thing we can be sure of is that there will inevitably be tax rises in the future to pay for the level of support given by the Government.



 

This product has been added to your cart

CHECKOUT