What Does the Winter Rescue Plan Mean for Businesses?
Rishi Sunak has announced five positive measures that will protect companies and self-employed workers. We’ve rounded them up and provided a quick explanation of how they can benefit your clients, as well as a few other tips for keeping businesses running smoothly.
Job Support Scheme
Starting on 1st November, the Job Support Scheme will allow employees to work one-third of their contracted hours, with the employer and the government each paying 22% towards the unworked hours. This way, the employee can earn 77% of their normal wages despite only working 33% of their usual hours. The JSS is expected to run for six months and employers can also claim the Job Retention Bonus if they’re eligible.
What this means: The furlough scheme helped countless employers to retain staff and avoid making redundancies. The JSS will continue this approach over the coming months.
Self-Employment Income Support Scheme
Self-employed workers that were eligible for the first and second SEISS grants will soon be able to apply for the third round. The extension is for individuals who are still trading, but working at reduced capacity due to lower demand for their services as a direct result of coronavirus.
This grant will cover 20% of an individual’s average monthly profits between November and January, capped at £1,875 in total.
What this means: The self-employed have been having an especially hard time during the coronavirus pandemic, so the extension of SEISS will allow them to continue providing their services whilst receiving crucial financial support.
Both the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) are being extended from their initial six years to a full decade.
Businesses can still apply for both of these schemes until 30th November 2020, which offer a flexible repayment scheme, interest-only periods and payment holidays.
The BBLS will soon be renamed Pay as You Grow, moving the focus to helping businesses to continue developing and expanding their customer base until 2030.
What this means: Employers can continue to access financial support from the government, which can be used to enhance the business and prevent avoidable measures such as redundancies, the reduction of services and foreclosure on commercial premises.
Self-Assessment Tax and VAT Deferral
If a business has already deferred its quarterly VAT repayments, the initial arrangement was that they had to be paid by 21st March 2021. This has now been changed so that repayment can be spread over eleven months during the 2021/2022 tax period.
Meanwhile, individuals who submit self-assessment tax returns and deferred their payments to 31st January 2021 can now pay in instalments over the course of twelve months, ending in January 2022.
What this means: Giving businesses and the self-employed additional breathing room enables them to protect their cash flow and profit margins more effectively.
VAT Cut for Hospitality Industry
The current reduction of VAT to 5% for businesses within the hospitality industry (e.g. pubs, restaurants and hotels) will run until the end of March 2021 rather than ending on 13th January.
What this means: Despite reduced opening hours and stricter safety measures, hospitality venues can compensate for some loss of capital by keeping the VAT savings for themselves.
Additional Tips for Businesses
As an accountant, you can help your clients to remain compliant and productive by reminding them of other ways to protect their daily operations. Prime examples include:
- Encouraging business owners and their staff to download the new NHS Covid-19 app, which uses Bluetooth Low Energy technology to detect when the device is near another with the app installed. The user can then see the risk level of where they currently are, as well as use the venue check-in feature and access the latest advice.
- The Health and Safety Executive is encouraging employers to ensure that every workspace has access to a fresh air source, as this significantly reduces the risk of the virus spreading.
- As remote working receives renewed focus, businesses can ensure continued productivity through video conferencing apps, business communication platforms like Slack, and cloud accounting software such as Xero and QuickBooks, which XL KPO Services specializes in providing for our clients.
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