Job Support Scheme
The government has announced a number of changes to the Job Support Scheme first announced last month. This scheme replaces the widely used Coronavirus Job Retention Scheme (CJRS).
The scheme will run for six months from 1 November 2020 and this increased support for employers will be reviewed in the new year.
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme (CJRS).
Employees must be on an employer’s PAYE payroll between 6 April 2019 to 23:59 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
Employers will be able to make a claim online through Gov.uk from 8 December 2020. They will be paid on a monthly basis.
Applicable to businesses whose premises 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. The grant per eligible employee available from the UK Government is two-thirds of their normal pay up to a limit of £2100 per month.
The scheme is designed to protect jobs in businesses who can operate safely but are facing lower demand over the winter months due to Covid-19. The Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125. This will ensure employees earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed the reference salary. The employee will have to work a minimum of 20% of their normal hours.
Andrew normally works 5 days a week and earns £1,4001 a month, working in a restaurant in the hospitality sector. His company is suffering reduced sales due to coronavirus. Rather than making Andrew redundant, the company puts Andrew on the Job Support Scheme, working 20% of his usual hours.
- His employer pays Andrew £280 a month for these hours.
- And for the time he is not working (80%), he will get 66.67% of his pay for that time. His total wage package is 73%, equal to £1,027.
- The Government will give a grant worth £691 (61.67% of hours not worked) to Andrew’s employer to support them in keeping Andrew’s job, and his employer will pay a further £56 for hours not worked (5% of wages).
- In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56).
- His employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover 94.6% of the employer’s total costs for retaining Andrew on the JSS between November and January.
Local Restrictions Support Grant
The government is providing additional funding to allow local authorities to support businesses in Tier 2 areas which are not legally closed, but which are severely impacted by the restrictions on socialising. The funding local authorities will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area, and will assume that these businesses receive grants equivalent to 70% of the grants for which legally closed businesses are eligible. Businesses that have been forced to close in Tier 3 areas will be able to claim up to £3,000 per month.
|Rateable Value||Tier 2 Restrictions||Tier 3 Restrictions|
|£15k or under||Grant of £934 per month||Grant of £1,334 per month|
|Between £15k and £51k||Grant of £1,400 per month||Grant of £2,000 per month|
|£51k or more||Grant of £2,100 per month||Grant of £3,000 per month|
This scheme will initially run until April, with a review point in January.
Grants will be administered by Local Authorities, and businesses are likely to need to apply to their local authority for support. It is up to local authorities to determine the payment schedule and timings for these grants. Some areas have been subject to restrictions on socialising for several months, before the tiering system was introduced. Funding for these areas will be backdated until the point at which these restrictions began.
Self Employed Income Support Scheme
The government will provide two taxable SEISS grants to support those experiencing reduced demand due to COVID-19 but are continuing to trade, or temporarily cannot trade.
It will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.
Grants will be paid in two lump sum instalments each covering 3 months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The government will pay a taxable grant which is calculated based on 40% of three months’ average trading profits, paid out in a single instalment and capped at £3,750.
The second grant will cover a three-month period from the start of February until the end of April 2021. The government will review the level of the second grant and set this in due course.
Joint Property Income
The share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed.
However, where the joint owners are husband and wife, or civil partners, profits and losses are treated as arising to them in equal shares unless:
- both entitlement to the income and the property are in unequal shares, and
- both spouses, or civil partners, must inform HMRC that their share of profits and losses is to match the share each holds in the property.
VAT Reverse Charge for the Construction Industry
You must use the reverse charge from 1 March 2021, if you’re VAT registered in the UK, supply building and construction industry services and:
- your customer is registered for VAT in the UK
- payment for the supply is reported within the Construction Industry Scheme (CIS)
- the services you supply are standard or reduced rated
- you’re not an employment business supplying either staff or workers, or both
- your customer has not given written confirmation that they are an end user or intermediary supplier
End users are businesses, or groups of businesses, that are VAT and Construction Industry Scheme registered but do not make onward supplies of the building and construction services supplied to them. Intermediary suppliers are VAT and Construction Industry Scheme registered businesses that are connected or linked to end users.
VAT is due when a VAT invoice is issued, or payment is received, whichever is earlier.
For invoices issued for specified supplies that become liable to the reverse charge, the VAT treatment for invoices with a tax point:
- before 1 March 2021 – the normal VAT rules will apply and you should charge VAT at the appropriate rate on your supplies
- on or after 1 March 2021 – the domestic reverse charge will apply
Suppliers must not enter any output tax on sales under the reverse charge. The supplier only needs to enter the net value of the sale.
If you buy services subject to the reverse charge, you must enter the VAT charged as output tax on your VAT return. Make sure you do not enter the net value of the purchase as a net sale.
You may reclaim the input tax on your reverse charge purchases, subject to the normal VAT rules.
High Income Child Benefit Charge
You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either:
- you or your partner get Child Benefit
- someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep
It does not matter if the child living with you is not your own child.
If your partner’s income is also over £50,000 but yours is higher, you’re responsible for paying the tax charge.
‘Partner’ means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.
You need to fill in a Self Assessment tax return each tax year and pay what you owe.
If you do not usually send a tax return, you need to register by 5 October following the tax year you need to pay the tax charge.