The Chancellor had a difficult task in this Spring Budget: to indicate how he might balance the Government’s books in the future, while still having to pay out huge sums to support the economy.
He said that he would continue to provide ‘whatever it takes’ to protect businesses and jobs during the present crisis, while being honest about the need to ‘fix the public finances’ and setting out his plans to build the future economy.
Extension to the Coronavirus Job Retention Scheme (CJRS)
For periods from May 1st 2021 onwards, you will be able to claim for eligible employees who were on your PAYE payroll on March 2nd 2021. This means you must have made a PAYE Real Time Information (RTI) submission between March 20th 2020 and March 2nd 2021, notifying HMRC of earnings for that employee.
The government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
You will need to continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. This means, for periods between July and September, you will need to fund the difference between this and the CJRS grants yourself. You can also top up wages above the 80% if you wish, but you are not required to do so.
You must continue to pay Employer National Insurance contributions and pension contributions on subsidised furlough pay from your own funds.
Self-employed people with profits up to £50,000 have been able to claim grants under the Self-Employed Income Support Scheme (SEISS). There have so far been three grants under the SEISS, each covering three months; two amounted to 80% and one amounted to 70% of average monthly profits up
to limits of £2,500 and £2,187.50 respectively per month.
A fourth grant, covering February to April 2021, will be claimable from late April at 80% of three months’ average profits capped at £7,500 in total. Claimants must have filed a 2019/20 tax return to be eligible for this grant.
People who began self-employment in 2019/20, who did not have a record of earnings, could not claim the first three grants, but may be able to claim the fourth grant if they have filed a 2019/20 return by midnight on March 2nd 2021.
A fifth grant, covering the period from May to September 2021, can be claimed from late July. This will be targeted at those who need it most as the economy reopens.
Those whose turnover has fallen by 30% or more will be eligible for the full grant, which will be 80% of three months’ average profits capped at £7,500. The fact that the grant covers a five-month period appears to allow for the likelihood that the business will be reopening in that time. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. Further details will be published in due course.
The Budget confirms that SEISS grants will be treated as taxable income of the business in the tax year in which they are received.
VAT deferral – apply now to spread your payments
The VAT deferral new payment scheme is open for all businesses who deferred VAT due between March 20th and June 30th 2020 and still have payments to make, or who are unable to pay in full by March 31st 2021. This includes those on Payment on Account and Annual Accounting schemes.
Apply now to spread these payments over a number of months – the later you join the fewer instalments are available to you. Join from March 19th 2021 to benefit from the maximum number of 11 instalments.
You can join the scheme online without the need to call HMRC. To find out more information, including the things you need to do before joining, go to GOV.UK and search ‘VAT deferral’.
Loans and grants
There have been several Government-backed loan schemes to support businesses through the pandemic. Some of these are coming to an end on March 31st 2021. However, the Chancellor announced a new ‘Recovery Loan Scheme’.
This will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. This will be open to all businesses from April 6th 2021. This includes those who have already received support under the existing COVID-19 loan schemes.
For further advice on helping you make the most of the support available, please get in touch with a member of our friendly team of tax and business advisers.
Please visit www.carpenterbox.com or call David on 01903 234094.