Chancellor Rishi Sunak’s Summer Economic Statement – Summary

 

Chancellor Rishi Sunak delivered his Summer Economic Update speech to the House of Commons today, Wednesday 8th July 2020. The key aspect of his speech was to “Protect, Support and Create” jobs. 

The main points discussed in his second stage recovery plan have been summarised below:-

 

Step 1 – Supporting Jobs

Furlough/ job retention scheme – the furlough scheme will continue to wind down gradually, protecting jobs until October 2020, as originally planned.

 

Job Retention Bonus

  • Any employer who brings an employee back off furlough, and keeps them in a job until the end of January, will get a £1,000 bonus.
  • This £1,000 bonus can be claimed for each employee brought back full time from furlough.
  • To get the bonus, firms must pay at least £520 each month from November to the end of January.

 

Kick Start Scheme

  • This fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.
  • The government will cover 100% of the costs for a minimum 25-hour week at national minimum wage, with a maximum grant of £6,500 per new recruit.
  • National Minimum Wage is as follows:

        – £4.55 for under 18s,

        – £6.45 for 18 to 20-year-olds, and

        – £8.20 for 21 to 24-year-olds.

  • Employers will be able to top up that payment if they wish.
  • These roles that are opening to young people must include quality training and various opportunities to build their skills in the workplace.
  • This scheme will open for applications in August and there is currently no cap on the number of places funded.

 

Apprenticeships

  • For the next six months the government are going to pay employers to create and offer new apprenticeships.
  • Employers can receive £2,000 per apprentice between the ages 16 and 24
  • Employers can receive £1,500 per apprentice ages 25+
  • This money will be in addition to the existing £1,000 payment the Government already provides for new 16 to 18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.

 

Step 2 – Job creation

Announcement today is for England only and the plan will create tens of thousands of jobs through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects with a focus on energy-saving improvements to go green.

Funds are to be made available to Northern Ireland and more specific detail will be announced by the Northern Ireland Executive in the coming weeks.

 

Step 3 – Protect jobs

The chancellor has announced two measures to protect jobs with particular focus put on the worst hit sector, the Hospitality & Tourism sector:

 

1st measure

  • VAT for hospitality and tourism related activities will be cut to 5% as opposed to the current 20% and this will apply to food, accommodation and attractions for the next 6 months.
  • Starting Wednesday 15th July 2020 and ending 31st January 2021.
  • This temporary VAT cut for the hospitality sector does not include alcoholic drinks.

 

2nd measure

  • For the month of August 2020 everyone will receive an “Eat Out to Help Out” discount of 50% on all sit-down meals purchased from participating restaurants, bars, pubs or cafes between Monday to Wednesday;
  • Cap at £10 per head, including children.
  • As a customer you do not need to do anything to claim your discount from the participating businesses, it will be automatically applied to your meal so long as the venue has signed up to the Government’s scheme.
  • The discount can be used “unlimited times” on eligible days when dining in but will only include non-alcoholic drinks.
  • Businesses will need to register, and can do so through a simple website which is open from Monday 13th July 2020. Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.

 

Stamp Duty

Property transactions fell by 50% in the last few months, therefore to increase this market again:

  • The government has increased the 0% stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland.
  • People buying second homes and buy-to-let properties will also benefit, but will still have to pay the extra duty at 3% that is due on the entire price.
  • The average stamp duty bill will fall by £4,500 and nearly nine out of 10 people buying a main home this year, will pay no stamp duty at all.
  • This takes effect from today until 31st March 2021.

 

Other

Employers will not have to pay any tax on coronavirus swab tests provided for their staff.

 

 

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Covid-19 General Update

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Updated 10th July 2020

1. Defer your Self Assessment Payment on Account

You have the option to defer your second payment on account if you are:

  • registered in the UK for Self Assessment
  • and finding it difficult to make your second payment on account by 31st July 2020 due to the impact of coronavirus.

You can still make the payment by 31 July 2020 as normal if you’re able to do so.

HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it’s paid on or before 31 January 2021.

The usual interest, penalties and collection procedures will apply to missed payments after 31st January 2021.

You will still need to submit your Self Assessment tax return to HMRC on time.

If you Choose to Defer your Payment on Account (POA)

Choosing to defer your POA will not stop you from being entitled to other coronavirus support that HMRC provides.

You also do not need to tell HMRC that you’re deferring your payment on account as this will automatically be applied if you do not pay what is owed before 31st July 2020.

You must make your second payment on account on or before 31 January 2021 if you choose to defer. Other payments you may have to make by this date include any:

  • balancing payment due for the 2019 to 2020 tax year
  • first payment on account due for the 2020 to 2021 tax year

You can check payments you need to make towards your next tax bill by signing in to your online account.

There are many options open to you in terms of paying your Self Assessment Payment on Account.

  • Payment in Full – You can pay your second payment on account bill in full any time between 31 July 2020 and 31 January 2021 using the online service.
  • Payment in Installments – You need to contact HMRC if you already have overdue tax which you’re paying through a Time to Pay instalment arrangement and want to include your second payment on account in that arrangement.If you do not have other overdue taxes, you can make your payment in instalments any time between now and 31 January 2021 by setting up a budget payment plan.
  • Payments by Direct Debit – If you choose to defer and normally make your payments on account by Direct Debit, you should cancel your Direct Debit through your bank as soon as possible so that HMRC will not automatically collect any payment due. You can cancel online if you’re registered for online banking.

 

2. VAT

If you’re a UK VAT-registered business that deferred VAT payments between 20 March 2020 and 30 June 2020, you now need to:

  • Set-up cancelled Direct Debits in enough time for HMRC to take payment
  • Continue to submit VAT returns as normal, and on time
  • Pay the VAT in full on payments due after 30 June

Any VAT payments you have deferred between 20 March and 30 June should be paid in full on or before 31 March 2021.

 

3. SEISS – Deadline for Claiming the 1st Grant is 13th July

The 2nd and final grant is available from August for businesses who have been adversely affected on or after 14th July 2020.

Click Here for More Information on the 2nd  and Final SEISS Grant.

 

4. Summer Economic Update
 
The Chancellor of the Exchequer, Rishi Sunak, delivered his “Summer Economic Update” on Wednesday 8th July 2020. 

Throughout his statement, Chancellor Sunak announced various new schemes to help stabilise the UK economy as we all begin to slowly creep out of COVID-19’s shadow.

Please Click Here for a Summary on his Statement

 

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Abac is Re-opening and is Ready for Business!

 

We are pleased to announce our office is re-opening on Monday 20th July 2020.

Due to the on-going Covid-19 pandemic we have implemented a number of social distancing measures to ensure we keep our team and clients as safe as possible.
 
Some of our staff are working remotely and where possible we are encouraging clients to contact us via telephone, email and have online meetings with us via Zoom.
 
Arrival to the office, for any reason, will be strictly by appointment only, during the hours of:
  
9am – 5pm          Monday – Thursday
 
9am – 1pm          Fridays
 
If you would like to make an appointment or to speak to a member of our team, please contact our office on:

028 8224 7222.
 
As always, we will continue to monitor the situation and will follow the latest government advice.
 
We’d like to thank you for your co-operation and continued support during these extraordinary times.
 
 

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Self-Employment Income Support Scheme 2nd Claim – Update

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As we advised on 1 June the Self-Employment Income Support Scheme is being extended but more details have now been released and there is an unwelcome element therein. In order to claim for the second and final grant your business has to have been adversely affected on or after 14 July 2020.

You can still claim for the second grant even if you did not make a claim for the first grant and you will still be able to make a claim in August 2020.

This grant will still be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,750 in total. (The last grant if you were eligible was for 80% rather than 70% so the amount you will receive this time will be 87.5% of what you claimed the last time).

HMRC will work out your eligibility the same way as the first grant. If you make a claim for the second grant, you will have to confirm that your business has been adversely affected on or after 14 July 2020 and HMRC have provided the examples below.

Check Your Eligibility for the Second SEISS Grant Here.

To check your eligibility you will need:

  • Your UTR Number 
  • Your National Insurance Number
  • Details to the government gateway account used to make your 1st SEISS grant claim.

 

Adversely Affected Examples:

 
 

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Furlough Scheme Update

 

Changes to CJRS from 1 July 2020

* The Coronavirus Job Retention Scheme will close on 31 October 2020.

* From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.

Changes to amounts HMRC are going to pay

* For June and July, the amount of furlough HMRC will pay remains the same, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.

* For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.

* For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages by 10% to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

* For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages by 20% to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed

Changed to minimum furlough periods

Up to 30th June 2020

* Until 1 July 2020, any employees you place on furlough must be furloughed for a minimum of 3 consecutive weeks. When they return to work, they must be taken off furlough. 

* Employees can be furloughed more than once, but they must be furloughed for a minimum of 3 consecutive weeks each time they are furloughed.

From 1 July 2020

* From 1 July, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

* Where a previously furloughed employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July.

* Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days.

Other Changes re making your claims

* There is no maximum length for claim periods that end on or before 30 June. However, claims for any periods starting before 1 July must end on or before 30 June. This is the case even where an employee furloughed in June continues to be furloughed full time in July. 

* Separate claims will need to be submitted to cover the days in June and the days in July that you want to claim for, even if employees are furloughed continuously. This may mean that your claim periods will differ from the pay periods you use.

* Claims for periods ending on or before 30 June 2020 must be made by 31 July 2020.

* Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless you’re claiming for the first few days or the last few days in a month.

* For claim periods starting on or after 1 July you can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.

* Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.

* If your pay period includes days in more than one month, you’ll need to submit separate claims covering the days that fall into each month. You should calculate each of those claims separately. Claim periods cannot overlap, so you will need to make sure you include all of the employees you want to claim for in each claim you make.

 
 

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Self-Employment Income Support Scheme Update

On the 29th May, the Chancellor, Rishi Sunak, announced more details about the extension of the Self-Employment Income Support Scheme, which are outlined below.

Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 (coronavirus) more recently.

Claims for the first SEISS grant, which opened on 13 May, must be made no later than 13 July. Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total).

It is really important to note that as with the first SEISS grant, the eligible individual must make the claim themselves. If an agent attempts to make a claim on their behalf, this will trigger a fraud alert and will result in significant delays to payment. HMRC will calculate the amount of self-employment support individuals will receive.

More information about the second SEISS grant will be available on 12 June.

Coronavirus Job Retention Scheme Update

On the 29th May, the Chancellor, Rishi Sunak, announced more details about the extension of the Coronavirus Job Retention Scheme (CJRS) and these are outlined these below.

1. From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
2. From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
3. The scheme will close to new entrants from 30 June.

1. Part time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.

Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.

2. Employer contributions
From August, the government grant provided through the job retention scheme will be slowly tapered.
* in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
* in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
* in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
* in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
* the cap on the furlough grant will be proportional to the hours not worked.

Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.

Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.

3. Important dates
It is important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

 
 

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NI Micro-business Hardship Fund

 
The NI Executive has released a new NI Micro-business Hardship Fund to help the Northern Ireland based micro-businesses and social enterprises who were unable to claim any other COVID-19 support measures released over the past few weeks.

 

Applications for the fund can be made online from

6 pm on Wednesday 20th May 2020 and will close on Friday 12th June 2020 at 6 pm.

 

There is a £40 million budget within this new Hardship Fund and to ensure the government does not exceed it, the final amounts rewarded will depend on the number of successful applications. The level of Hardship Fund grant will be up to £10,000 for businesses which pay business rates on premises and up to £5,000 for those that do not pay business rates. Businesses within each category will receive the same amount. Only one grant will be paid to each eligible business, irrespective of how many properties the business currently occupies.

Who is Eligible?-

  •  The business must be based in Northern Ireland.
  • At 29 February 2020, the business must have employed between 1 and 9 employees paid via PAYE. Businesses, where the sole employee is the business owner or company director, are not eligible for this scheme. The number of employees will be based on headcount.
  • Since 1 March 2020, the business must have experienced a reduction in turnover in excess of 40% as a direct result of the COVID-19 pandemic or associated Government restrictions.

The NI Micro-business Hardship Fund is open to all micro-business and social enterprises excluding the following:-

  • Primary agricultural producers i.e. those primarily concerned with crop or animal production or forestry or logging or fisheries or aquaculture. However, agricultural businesses associated with the processing, marketing and retail of agricultural products can apply to the fund;
  •  Businesses eligible for the following NI Executive schemes:
    – £10,000 Small Business Support Grant Scheme
    – £10,000 Small Business Grant for rental properties and Total NAV of £1,590 or below
    – £25,000 Retail, Hospitality, Tourism and Leisure Grant
    – COVID-19 Childcare Support Scheme
  • Charities or social enterprises with charitable status;
  • Social enterprises that receive less than 60% of revenue from trade in goods and/or services.

Businesses should note that other non-repayable Government grants related to COVID-19 will be taken into account and will be deducted, where applicable, from the final grant awarded.

 

Use the online eligibility checker to see if your business can qualify for this grant. This process is estimated to take up to 1 hour to process. You can save your application and return to it at any time before the closing date

 

 
 

 

 

You will need the following details at hand in order to check your eligibility:-

  • Your business name;
  • Your contact name and number;
  • Your business address and postcode;
  • Your employer PAYE reference number, also known as an Employer Reference Number or ERN;
  • The number of staff on your PAYE payroll your business employed as of 29 February 2020;
  • Your LPS Ratepayer ID and Occupancy ID if you pay business rates (This is on your rates bill);
  • Your VAT number if you are VAT registered;
  • Your business bank account number and sort code (only provide bank account details where a BACS payment can be accepted);
  • Details of any de minimis funding your company or any company within the Group (if applicable) has received in the current or previous two fiscal (accounting) years.

You will also need to provide the following electronically:-

  • A form of photographic ID as your proof of identity, such as a scanned copy of a valid passport or a current driving licence;
  • A scanned copy of a bank statement dated within the last three months for an account used by your business that clearly shows your address;
  • A scanned copy of your PAYE Real Time Information (RTI) return for the period ended 29 February 2020.

The maximum file size of each attached document can be no bigger than 3MB.

A list of Frequently Asked Questions (FAQ’s) has been released in relation to the NI Micro-business Hardship Fund. Please find this document by clicking the link below:

https://www.nibusinessinfo.co.uk/sites/default/files/NI-Micro-Business-Hardship-Fund-Guidance-and-FAQs-Version-1.2-21-May-2020.pdf

 

 

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Holidays when on Furlough

Just to clarify the current position regarding holidays whilst employees are on furlough leave:

• Holiday leave is still accrued whilst employees are on furlough

• Employees can take holidays whilst on furlough and under the Working Time Regulations, employees are required to be paid holiday pay at their normal rate of pay. (Where the rate of pay varies, this can be calculated based on the average pay received by the employee in the previous 52 weeks).

• Employers are therefore required to pay the additional 20% over the grant for employees that take holidays whist on furlough, but can still claim furlough for the other 80% during this holiday time. As you are still claiming furlough you are not breaking the furlough period for the three week calculation.

• Employers can restrict when leave is taken, if there is a business need, both during furlough and during the recovery period.

• Amendments to the Working Time Regulations (Northern Ireland) 2016 mean that employees will be able to carry forward up to 4 weeks annual leave into the next 2 holiday years as a result of coronavirus.

• Per Labour Relations Agency, HMRC’s Coronavirus Job Retention Scheme, whilst not legislation, does state that employees are entitled to take holiday leave whilst they are on furlough and from a legal point the Working Time Regulations state that an employer can request that employees take holiday leave by giving them positive notice of at least twice the length of their leave. Based on this The Labour Relations Agency states that there is nothing to say that employers cannot require employees to take annual leave whilst on furlough, but that this could be challenged in court at a later date and could be proven to be unlawful. So the guidance is saying you can do it, but the law could end up stating not correct at some time in the future and you could still owe the holidays at that time.

• Check contracts as this will normally have be the overriding guidance, it may already state what can or cannot be done in relation to holidays.

Disclaimer:- Our guidance is based on the best information available at this time and our interpretation of it, which is subject to change after this date. While we are happy to share this information, it is generic advice primarily for our clients, we will always recommend specific advice for our clients before acting and will accept no liability to anyone other than our own clients. 

 

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