Tough days ahead with rising Covid-19 cases and new lockdowns
This article is a summary of our Financial Update for October/November 2020. For the full update, please click here.
As shorter days and colder mornings are upon us, the rise in Covid-19 cases also serves to restrict our activities and shrink our worlds to maximum gatherings of six people at best and no household mixing whatsoever at worst.
Within this bleak landscape of struggling businesses and restricted social activities the government’s support measures also keep shifting as the original Coronavirus Job Retention Scheme winds down to the end of furlough and employers and employees look to transition to the Chancellor’s latest iteration of government support – the Job Support Scheme (JSS).
Under the JSS, which itself has already been subject to modifications before it is introduced) businesses that can retain their staff for at least 20% of their working hours can use what is referred to as JSS Open, with the government contributing the lions share to bring pay up to 73% of the normal wage level.
Employers who are able to retain their furloughed staff will be rewarded with a bonus payment in the new year.
With additional restrictions and local lockdowns already coming in, Rishi Sunak announced further measures for businesses temporarily forced to close but still with property bills to pay. They will be offered grants of up to £1,500 every three weeks to help cover their costs, while employees will receive two-thirds of their salaries – this is known as JSS Closed.
Don’t forget that most of the support grants for businesses and individuals are taxable. While tax payments can be deferred into 2021, these will eventually have to be accounted for.
Even before the end of the CJRS HMRC is already investigating ways to recover furlough payments issued this year to businesses that either didn’t use the money to top up furloughed employees’ pay, or whose position changed, making them no longer eligible for the grant.
Meanwhile with the anticipated autumn Budget now postponed to spring next year, speculation continues about how the Chancellor is going to pay for the considerable support schemes he has set up for businesses and employees. Higher rate taxpayers are thought to be the likely target, and we suggest changes to CGT could be the means to recover some funds.
Looking forward to more normal times, you may be keeping profits in your trading company. This is a tax-efficient strategy, but holding cash investments and property on your balance sheet may affect your ability to claim other tax reliefs.
For information on the new support grants, taxes due on those grants and payment arrangements, read our full October/November newsletter, which covers these topics and more in considerable detail. We’ll have more detail on the JSS in next month’s newsletter as further guidance is promised throughout the coming days. And as always do get in touch if any of the issues covered affect you and your finances.
*This article was originally posted on DTE website: https://www.dtegroup.com/news/blog/tough-days-ahead-with-rising-covid-19-cases-and-new-lockdowns/