With the Autumn Budget cancelled this year, Chancellor of the Exchequer, Rishi Sunak, instead announced a Winter Economy Plan containing a series of modifications and new schemes that would be made available to further support businesses and individuals throughout their pandemic recovery.
So, what do you need to know?
The ‘furlough’ part of the Job Retention Scheme will end at the end of October as planned. In its place, starting from 1 November and lasting 6 months, will be the new Job Support Scheme. This has essentially been designed to “protect viable jobs in businesses who are facing lower demand”, providing the financial assistance needed to prevent organisations from making widespread redundancies. It is the Government’s response to help the economy recover from several months’ lockdown, as well as shield businesses from possible further disruption yet to come as more regional lockdowns and other restrictions are introduced to reduce and tackle a second peak of COVID-19.
The Job Support Scheme will work by enabling employees’ hours to be reduced and their salaries topped up. To be eligible, employees must work at least 33% of the contracted hours. For the remaining hours not worked, the employer and Government pay 1/3 of the wages each (the Government’s contribution is capped at £697.92 per month), meaning that individuals could work 33% of their hours while receiving a minimum of 77% of their pay. The scheme is open to all businesses with a UK bank account and UK PAYE schemes, though large businesses will need to demonstrate that their turnover is lower post-pandemic (this is unlikely to affect dental practices or small groups with 2-5 clinics). Any employers using the scheme can still claim the Job Retention Bonus of £1,000 per employee brought back from furlough that remains employed until 31 January 2021.
All of this, of course, only impacts dental practices with regards to employed staff, but it should still go some way to supporting business recovery from months of closure. If staff can come back at reduced hours, without massive financial sacrifices to them, gradual re-growth of the business is much more viable and staff retention will be made slightly simpler.
Deferred VAT won’t mean a big March bill
Back in March, it was made possible for companies to defer their VAT payments due to the financial disruption predicted from the coronavirus outbreak. At the time, it was planned for organisations to make up for it with a large bill in March 2021, but Mr Sunak changed that with his Winter Economy Plan. He made it possible for businesses to spread the cost of their deferred VAT payments over the following 11 months with no added interest. This should make financial forecasting for 2021 that little bit easier for dental practices who had previously expected to pay out a lump sum in the New Year.
Of potential interest to associates, Mr Sunak announced an extension to the Self Employment Income Support Scheme Grant. This involves an initial taxable grant for eligible individuals who are facing reduced earning capacity due to the pandemic. It will cover 20% of average monthly profits from November to the end of January, up to a total of £1,875. An additional grant will be available from February 2021 to the end of April – though this will be subject to review nearer the time.
A balancing act
Whether you believe these measures go far enough to really help your business through the next 3-6 months, it is important to work with what you’ve got as well as you can. Making the most of any additional financial support you qualify for will help to protect the current stability and long-term sustainability of your practice, so it’s vital to take action. You will need to effectively balance the benefits available for the business and for your staff, against what you need to do to deliver the care your patients require.
Make the most of it
As with many schemes and criteria involving HMRC and other Government bodies, obtaining and understanding the options that are most relevant to you will be key. For help in navigating the ever-changing landscape, seek support from experts you can trust, such as the team of Independent Financial Advisers (IFAs) at money4dentists. With years of experience in the sector, as well as up-to-the-minute information on all the financial solutions that could be relevant to you, we can help ensure you get the support you need.
For more information please call 0845 345 5060, email email@example.com or visit www.money4dentists.com
Gov.uk. Coronavirus (COVID-19) Guidance and Support. Policy paper. Job Support Scheme, 24 September 2020. https://www.gov.uk/government/publications/job-support-scheme [Accessed September 2020]
Gov.uk. Coronavirus (COVID-19) Guidance and Support. Part of Support for businesses and self-employed people during coronavirus. 31 July 2020. https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus [Accessed September 2020]