On the 24th September 2020, Rishi Sunak announced several new schemes to support businesses and workers across the UK as part of his Winter Economy Plan.
Over the course of this post, we’ll take a close look at the details of each of the new schemes, but we’ve also provided a brief rundown of the main highlights below.
If you’d like to discuss any aspect of the Winter Economy Plan and how it might affect your business, don’t hesitate to get in touch.
- As well as extending the Self Employment Income Support Scheme (SEISS) to January 2021, the Chancellor also unveiled his new Job Support Scheme.
- Over one million businesses across the UK will be given flexible options to help them pay back loans they’ve taken out during the coronavirus pandemic.
Job Support Scheme
It was announced that the new Job Support Scheme will come into effect starting on the 1st November 2020. This updated scheme will provide support to workers who are working less than their normal hours as a result of reduced demand due to coronavirus.
Employers will continue to pay employees for the hours that they work; however, the government will help businesses to pay for any hours that their employees could not work by contributing a third of the wages (the business will also have to contribute a third).
The introduction of the Job Support Scheme will mean that employees will still receive two-thirds of their wages for any hours that they could not work due to coronavirus.
There are, however, some eligibility criteria that employees must meet:
- Employees must be working at least 33% of their usual hours to qualify;
- The grant received will be calculated using the employees usual salary, which will be capped at £697.92 a month;
- The scheme will last for six months, ending in April 2021;
- This scheme will be open to business across the UK even if they have not previously used the furlough scheme;
- The scheme is designed to sit alongside the Job Retention Bonus.
The extension of the Self Employment Income Support Scheme (SEISS)
This extension will provide two grants to cover a period of six months from November 2020 to April 2021 paid in two lump sums: the first grant will cover the period from November to January and the second from February to April.
The first period will cover 20% of average monthly trading profits, covering 3 months worth of profits up to a maximum amount of £1,875. The level of the second period is still in review and will be set in due course.
HMRC is expected to announce how to claim these grants over the coming weeks.
Tax cuts and deferrals
The chancellor also announced that the government will be extending the 15% VAT cut across the tourism and hospitality sector up until the end of March 2021.
Businesses that delayed their VAT Bills will be given more time to pay under the new payment scheme. This will see businesses being able to pay their VAT bills in smaller instalments if they wish: 11 smaller interest-free payments will be payable during the 2021-22 tax year (rather than one large amount in March 2021).
Self-Assessment taxpayers will also be able to benefit from a 12-month extension to pay their tax bill. This means payments deferred to January 2021 as well as payments due in July 2020 will now not need to be paid till January 2022.
Loan flexibility: Pay as You Grow and the Coronavirus Business Interruption Loan Scheme (CBILS)
Businesses that took out a bounce-back loan will have the ease of paying this off through the Pay as You Grow flexible repayment system, meaning that they now have more time to pay the loan back: the length of the loan has been extended from six to ten years, resulting in monthly repayments being cut by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The government is also extending applications for the Coronavirus Business Interruption Loan Scheme (CBILS), which was previously set to end in November. CBILS lenders will have the ability to extend the loan repayment from a maximum of 6 years to 10 years. You can apply for the scheme via the gov.uk site.
For any further information about the Winter Economy Plan and what it means for your business, contact us today.