Having cancelled this year’s Autumn Budget, the Chancellor revealed his armoury of measures that make up his ‘Winter Economy Plan’.
During what was a short, concise speech, Rishi Sunak confirmed that the proposals intend to ‘manage the virus, jobs and the economy over the winter period’.
He also explained how ‘the next phase of support must be different from that which came before. The primary goal of our economic policy remains unchanged – to support jobs – but the way we achieve that must evolve’.
The new measures announced are summarised below:
Support for workers
A new Job Support Scheme will be introduced from 1st November to protect viable jobs in businesses who are facing lower demand over the winter months due to the Coronavirus.
The scheme, which runs for six months, will see the Government contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
Employers will continue to pay the wages of staff for the hours they work, but for hours not worked, the Government and their employer will each pay one-third of the worker’s equivalent salary. Employees who can only return to work on shorter time will still be paid two-thirds of the hours for those hours they cannot work.
To support only viable jobs, employees must be working at least 33% of their usual hours and the level of grant will be calculated based on an employee’s regular salary, capped at £697.92 per month.
The Chancellor qualified his announcement saying, ‘businesses will not be able to issue redundancy notices to employees on the Job Support Scheme’.
The scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance published in due course. It will sit alongside the Job Retention Bonus with businesses able to benefit from both schemes to help protect jobs.
The Self Employment Income Support Scheme Grant (SEISS) is to extend.
An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to trade actively but face reduced demand due to COVID-19.
The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.
Cash flow Assistance – Tax cuts and deferrals
Tourism and hospitality sector
There is to be an extension to the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
Those businesses who deferred their VAT bills can use the New Payment Scheme, which gives them the option to pay back in smaller instalments.
Rather than paying a lump sum in full at the end of March 2021, it will be possible to make 11 smaller interest-free payments during the 2021-22 financial year.
Income Tax deferral
Self-assessment taxpayers will be able to benefit from an additional 12-month extension from HMRC on the Time to Pay self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Flexibility to pay back loans
Repayment of a Bounce Back Loan is extending from six years to 10, which will cut monthly repayments by almost half.
Interest-only periods of up to six months and payment holidays will also be available.
The Government is to give Coronavirus Business Interruption Loan Scheme (CBILS) lenders the ability to extend the length of loans from a maximum of six years to 10 if it helps businesses to repay the loan.
Application for loans
Extension to the timetable for applications for the Government’s Coronavirus loan schemes until the end of November. This will apply to CBILS, CLBILS, Bounce Back Loans and the Future Fund.
To discuss any of the above announcements in detail, then please contact your Champion adviser.