Rishi Sunak Announces Winter Economy Plan
Rishi Sunak Announces Winter Economy Plan
The chancellor, Rishi Sunak, announced yesterday his Winter Economy Plan to the House of Commons. The new measures that will be implemented are to support jobs and businesses as stricter COVID19 restrictions come into force. All of these new measures announced are expected to be in place for the next six months.
New Job Support Scheme
This scheme will be introduced from 1 November 2020 to support viable UK employers who face a lower demand due to COVID19 and to keep their employees within the workforce. The government are going to directly support the wages of people in work, giving businesses who face depressed winter demand the option of keeping employees in a job on shorter hours rather than making them redundant. Helping to battle the unemployment crisis and also gives employers an incentive to bring back furloughed staff.
- The employee will need to be working at least one third of their usual hours, of which the employer will pay their wages as normal.
- The government will then, along with the employer increase those wages by covering two thirds of the pay that they have lost out on as a result of their working hours being reduced.
- The employer and government will pay one third each of the employee’s usual pay.
- This is capped at the government contributing £697.92 per month.
- This scheme ensures that employees will receive at least 77% of their pay, where the government contribution has not been capped.
This scheme is available to all SMEs and businesses are eligible, even if they did not use the furlough scheme. Larger business may be eligible to apply if their turnover has dropped by over a third.
SEISS Grant Extension
The government are extending the existing self-employed grant on similar terms and conditions as the new jobs support scheme. This grant is limited to self-employed individuals who are currently eligible for SEISS and are actively continuing to trade but are facing reduced demand due to COVID19.
VAT increase cancelled
The planned increase in VAT has been cancelled for businesses in the hospitality and tourism sector. The lower 5% VAT rate is remaining until March 31st next year. This is to help support the cash flow and viability of businesses, as well as protect 2.4 million jobs.
Extension of access to finance schemes
The government is extending four temporary loan schemes to 30 November 2020 for new applications. The four temporary loan schemes are:
- Bounce Back Loan Scheme (BBLS)
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- Future Fund
Introduction of Pay as you Grow for Bounce Back Loan Scheme
Pay as you Grow gives businesses who have borrowed money under the Bounce Back Loan Scheme more time and greater flexibility to repay.
- Loan repayments can be done over an extended period of 10 years, which can nearly halve the average monthly repayments
- Businesses who are struggling can choose to make interest-only payments for periods of up to three months (this can be done three times)
- Anyone in trouble can apply to suspend repayments altogether for up to six months
VAT deferral scheme
A business that deferred VAT this year to help them survive will no longer have to repay all of this in one lump sum in March 2021.
- Businesses are able to spread their payment VAT bill over the 2021-2022 financial year via 11 repayments with zero interest.
- Allowing businesses to repay in smaller payments, rather than one larger payment
- On average businesses, owe £60,000, therefore instead of paying a lump sum of that, they are able to do 11 smaller payments of less than £6000.
- All business that took advantage of the VAT deferral are eligible, but they will need to opt-in.
- HMRC will put in place the opt-in process in early 2021.
In addition, they are offering enhanced time to pay for self-assessment taxpayers. The government will give the self-employed and other taxpayers more time to pay taxes that are due in January 2021.
The Winter Economy Plan is available to read in full detail on the government website.
If you have any concerns or would like to discuss any of these new guidelines further, please get in contact with the HPC team today.
T: 0844 800 5932