Business Support Detailed In Winter Economy Plan
Yesterday the Chancellor, Rishi Sunak, announced his Winter Economy Plan to protect jobs and support businesses over the coming months. What does this mean for you? Read on to find out more:
A new Job Support Scheme will be introduced from 1 November 2020 to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.
- The new scheme will replace the current Furlough scheme (and appears to be much less generous) when it ends on 31 October 2020. It will also be open to businesses even if they have not previously used the furlough scheme.
- This scheme will run for 6 months with the government paying 1/3rd of each employee’s equivalent salary for hours not worked, up to a maximum £697.92 per month (employees must be working at least 33% of their usual hours). The employer will have to pay the other 1/3rd of each employee’s equivalent salary for hours not worked, the employee will be unpaid for the 1/3 balance.
- So, come November, if you are working 1/3 of your normal working week: your employer will pay for the 33% hours worked, the government will pay for 1/3 of hours not worked (22%) and your employer will pay another 22%. This means you will receive a total of 77% of your pay, even though you are only working 33% of your hours.
An extension of the Self Employment Income Support Scheme (SEISS) has been announced.
- An initial taxable grant will apply to those who are currently eligible and are continuing to actively trade but face reduced demand due to coronavirus. This initial lump sum will be based on 20% of average monthly profits for the period, 1 November 2020 to 31 January 2021, up to a total of £1,875.
- A second grant (which may be adjusted depending to changing circumstances), will be available for self-employed individuals to cover 1 February 2021 to 30 April 2021.
The reduction of VAT for the hospitality and tourism sectors.
- This temporary reduction to 5% has been extended to 31 March 2021.
Deferral of VAT payments, relating to the period 20 March to 30 June 2020 and due to be paid by 31 March 2021, will now to able to be paid through a New Payment Scheme.
- This new scheme gives the option to pay back deferred VAT in 11 smaller interest-free payments during the 2021-22 financial year.
Self-assessment tax payments due by 31 January 2021 (the second payment on account at 31 July 2020 and any balancing payments due by 31 January 2021) will now not need to be paid until 31 January 2022.
- This will be facilitated by a separate additional 12 month extension from HMRC on the ‘Time to Pay’ self-service facility. It will be necessary to apply for this payment plan.
Flexibility to help repay government backed Covid-19 related loans have been introduced.
- Under a new Pay as You Grow flexible repayment system, Bounce Back Loans and CBILS loans can now be repaid over 10 years instead of the original 6 years.
- In addition, the Chancellor also announced he would be extending the loan application deadline for the government’s coronavirus loan schemes until 30 November 2020. We await further information from lenders on how these new terms will be put in place.
As always, please feel free to contact us with any queries on the above points on +44(0)28 8772 4697 or email email@example.com. Further details will be shared as they come available.
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Posted on September 25, 2020