Chancellor Rishi Sunak has unveiled new financial support measures under “The Winter Economy Plan” in an endeavour to minimise further unemployment and to help businesses through the potentially uncertain winter ahead.
We have outlined just some of these support measures below:
- The Job Support Scheme
The new “Job Support Scheme” introduced by the Chancellor will be replacing the existing Coronavirus Job Retention Scheme (furlough) which is to end on the 31 October. The new scheme will be effective from 1 November 2020 and is expected to run for 6 months with aims to protect workers in viable jobs who are working fewer than normal hours due to a decrease in demand.
The key facts you need to know:
- To be eligible for the new Job Support Scheme employees must work a minimum of 33% of their usual hours
- For the remaining hours not worked, the government and employer jointly pay one-third of wages each (capped at £697.92 per month)
- All small and medium-sized businesses (SME’s) are eligible for the scheme but larger businesses must show a fall in income as a result of the crisis
- Employers who did not previously claim on the furlough scheme are also eligible to join the new scheme.
For example:
An employee earning £2000 per month and working 50% of their usual hours:
- £1,000 normal pay (employer will continue to pay the salary for the hours staff work £2000 x 50%)
- Plus £333 extra from their employer and £333 from the government (£1000 x 1/3 each for the hours not worked)
Total employee pay = £1,666
- Self-Employment Income Support Scheme Grant (SEISS) extension
The Government is continuing its support for self-employed individuals by extending the Self-Employment Income Support Scheme Grant (SEISS) on similar terms to the Job Support Scheme.
The key facts you need to know:
- An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus
- The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year
- This sum is worth 20% of average monthly profits, up to a total of £1,875
- An additional second grant will be available for self-employed individuals to cover the period from February 2021 to the end of April.
- Tax cuts and deferrals
As part of the support package, the Government has announced measures to support VAT and Self-assessment taxpayers in the form of tax cuts and deferrals.
The key facts you need to know:
- Extension of the temporary 15% VAT cut for the tourism and hospitality sectors to the 31 March 2021
- The “New Payment Scheme” gives businesses who deferred their VAT bill an option to pay it back in 11 interest-free payments during the 2021-22 financial year
- The “Time to Pay” self-service facility gives Self-assessment taxpayers an additional 12-month extension on the balancing payments who deferred from July 2020 to January 2021- it now does not need to be paid until January 2022.
- Giving businesses the flexibility to pay back loans
Finally, measures have also been introduced for businesses who received funding through the Government backed loan schemes such as the Bounce Back Loan or the Coronavirus Business Interruption Loan Scheme, to allow for greater flexibility and cash management through reducing monthly repayments.
The key facts you need to know:
- “Pay as You Grow Scheme” allows businesses repaying the Bounce Back Loan to extend the length of the loan from six years to ten
- Businesses “in trouble” can also move to interest-only periods and payment holidays for six months with credit ratings remaining unaffected (Bounce Back Loan)
- The Government intends to support Coronavirus Business Interruption Loan Scheme lenders to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan
- Extension of applications for the Government’s coronavirus loan schemes until the end of November.
If you would like to find out more about how these new financial support measures can best help your business, please contact your account manager or a member of our team who will be happy to assist!
Note: the information provided in the article is correct at the time of publishing and may be subject to change.
