The Chancellor, Rishi Sunak has unveiled measures to protect jobs as a result of the coronavirus crisis in his Winter Economy Plan. Below we outline some of the key announcements made:
Job Support Scheme
Rishi Sunak opened his statement by announcing that a new “jobs support scheme” would be introduced to subsidise the wages of people in work to replace the furlough scheme when it ends at the end of October. The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19 and employers will also be able to claim the Job Retention Bonus if they meet the eligibility criteria. The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job. The scheme is due to run from November to April 20201 and all small & medium businesses with a UK bank account and UK PAYE schemes are eligible to apply, even if they used the furlough scheme previously. Larger businesses will also be able to apply but will have to meet a financial assessment test. Employees must be on an employer’s PAYE payroll on or before 23 September 2020 and employees must work at least a third of their normal hours and be paid for that work by their employer. For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month. The grant payments will be made in arrears on a monthly basis, meaning that a claim can only be submitted after payment to the employee has been made and that payment has been reported to HMRC via an RTI return. The grant will not cover employer NICs or pension contributions, although these contributions will remain payable by the employer.
Self-Employment Income Support Scheme Grant (SEISS)
The Government has announced that it will continue supporting the self-employed by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but have face reduced demand due to the pandemic. 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.
VAT Cut Extended for tourism and hospitality sectors
The chancellor announced that the temporary 15% VAT cut for tourism and hospitality sectors will be extended, meaning that the lower 5% VAT rate until March 31st next year.
It was also announced that those who deferred their VAT bills will be given longer to pay them back through the New Payment Scheme, giving businesses the option to pay back in smaller installments rather than paying a lump sum in full in March 2021, they will be able to make 11 smaller interest-free payments throughout the 2021-2022 financial year.
Self-assessed Income Taxpayers
Self-assessment taxpayers will be able to benefit from a additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility meaning that payments deferred from July 2020 and those due in January 2021 will not need to be paid until January 2022.
Bounce Back Loan
The Chancellor also announced greater flexibility for businesses who took out a Bounce Back Loan as a new 'Pay as You Grow' flexible repayment system has been introduced. The repayment system allows businesses to extend the length of the loan from six years to ten. Interest-only periods of up to six months and payment holidays will also be available to businesses.
Coronavirus Business Interruption Loan Scheme
Businesses who have utilised the Coronavirus Business Interruption Loan Scheme previously will also allow lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
The Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund until the end of November.
More information about the measures introduced can be found in the Winter Economy Plan document.