Chancellor's Winter Economy Plan
The Chancellor Rishi Sunak, has today, Thursday 24 September, announced his Winter Economy Plan in the shape of a new Job Support Scheme, Pay as You Grow Loans, deferred tax bills and an extension to the VAT rate cut.
We’ve detailed the key measures the Chancellor announced today below:
Furlough/Job Support Scheme
The current Coronavirus Job Retention Scheme (‘CJRS’) will come to an end on 31 October 2020 and will be replaced with a new ‘Job Support Scheme’. The new scheme will run for 6 months from 1 November 2020.
Under the new scheme, the Government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
The requirements for the new scheme are that employees must work at least one third of their normal hours and employers will continue to pay the wages for that period.
For the remaining hours not worked, the Government and employer will each pay one third of the employee’s salary. i.e. employees who work for a shorter period will still be paid two thirds for those hours they cannot work. The Government's contribution will be capped at £697.92 per month.
All small and medium companies are eligible for this scheme with large companies being eligible where they can show that they have been adversely affected by the Coronavirus pandemic.
This scheme is open to employers across the UK even if they have not previously used the current CJR scheme. Making claims under the existing CJRS does not preclude businesses from claiming under the new Job Support Scheme. Further guidance is expected in this regard and we will update you as soon as we have further information.
Self Employment Income Support Scheme (‘SEISS’)
The SEISS will be extended until 30 April 2021, covering 20% of average monthly profits via government grant.
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.
Pay as You Grow Loans
- Bounce Back Loans – can now be extended from 6 to 10 years. Businesses can choose to move to interest only payments, or suspend payments altogether (for up to 6 months). Credit ratings will not be affected.
- Coronavirus Business Interruption Loan Scheme – will be extended for up to 10 years allowing borrowers more time to make repayments. The Government will continue to guarantee these loans during the extended repayment term.
A new successor loan scheme will be implemented in January 2021 and we will update you once we have further information.
The application deadline for all Coronavirus Loan Schemes has been extended to 30 November 2020.
Deferred tax bills
The Chancellor announced that deferred VAT due in March 2021, across all sectors can be repaid in 11 month interest free instalments to help businesses with their cashflow.
Self-Assessment tax payers will be able to apply for a 12 month extension from HMRC on the ‘time to pay’ self-service facility meaning payments will not need to be made until January 2022. Further, self-assessment tax payers will be able to set up a payment plan over 12 months (which will be subject to interest).
Hospitality and Tourism Sector - VAT Rate Cuts
Recognising that the hospitality sector will continue to be one of the hardest hit by the pandemic, the Chancellor has announced that the temporary 5% VAT rate for this sector will be extended until 31 March 2020 rather than ending in January. For a reminder of the previous announcement please visit here.
Insolvency Measures Extension
The Government has also extended measures to protect businesses from insolvency. For a reminder of those measures please visit here.
You can read the full government announcement here.
As always, if you have any questions in relation to the above you should not hesitate to contact your usual engagement partner.