Chancellor Rishi Sunak unveiled the Winter Economy Plan last month and the measures to protect jobs amidst the coronavirus pandemic. The key things addressed are:
- New Job Support Scheme
- Extension to Self Employment Income Support Scheme
- Businesses loan repayment flexibility
- VAT deferrals and reduction extensions
Support for employees
A new Jobs Support Scheme will replace the current furlough scheme when it ends at the end of October. It will run from 1st November for six months.The scheme will be targeted at small and medium sized businesses, however bigger firms can only use the scheme if turnover has fallen by a third.
The scheme will subsidise wages for employees who work a third of their usual hours. For the time they are working, they will be paid by their employers. The Government will pay a third of their usual pay for the time they aren’t working. This contribution from the government will be made as a grant and capped at £697.92 per month.
Businesses can benefit from both the Job Support Scheme and Job Retention Bonus to help protect jobs of their employees, rather than making them redundant.
Support for Self-Employed
The Self Employment Income Support Scheme (SEISS) supports self employed workers and individuals in a partnership who are experiencing less demand for work as a result of the CoVID-19 pandemic. The previous grants covering May to October 2020 were announced as part of the Summer Economic Plan.
The latest grant will be available for 6 months from November 2020 – April 2021, and will similarly be split into two parts, with the first one covering November, December, and January. Eligible applicants could receive up to 20% of 3 months’ worth of profits, up to a total of £1,875. The second part will be announced at a later date.
Support for Businesses
A ‘Pay As You Grow’ Scheme was announced, giving companies with a Bounce Back Loan to extend the repayment period from 6 years to 10. Interest-only payments of up to six months and payment holidays can also be made. This will help lift some the burden for businesses recovering from the pandemic. Application for the Bounce Back Loan scheme, as well as other government coronavirus loan schemes, have been extended until 30th November.
VAT Deferral Payments
The previous economic plan announcement gave businesses until the end of March 2021 to pay the VAT they had deferred.
VAT can now be deferred using a 12-month interest-free payment plan under the new Winter Economy Plan. That means VAT-registered businesses who deferred paying their VAT bill have until March 2022 to pay. Businesses are able to make smaller VAT payments over a longer period of time without being charged interest.
VAT Reduction Rates
A VAT cut down to 5% was made at the Summer Economic update for businesses in the hospitality and tourism sectors. This cut was due to increase to 20% on the 13th January 2021, however has now been extended until 31st March 2021. The extension will be applied automatically to eligible businesses.
Please always refer to the UK Government website for the latest information.