Rishi Sunak's "Winter Economy Plan" as Furlough Expires.
With the furlough scheme coming to an end and the Prime Minister's recent tighter restrictions to avoid a second wave of coronavirus cases, the Chancellor, today outlined additional government support for businesses and workers impacted by coronavirus across the UK.
So, what does this Winter Economy Plan encompass and who does it work for?
Support for workers
A Job Support Scheme will be introduced on 1st of November and run for 6 months in a bid to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. The government will "top-up" the wages of employees who are working fewer hours.
Employers will continue to pay the wages of staff for the hours they work, but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work. According to the government, in order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The Self Employment Income Support Scheme Grant (SEISS) is also being extended. An initial taxable grant will be provided to those who are currently eligible and are continuing to actively trade but face reduced demand. 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.
Tax cuts and deferrals
The 15% VAT cut for hospitality & tourism sectors has been extended to March 2021. This is in a bid to give businesses the confidence to retain staff as they weather the current economic climate.
Additionally, businesses who deferred their VAT bills are being given the option to pay this back in smaller instalments over the 2021-22 financial year, opposed to paying a lump sum at the end of March next year.
Self-assessment taxpayers will also benefit from an additional 1 year extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Giving businesses flexibility to pay back loans
Over 1 million businesses who availed of the government Bounce Back loans will benefit from the extension of the payback period from 6 years to 10. This extension will cut monthly loan repayments by nearly half.
The Chancellor also announced he would be extending the time for applications for the government’s coronavirus loan schemes until the end of November, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.