Winter Economy Plan: Key Points
On 24th September 2020, the Chancellor of the Exchequer, Rt Hon Rishi Sunak MP, unveiled the Government’s Winter Economy Plan. Central to the plan is the introduction of the Jobs Support Scheme, which is designed to focus on saving viable jobs across the UK.
The key aspects of the plan are as follows:
- Jobs Support Scheme – The Government will directly support the wages of people in work, in viable jobs. Employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer. The Government and the employer will each cover one-third of the pay an employee has lost by reducing their working hours.
- Anyone who as of yesterday is employed is eligible.
- The Scheme will start in November and run for six months.
- All small and medium-sized businesses are eligible to apply. Larger businesses may be able to apply but only when their turnover has fallen.
- All businesses are eligible, even if they have not previously utilised the furlough scheme.
- Employers who retain furloughed staff on shorter hours will be able to claim both the Jobs Support Scheme and the Jobs Retention Bonus.
- The Self-Employment Support Scheme: The Government announced that it will be 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 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 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.
- Coronavirus loan schemes: The application deadline for all coronavirus loan schemes, including the Future Fund, has been extended to 30 November 2020. The Government are currently working on a successor loan scheme, for introduction in January 2021.
- Pay as you Grow: The Government have introduced a ‘Pay as You Grow’ scheme for businesses which took out government-guaranteed loans during the crisis allowing. Loans taken out under the Bounce Back Loan Scheme or the Coronavirus Business Interruption Loan Scheme (CBILS) can be extended from six to ten years. Businesses who are struggling can choose to make interest-only payments and can apply to suspend repayments altogether for up to six months.
- VAT Deferral: Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March 2021. They will now have the option of splitting it into smaller interest-free payments over the course of 11 months. Any self-assessed income taxpayers who need extra financial assistance can also extend their outstanding tax bill over 12 months from January.
- VAT for tourism and hospitality: The Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March 2021.
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