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. 

Get in touch

If you have any questions, please email your usual MHA Henderson Loggie contact, or email info@hlca.co.uk.

Temporary VAT Reduction for Tourism & Hospitality Sectors

***As announced on Thursday 24th September, The Chancellor has extended the 15% VAT cut for the tourism and hospitality sectors until the end of March 2021***.


The Chancellor’s summer economic update introduced a significant reduction in the UK VAT rate from 15 July 2020 to 12 January 2021. The changes will apply to the Tourism and Hospitality sectors, where it is hoped that a new 5% rate for ‘specific supplies’ will help to stimulate consumer spending as we enter the next phase of our recovery from the Covid-19 pandemic. The measures will cover the following:

  • Food and non-alcoholic drinks – The reduced (5%) rate of VAT will apply to the on-premises supplies of food and non-alcoholic drinks from pubs, restaurants, bars, cafés and similar premises across the UK.  The reduced rate will also apply to supplies of hot takeaway food and drinks. 
  • Accommodation and attractions – The reduced (5%) rate of VAT will apply to supplies of hotel and holiday accommodation (including caravan & camping fees) and admission fees to attractions such as theatres, theme parks, museums, amusement parks, cinemas, safari parks, zoos & similar cultural events and facilities across the UK (it does NOT apply to sporting events)

Taken together with the easing of some lockdown restrictions, and other initiatives such as the Eat Out to Help Out scheme, it’s clear that the hospitality and tourism industries are a focus of the government’s efforts to support businesses affected by forced closures and social distancing.

There are two potentially competing drivers for this VAT reduction.  As there is no legal requirement for businesses to reduce prices to reflect the lower tax rate, the ‘benefit’ of the reduction could be to leave more of the day’s takings in the hands of the business and support the business.  However, if businesses pass on the tax saving (as Nandos, Pret A Manger and Starbucks have said they will), hard-pressed consumers will feel the benefit and perhaps increase their spending.  

However, some businesses may not experience increased demand due to social distancing and may have limited ability to deliver on increases in demand if social distancing makes it difficult to take on additional staff or reinstate furloughed staff.  Until these constraints ease and more restrictions lift, it might be commercially difficult for businesses to cut the price they charge.

Never was the ‘In it Together’ mantra more pertinent – many businesses in the tourism and hospitality sector have been closed and without income for months.  They need the support of consumers.  But consumers need the encouragement of a price reduction to come out and trade with local businesses.  Some middle ground and understanding should see improved confidence for both as we work our way out of lockdown.


Alan Davis, Chairman & Head of VAT, MHA Henderson Loggie