With the furlough scheme winding down and local lockdowns on the increase, today Rishi Sunak announced his unscheduled ‘winter economy plan’.

We set out below a brief summary of the announcements made today:

1. The Job Support Scheme

  • So What Has Changed?
    • The Job Support Scheme is an emergency jobs package to replace furlough scheme.
    • The new measure is not an extension of the furlough scheme, which still ends as planned on 31 October 2020.
    • The UK-wide Job Support Scheme will see the Government help to pay the wages of people returning to work on a part-time basis.
  • How Will The Scheme Work?
    • The system is designed to encourage companies to retain workers in viable jobs, while ensuring others are not kept on in posts that exist only because of the furlough scheme.
  • How Long Will The Scheme Run?
    • The new scheme will run for six months between 1 November 2020 and 30 April 2021
  • How Does The Scheme Compare To The Job Retention Scheme?
    • The new scheme is less generous than the furlough scheme but more flexible, essentially encouraging employers to give staff as many hours as they can or need to.
    • To be eligible for the scheme, employees must work at least a third of their regular hours and be paid at their usual rate.
    • For the remaining hours not worked, the Government and the employer each pay for a third of the worker’s wages, with the state contribution capped at £697.92 a month – so employees working 33% of their hours will get at least 77% of their salary, subject to this contribution cap.
  • Am I Eligible?
    • The scheme is available to all small and medium-sized businesses, while large businesses will only be able to use it if they can show their turnover was reduced by the virus.
    • It is also available to employers regardless of whether they have already used the furlough scheme.

 

2. SEISS grant extension

  •  So What Has Changed?
    • The self-employment income support scheme (SEISS), which was due to close for new applications on 19 October 2020, will now remain in place until 30 April 2021 on similar terms as the new support scheme.
    • The extension will come in the form of two taxable grants, with the first covering 20% of average monthly trading profits, paid in a single instalment for the three months from 1 November 2020 to 31 January 2021, and capped at £1,875 in total.
    • The Government has said it will review the level for the second grant, which will cover the period from 1 February to 30 April, and “set this in due course”.
  • Am I Eligible?
    • The scheme will only be available to self-employed individuals who are currently eligible for SEISSand actively continuing to trade.

 

3. More time to pay income tax bills

  • So What Has Changed?
    • Any self-assessed income taxpayers who need extra help can also now extend their outstanding tax bill over 12 months from January 2021.
    • Taxpayers now have more time to pay taxes deferred from July 2020 and those due in January 2021, building on the payments on account deferral in July 2020.
    • Taxpayers with up to £30,000 in self-assessment liabilities due in January 2021 will be able to use HMRC’s time-to-pay facility to pay over an extra 12 months.
    • In practice, those who deferred their payments on account in July 2020 will not need to settle their bill in full until on or before 31 January 2022.

 

4. Loans extension for struggling firms

  • So What Has Changed?
    • The Chancellor has now confirmed that new applications for four existing business loan schemes have been extended until Monday 30 November 2020. These include:
      • CBILS
      • Coronavirus large business interruption loan scheme
      • Bounce-back loans (BBL)
      • The future fund
    • The Chancellor has increased the repayment terms of BBLs and the CBILS by offering the choice of extending the repayments from six to ten years.

 

5. Option to split deferred VAT bills

  • Businesses that deferred their VAT payments between 20 March and 30 June 2020 will no longer have to pay a lump sum on or before 31 March 2021.
  • Instead, the Government is offering the option to split this repayment into smaller, interest-free payments over the course of 11 months.

 

6. Hospitality & tourism VAT rate

  • On 8 July 2020, the Government cut the standard rate of VAT for businesses operating in the hospitality and tourism sectors from 20% to 5%, initially from 15 July 2020 until 12 January 2021.
  • This temporary reduction for the businesses severely affected by forced closures and social distancing measures due to the coronavirus has been extended until 31 March 2021.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.