Earlier today, The Chancellor Rishi Sunak announced a package of further measures dubbed ‘The Winter Economy Plan’ which is designed to help support businesses and individuals over the coming months. 

We summarise below the main measures announced:

WHAT IS IT?

The Government will be introducing a new Job Support Scheme from 1 November 2020. Employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and The Government will each pay one third of the employee’s usual pay, and The Government contribution will be capped at £697.92 per month. Employees using the scheme will receive at least 77% of their pay, where The Government contribution has not been capped. The employer will be reimbursed in arrears for The Government contribution. The employee must not be on a redundancy notice. 

WHEN WILL THIS START AND WHO IS ELIGIBLE?

The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. All Small and Medium-Sized Enterprises (SMEs) will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and The Government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

 

WHAT IS IT?

The Government recognises the continued impact that COVID-19 has had on the self-employed and has taken action to provide support. The SEISS Grant Extension provides critical support to the self-employed. The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19. The scheme will last for 6 months, from November 2020 to April 2021.

WHEN WILL THIS START AND WHO IS ELIGIBLE? 

The extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total. The second grant will cover a three-month period from the start of February 2021 until the end of April 2021. The Government will review the level of the second grant and set this in due course.

 

VAT

The Government will give businesses which deferred VAT falling due between March 2020 and June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the new payment scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.

INCOME TAX

The Government will give the self-employed and other taxpayers more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service ‘Time to Pay’ facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022. Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s ‘Time to Pay’ Self-Assessment helpline to agree a payment plan.

 

The Government is extending the temporary reduced rate of VAT (5%) from 12 January 2021 to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.

 

The Government is extending the previously announced temporary loan schemes to 30 November 2020 for new applications:

• Bounce Back Loan Scheme (BBLS) – Loans are between £2,000 and £50,000, capped at 25% of turnover, with a 100% Government guarantee to the lender to provide them with the confidence they need to support the smallest businesses. The borrower does not have to make any repayments for the first twelve months, with The Government covering the first twelve months’ interest payments. Under the new ‘Pay as you Grow’* options, Bounce Back Loan borrowers will all be offered the choice of more time and greater flexibility for their repayments.

*Pay as you Grow – The Government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). These changes will provide greater flexibility to repay these loans over a longer period and in a way that better suits businesses’ individual circumstances.

• Coronavirus Business Interruption Loan Scheme (CBILS) – The scheme provides loans of up to £5 million with an 80% government guarantee to the lender, giving lenders the confidence to provide finance to SMEs. The Government does not charge businesses for this guarantee and also covers the first twelve months of interest payments and fees.

The Government intends to allow CBILS lenders to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.

  

It is important to watch out for scams and fraud so if someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, IT IS A SCAM.

For the source of information and to keep up to date of further announcements on the schemes please see the links below: 

https://www.gov.uk/government/publications/winter-economy-plan/winter-economy-plan#policy-decisions

Last modified on Thursday, 24 September 2020