Today saw the Chancellor of the Exchequer, Rishi Sunak announce his Winter Economy Plan. This new plan has been designed to preserve jobs and enhance cashflow for businesses who are taking advantage of the various coronavirus loan schemes.
Here’s the key updates from the Winter Economy Plan you need to be aware of:
Job Support Scheme The Job Support Scheme will be launched on 1st November 2020 and run for 6 months. This scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19.
To be eligible, employees must work a minimum of 33% of their regular hours (which the employer will pay them for). For the remaining hours not worked, the government and employer will pay 1/3 of the wages each. This will mean that employees who are working 33% of their normal hours, would receive 77% of their pay. 55% of these wages will be paid by the employer and 22% will be paid by the government.
All small and medium sized businesses are eligible to apply for the Job Support Scheme (even if you have not previously used the furlough scheme). Larger businesses (businesses with a turnover of over £25 million) are also able to apply, however, only if they can show that their turnover has fallen.
If you are retaining furloughed staff on shorter hours you will be able to claim both the Jobs Support Scheme and the Jobs Retention Bonus, significantly increasing the incentive to bring back your previously furloughed employees.
Self-Employment Income Support Scheme The Self-Employment Income Support Scheme has now been extended until 30th April 2021. This will support viable traders who are facing reduced demand over the winter months, covering 20% of average monthly trading profits via a government grant.
This will be two grant payments. The first grant will cover 20% of average monthly trading profits, for the quarter ending January 2021, capped at £1,875. The government will release further detail on the level of the second grant at a later date.
Loan Application DeadlinesThe application deadline for all coronavirus loan schemes, including the Bounce Back Loan, Interruption Loan Schemes and the Future Fund Scheme, has been extended to 30th November 2020, to ensure even more businesses can benefit from the support.
Pay as you Grow Scheme The Pay as you Grow Scheme will enable the businesses which have borrowed under the Bounce Back Loan Scheme, the choice of more time and greater flexibility for their repayments. This means…
- Loans can be extended from six to ten years – nearly halving the average monthly repayment.
- Businesses who are struggling can now choose to make interest-only payments.
- Anyone struggling can apply to suspend repayments altogether for up to six months.
VAT Deferral Scheme New VAT Deferral Scheme has been put in place to support nearly half a million businesses that deferred more than £30 billion of VAT this year. Businesses can now spread their VAT bill over 11 repayments (in equal instalments), with no interest to pay.
VAT Cuts for Tourism & Hospitality To continue supporting over 150,000 businesses and protect 2.4 million jobs, the Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
For more support and guidance
For more detailed information regarding the Winter Economy Plan, please see the official government guidance here.
We’re here to help guide you through the Coronavirus crisis and beyond. Please book a Covid-19 consultation call with a member of the team if you need further assistance.