The Chancellor Rishi Sunak has unveiled his plan to protect jobs and support businesses over the coming months as a result of the coronavirus pandemic. Here, Nick Marshall, director at Beatons, examines how the new initiatives will help.
The Winter Economy Plan will provide additional government support to help businesses and workers impacted by the coronavirus across the country. The package of measures will continue to protect jobs and help businesses through the uncertain months ahead.
Central to the plan is a new Job Support Scheme and extension of the Self-Employment Income Support Scheme as well as the flexibility for businesses to repay loans.
Job Support Scheme
From November 1, the Job Support Scheme will be introduced to protect viable jobs in businesses who are facing lower demand during the winter months due to COVID-19.
The scheme, which will run for six months and help keep employees attached to the workforce, will see the government contribute towards the wages of those working less hours than usual.
Employers will continue to pay the wages of staff for the hours they work. For the hours not worked, the government and the employer will each pay one third of their equivalent salary.
To be eligible for the scheme, employees must be working at least 33% of their normal hours. The grant will be calculated based on the worker’s usual salary, capped at £697.92 per month.
It means workers on the scheme will not get their full salary but should get at least 77%.
It will be open to businesses even if they have not previously used the Job Retention Scheme which comes to an end on October 31.
Self-Employment Income Support Scheme
The government is also continuing its support for millions of self-employed workers by extending the Self-Employment Income Support Scheme (SEISS).
An initial taxable grant will be provided to those currently eligible for SEISS and are continuing to trade but facing lower demand. The sum will cover three months’ worth of profit from November to the end of January 2021 – worth 20% of average monthly profits up to £1,875.
A second grant will be available from February 2021 to the end of April and may be adjusted to respond to the changing circumstances. It ensures that support continues through to next year.
Tax cuts and deferrals
The hospitality and tourism sector has been one of the sectors most severely hit by the pandemic. As part of the Winter Economy Plan, the temporary 15% VAT cut for the sector has been extended until the end of March 2021.
And, up to half a million businesses who deferred their VAT bills will now be able to benefit from a New Payment Scheme. It will give them the option of paying back in 11 interest-free instalments during the 2021/22 financial year as opposed to one lump sum due at the end of March next year.
Additionally, around 11 million self-assessment taxpayers will benefit from an additional 12-month extension from HMRC on the Time to Pay self-service facility. Payments deferred from July 2020, and those due in January 2021, will not need to be paid until January 2022.
Businesses who took out a Bounce Back Loan will be given more time to make repayments with the Pay as You Grow scheme.
The length of the loan term has been increased from six to 10 years which will result in monthly repayments being cut by nearly half. Interest-only periods of up to six months and payment holidays will also be available.
These measures will protect jobs by helping businesses recover from the effects of the pandemic.
Lenders who provided the Coronavirus Business Interruption Loan Scheme will be helped by extending the length of loans from a maximum of six years to 10 years to help businesses repay the loan.
The Chancellor also revealed that he is extending applications for the government’s coronavirus loan schemes until the end of November. The move means that more businesses will be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.
If you or your business needs advice or assistance with these new measures, get in touch by calling 01473 659777 or email firstname.lastname@example.org to see how we can help.