On the 24th September, the Chancellor Rishi Sunak gave his speech presenting the government’s ‘Winter Economy Plan’.
In this plan, he announced how he would support businesses and jobs as we move into the winter.
With the Coronavirus Job Retention Scheme (CJRS or ‘Furlough Scheme’) and the Self-Employed Income Support Scheme (SEISS) coming to an end in October, many people were keen to understand what comes next.
The highlights of the announcement for small business were:
Another Self-Employed Income Support Grant (SEISS)
- Self-employed people can take advantage of a third grant.
- The criteria remain the same, which means if you sadly weren’t eligible for the other grants, you won’t be for this one either. Details on the eligibility in our BLOG HERE.
- The grant will be for 20% of average monthly trading profits.
- Paid in a single instalment covering 3 months profits for November 2020 to January 2021.
- It is capped at £1,875.
- Dates on when you can apply and when it will be paid are not yet available.
The 3 months covering February 2021 to April 2021 will be covered by a fourth grant. We await details of how much this grant will be.
‘Pay as you Grow’ Bounce Back Loan extension
Bounce back loans have had some great tweaks in this Winter Economy Plan:
- You can now extend the term of the loan from 6 to 10 years.
- Businesses will also have the option to temporarily move to interest-only payments for up to 6 months. They can use this option 3 times.
- Business can pause their repayments entirely for up to six months (you can only use this one, and after the first 6 payments).
We await more information on how this will work in reality – we’ll update as we have it.
A new ‘Job Support Scheme’
Intended to support employers who face lower demand due to COVID-19. Employees receive 77% of their usual wages whilst working fewer hours.
Summary:
- The scheme starts on 1st November for 6 months.
- Employees must on have been on the payroll and HMRC know about it, on or before 23rd September to be eligible. In practice, this is likely to mean for monthly paid employees, that 31st August would be the actual cut-off date.
- Employees will need to work a minimum of 33% of their usual hours for the first 3 months of the scheme.
- The government will pay a third of hours not worked. Employers will pay another third of hours not worked.
- The scheme is a little complex to understand (blog to follow), but under a normal example the employee will work 33% of their usual hours, at a cost of at least 55% of the usual to the employer.
- Employers must still pay pension and employers National Insurance contributions for the employee. There is no government support for this aspect.
- You can still use this scheme for an employee and be eligible for the Furlough Bonus payment previous announced.
- Detailed guidance ‘will be published shortly’ by HMRC.
HMRC Factsheet HERE
Coronavirus Business Interruption Loan Extension (CBILS)
- The government intends to allow lenders of CBILS to extend the term of the loan to up to 10 years.
- There are no practical details on this at the time of writing.
Tax Deferrals
VAT
In the original lockdown, you could automatically defer your VAT payments due in the period March – June 2020 until 31st March 2021. In the Winter Economy Plan, you now have the ability to spread this payment over 11 equal instalments, over the 20/21 year.
Businesses will need to opt-in this time. Details on how to do this will be put in place in early 2021.
Personal Tax
The government will give more time to pay taxes due from your tax return in January 2021.
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 originally due in July 2020 will not need to be paid in full until January 2022, as they were part of the original deferral.
Hospitality and Tourism VAT Extension
The announcement confirmed that the temporarily reduced rate of VAT (5%) 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. This will run until 31st March 2021.
If you are interested in all the previous support package announcements, check out our frequently updated blog HERE.