Today saw another major set of announcements from the Chancellor affecting businesses and employers, following the speech on Monday from the Prime Minister announcing additional restrictions, in particular, asking people again to work from home where possible.
The Chancellor started his speech on his ‘Winter Economy Plan’ by saying that the restrictions would probably last up to six months and his announcements were made in that context
He emphasised the need to support “businesses with viable jobs” and that he could not save every job.
Onto the specifics, which were in two parts – Job Support and Financial Support
- The Furlough Scheme will end as previously announced on 31 October. However the Government will now replace it with a ‘Job Support Scheme’ for six months covering November 2020 to April 2021.
- The ‘Job Support Scheme’ will be open to all small and medium-sized firms and ‘qualifying’ larger firms who can evidence a fall in turnover with one crucial change from the Furlough Scheme….
- To qualify for the scheme, Employees must work at least one-third of their usual hours, then for every hour not worked, the Government will cover one third of the pay for the remaining time, the employer will also cover one third, meaning that an employee should be paid at least 77% of their wages;
- As with the furlough scheme, Government contributions will be capped to a maximum of just below £700
- Anyone using the scheme cannot make staff redundant.
- Where a business cannot afford to employ staff for one-third of the time, the scheme will not be available.
The Self-Employment Income Support Scheme will be extended for another six months, with the next grant covering the period from November to January, using a similar methodology to the previous grants but capping payments at £1,875 per month. Payments under the grant after that – from February to April 2021 – will be determined nearer the time.
The Job Retention Scheme – paying a bonus to businesses retaining staff as at 31 January 2020, and the various Training Schemes, such as the Kickstart Scheme, will remain in place as planned.
The Chancellor announced a series of measures to help ease businesses’ cash flow challenges. These were:
- Bounceback Loans
- Loans of up to £50,000 or 25% of annual turnover, with no interest payable for the first 12 months
- The application period has been extended from 2 November to 31 December 2020
- The period of time in which these loans must be repaid has been extended from 6 to 10 Years
- Flexible repayment terms have been introduced, such as suspending interest or repaying on an interest only basis
- Coronavirus Business Interruption Loan Scheme (‘CBILS’)
- The Government guarantee on the repayment of these loans has been extended from 6 to 10 years
- A ‘Successor’ Loan scheme will be announced in the coming weeks
- Deferral of Tax payments
- VAT deferral. For those businesses who deferred their VAT payment in quarters ending between March and May 2020 until March 2021, that payment can be made in 11 equal instalments rather than in one lump sum
- Self-Assessment Income Tax bills for 2019/20 due for payment on 31 January 2021 can also be paid in instalments up to January 2022.
- VAT for the Hospitality & Tourism Sectors
- The 5% rate of VAT on Sales in the Hospitality and Tourism sectors has been extended until 31 March 2020
Here is a hard copy of the ‘Winter Economy Plan’