With the Autumn Budget being scrapped this year, Rishi Sunak is focusing on securing the economy and protecting jobs.
In Parliament on 24th September he presented his new phase of Government support for businesses and individuals called the Winter Economy Plan – We’ve outlined the key points below but we anticipate that further details will follow.
VAT Cut Extended
- The VAT reduction from 20% to 5% (for the hospitality and tourism sectors only) will be extended until the end of March 2021.
VAT Deferral Scheme
- Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months next financial year.
Related article: Deferring your July Income Tax Payment
HMRC Time To Pay Extension
- Self-assessed income tax payers who need extra help can now benefit from a 12-month extension on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
- Where the total tax due doesn’t exceed £30,000 the application for time to pay will be agreed automatically when the taxpayer applies using an online form.
- If the tax due exceeds £30,000 or the taxpayer needs longer to pay, the telephone service will still be available to agree a bespoke payment plan.
Related article: Delaying Payments to HMRC – Using a Time to Pay Arrangement
Bounce Back Loans
Now known as ‘Pay as you Grow’ the new repayment system will provide flexibility for firms repaying a Bounce Back Loan.
- Extending repayments from 6 to 10 years.
- Interest-only payments.
- Suspending repayments for up to 6 months if needed.
- Credit ratings won’t be affected.
- The Government has said it intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
- The application deadline for all coronavirus loan schemes – including the future fund – has been extended to 30 November.
Self-Employed Grant (SEISS)
- SEISS will be extended on similar terms as the new Job Support Scheme.
- An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
- The initial lump sum will cover three months’ worth of profits for the period from November to the end of January 2021, worth 20% of average monthly profits, up to a total of £1,875.
- An additional second grant to cover the period from February 2021 to the end of April – this may be adjusted to respond to changing circumstances.
Related article: Government announces the Self Employed Income Support Scheme
Jobs Support Scheme replaces Coronavirus Job Retention Scheme
With the Furlough scheme not being extended, it is ending at the end of October and being replaced by the new Jobs Support Scheme, which will run for 6 months.
- The Government will directly support the wages of people in viable work. Businesses facing reduced demand can avoid making employees redundant by keeping them on shorter hours.
- The employee will work at least a third of their normal hours paid by the employer
- For the hours not worked, the government and the employer will each pay one third of their equivalent salary.
- The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
- All SMEs are eligible for the scheme, but larger firms can apply too if their turnover is affected by coronavirus.
- Employers that are retaining furlough staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention bonus.
Related article: How to Furlough Employees
You can read a full online version of the Winter Economy Plan here.