COVID-19: 24 September Update – Rishi Sunak announces Winter Economy Plan
We now know that there will not be the usual Autumn Budget. Instead, Rishi Sunak has outlined the government’s plan, dubbed the Winter Economy Plan, to support businesses and safeguard employment over the next few months.
Included in this update is an overview of the key points to note. No doubt further details will be released over coming days and we will, of course, let you know when this information becomes available.
Coronavirus Job Retention Scheme (CJRS) replacement
The existing CJRS, or furlough schemes as it is often referred to, will end as planned on 31 October 2020.
A new Job Support Scheme, which will initially run for six months from November, will provide funding for employers who are able to retain employees albeit on shorter hours.
Employers will be required to pay the wages of staff for the hours they work. For the hours not worked, the employee will receive two thirds of their usual salary, the government and the employer paying one third each. The remaining third of the non-worked hours will not be paid. The level of government funding provided will be capped at £697.92 per month and calculated based on an employee’s usual salary. Please see HMRC’s calculations for these payments.
The Job Support Scheme will be made available to all businesses across the UK even if they have not previously taken advantage of the CJRS, provided they are able to demonstrate that they have been adversely affected by COVID-19.
The scheme can also be used alongside the Jobs Retention Bonus which provides a one-off £1,000 payment for each furloughed employee who remains continuously employed through to 31 January 2021.
Self Employed Workers – SEISS Grant Extension
The Self Employment Income Support Scheme Grant (SEISS) is to be extended for another six months, from November 2020 until April 2021.
Funding will be limited to those individuals who are currently eligible for SEISS and are continuing to trade, but are finding their business adversely affected by COVID-19.
An initial taxable grant will cover three months’ worth of profits for the period from November to the end of January next year. This will cover 20% of average monthly profits and will be capped at £1,875 in total. A second grant will cover the period from February 2021 to the end of April 2021. The government have said that they will review the level of this second grant to respond to changing circumstances.
Changes to VAT, and Personal and Business Tax
The temporary reduced (5%) rate of VAT for hospitality, food, accommodation and attractions will be extended until 31 March 2021 – this was due to revert to 20% on 13 January 2021.
Businesses who have deferred their VAT bills until March 2021 now have more breathing space through a New Payment Scheme. This will provide an option to pay back in smaller installments and spread payments over the full financial year 2021-2022. Rather than a lump sum at the end March 2021 you can will be able to make 11 smaller interest-free payments during 2021-22.
In addition, self-assessment taxpayers will have more time to pay taxes due on 31 January 2021. By using HMRC’s self-service Time to Pay facility payment can be spread over 12 interest-free instalments. This means that payments already deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
The government is extending the application period for their COVID-19 loan schemes until 30 November 2020.
In addition, the repayment terms of the loans will be extended from six years to ten, which may reduce monthly repayments by almost 50% in some cases.
Business that have taken a Bounce Back Loan, will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which can be used up to three times), or to pause their repayments entirely for up to six months (an option which can be used once and only after having made six payments).
You can find the full details here on the GOV.UK website.
It has been a very long road for many this year. We know there are many challenges ahead and we encourage you to contact us if you need support. Our phone numbers and email addresses remain as they were. We cannot say too many times that we are here to help.
Information correct as of 24 September 2020