Against a backdrop of surging Coronavirus cases across the UK, and the introduction of further Government restrictions, the Chancellor of the Exchequer, Rishi Sunak, delivered his Winter Economy Plan on Thursday of last week. Sunak’s Plan is intended primarily to offer additional support to businesses and protect jobs over the last quarter of 2020 and into 2021. It comprises four main additions to the existing plan.
A New Job Support Scheme
This is to be introduced from 1st November and set to run for six months, during which time the Government will contribute towards the wages of employees that are working fewer than normal hours due to decreased demand. Whilst employers are to continue funding wages for the hours that are worked, the Government and employer will each pay one third of equivalent salary for the hours not worked. In order to qualify, employees must be working at least 33% of their typical hours, with the level of grant capped at £697.92 per month.
Extension of the Self Employment Income Support Scheme (SEISS) Grant
For those currently eligible for the SEISS Grant and continuing to trade but facing reduced demand, a further taxable grant will be available. This offers a lump sum of three months’ worth of profits from November to January 2021, equating to 20% of average monthly profits up to a maximum of £1,875.
A second grant is also set to be available for the self-employed to cover the period from February to the end of April 2021, although this is subject to change.
Temporary 15% VAT Cut
Sunak also announced that the 15% VAT cut is to be extended to the end of March 2021 for the tourism and hospitality sectors, the intention being that businesses within this sector feel able to retain staff as they adapt to the impact of the Coronavirus.
Furthermore, businesses that deferred their VAT bills will now be able to make payment in eleven instalments during the 2021/22 tax year, rather than an as one lump sum at the end of March 2021, under the New Payment Scheme.
Increased Flexibility for Business Loans
The introduction of a new ‘Pay As You Grow’ repayment system for Bounce Back Loans will see the extension of loan terms from six to ten years. In conjunction, businesses may be able to extend the length of Coronavirus Business Interruption Loans to ten years. Applications for such loans, and other Coronavirus loan schemes, will now remain open until the end of November.