On 24th September, as part of his Winter Economy Plan speech, Chancellor Rishi Sunak outlined the next phase of the Government’s planned economic response to the COVID-19 pandemic, to help protect jobs and businesses through the winter months.
Back in March, at the start of the pandemic, Government economic support reflected the situation faced by businesses at the time – temporary disruption and closure. The situation has now evolved to one of more permanent economic adjustment. In response to this, the Chancellor explained that the next phase of Government economic support for people’s jobs, businesses and public services must also evolve.
Outlined below are the five key economic measures introduced by the Chancellor to tackle the next phase of the pandemic.
- Job Support Scheme
Many businesses are now operating viably and safely, but they face reduced demand over the winter months. The Job Support Scheme gives businesses support to bring people back to work and protect as many viable jobs as possible.
- Starts 1st November 2020 and runs for six months
- For employees on payroll on 23rd September 2020
- Employees must work for at least one-third of their usual hours and get paid (presumably) at a normal rate
- Government and employer pay one-third each of the employee’s remaining hours
- Employees working 33% of their normal hours would receive at least 77% of their normal pay
- Employer will pay the cost of employee’s national insurance and pension contributions
- Grant for the self-employed – self-employment income support scheme (SEISS)
The SEISS is to be extended from November 2020 to April 2021 in the form of two further taxable grants – grant three and grant four. Grant three covers businesses affected after 1 November 2020 and will be paid in a single instalment. Details of the fourth grant are not yet known.
- Third grant will be available to cover 20% of average monthly profits for three months, from 1st November 2020 – capped at £1,875 for the three months
- Fourth grant will also be made available for the period February to April 2021, but the amount is not yet known
- Grant application open and close dates for third and fourth grants are not yet known
- Coronavirus loan schemes
Coronavirus loans introduced at the beginning of the pandemic have given over a million small businesses a £38 billion boost to help them survive. The Government is introducing a new scheme to allow businesses more time and greater flexibility to repay their loans.
- Bounce Back Loans upgraded to Pay As You Grow scheme
- Loan application closing dates are extended until 30th November 2020
- CBILS and BBL repayment terms extended to 10 years
- BBL: Businesses will be able to pay interest-only repayments for up to six months, and struggling businesses can apply for holiday repayments for up to six months
- Tax deferrals
To support businesses facing difficulty with cashflow, the Chancellor announced that he will give them the option to spread deferred tax payments in interest-free instalments. All businesses that took advantage of the VAT deferral can use the new payment scheme. From January 2021, self-assessed taxpayers will be able to extend any outstanding tax bill over 12 months.
- Taxes due by 31st January 2021, related to the 2019/20 tax year and 1st payment on account for the tax year 2020/21, can be paid in 12 monthly instalments until January 2022
- For tax liabilities under £30,000, tax payment deferral can be applied for via an online form
- For tax liabilities above £30,000, tax payers need to call HMRC to agree a bespoke payment plan
- Deferred VAT payments for the period 20th March to 30th June 2020 can be paid in 11 equal instalments between April 2021 and March 2022. Businesses need to apply online for this further deferral
- VAT
The Chancellor’s final step is in support of hospitality and tourism – two of the most affected sectors.
- VAT rate reduction for the hospitality and tourism sectors has been extended to 31st March 2021
To find out how you can apply for the new schemes announced by the UK government, call us on 0207 118 7171 or email at info@gainsaccountants.com.