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Here’s what business owners need to know about the Winter Economy Plan

The Government have now released plans on how they plan to protect jobs and support businesses over the coming winter period amidst a rise in COVID-19 cases and a second wave of lockdown measures for the UK.

The UK’s Chancellor Rishi Sunak outlined additional support earlier this week for businesses and workers impacted by coronavirus. The additional package aims to protect jobs and help businesses through the next few uncertain months.

The package includes a new Jobs Support Scheme to help protect workers returning to work, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The Chancellor of the Exchequer Rishi Sunak said:

“Our approach to the next phase of support must be different to that which came before. The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”

Jobs Support Scheme

The Jobs Support Scheme will be launched on the 1st of November 2020 to help businesses protect jobs where their demand may be reduced over the winter period. This scheme will run for six months and help keep employees attached to the workforce with the Government contributing to wages for those working fewer hours due to the decreased demand.

In order to meet the criteria, employees must be working 33% of their normal hours and will be calculated based on their normal salary, capped at £697.92 per month. It is open to businesses across the UK even those who did not take advantage of the furlough scheme previously.

The scheme is designed to work alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.

Extending the Self Employment Income Support Scheme Grant (SEISS)

Supporting millions of self-employed workers, the SEISS Grant will be extended for those currently eligible for the grant who are continuing to actively trade but face reduced demand due to coronavirus.

This will be initially a taxable grant of a lump sum that will cover three months’ worth of profit for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875. There will also be additional support for the self-employed to cover the period from February 2021 to the end of April.

Tax Cuts

To help give businesses with the tourism and hospitality industries the confidence to keep staff on during this time the Government will be extending the temporary 15% VAT cut to the end of March next year.

For the half a million businesses who deferred their VAT bills earlier this year will be given an extension through the New Payment Scheme which allows you to pay back in smaller instalments rather than paying a lump sum at the end of March 2021. This will be done in 11 smaller interest free payments during the 2021-2022 financial year.

Self Assessment tax payers will also benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility. This means that payments will not need to be paid until January 2022.

Bounce Back Loan Repayment

Those who took out a bounce back loan from the government earlier this year through a new Pay as You Grow flexible repayment system. This will extend the length of the loan from 6 years to 10 and thus cut monthly payments in half. This will help to further protect jobs and help businesses recover from the affects of the pandemic.

The Coronavirus Business Interruption Loan Scheme is also available to be extended from a maximum of 6 years to 10 years if it will help businesses repay the loan.

An extension on the coronavirus loan schemes has also been announced up until the end of November this year. Meaning more businesses will be able to take advantage of the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.

 

You can read more on the full announcements here. If you have any thoughts or comments on this make sure to let us know by tagging us on social media.

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