Help beyond furlough – the ‘Winter Economy Plan’
Last week Chancellor Rishi Sunak delivered his Winter Economy Plan, outlining financial help for businesses and individuals for the months ahead. (Note the Autumn Budget has been postponed to early 2021)
The key measures are outlined below:
Furlough’s replacement – the ‘Job Support Scheme’
The furlough scheme winds down at the end of October and its replacement, the Job Support Scheme is designed to top up the wages of those in work. Employers will be incentivised to avoid making roles redundant with recurrent waves of the virus expected to cause further disruption to the economy. Key points:
- The scheme begins on 1 November and runs for 6 months
- Employees must work at least a third of their usual hours, paid for by the employer
- For the time they are not working, the government and the employer will each pay a third of the employee’s usual pay
- The employee receives 77% of usual pay overall with the level of grant capped at £697.92
- Employees must be on an employer’s PAYE on or before 23rd September
- The JSS is open to SME employers with larger businesses eligible if turnover has fallen by a third
- Large businesses will have to meet a financial assessment test (none for SME businesses)
- Businesses can claim both the JSS and Job Retention Bonus (a one-off payment of £1,000 employed continually through to 31 Jan ’21 earning on average £520 per month)
- Businesses don’t have to have previously used the furlough scheme to be eligible for JSS help
Extension of the Self-Employed Income Support Scheme ‘SEISS’
- Self-employed workers can apply for a new grant to cover the three months to end of Jan ‘21
- The taxable grant will be at 20% of average monthly earnings, capped at £1,875
- A second grant will be available for the three months to end of April ‘21
- Under ‘Time to Pay’, self employed taxpayers can defer tax payments from July 2020 to January 2022, a year later than the previous extension
Repayment of state-backed business loans – ‘pay as you grow’
- Businesses can repay state-backed loans back over a 10-year period (up from 6 years), almost halving repayments
- State-backed loans have been extended until the end of 2020 with a replacement scheme due in 2021
- Borrowers have the option of making interest-only repayments with businesses in real trouble able to suspend repayments
VAT concessions
- The planned increase in VAT from 5% to 20% on 13th Jan has been scrapped for the hospitality & leisure sector
- The lower rate is effective until 31 March 2021
- Business are permitted to spread VAT bills across 11 payments
Please get in touch if you’d like to discuss the changes and what they mean for you. Email Julia Gallagher or call 01527 558539.
