Chancellor Sunak’s Winter Economy Plan

 

Chancellor Rishi Sunak delivered a speech in regards to his Winter Economy Plan to the House of Commons today, Thursday 24th September 2020.

Throughout his statement, Chancellor Sunak announced a new Job Support Scheme to prevent mass job loss when the Jobs Retention Scheme ends at the end of October, alongside updates to various other government incentives that are currently on offer to help the British people.

 

 

The Chancellor has outlined the following within his Winter Economy Plan speech:

 

Job Support Scheme:

The furlough scheme has been winding down since August, with plenty of concern for what will replace the scheme which has paid wages of workers up and down the country since March.

The Job Support Scheme is designed to protect viable jobs in businesses who are
facing lower demand over the winter months due to Covid-19, to help keep their
employees attached to the workforce.

Employers using the Job Support Scheme will also be able to claim the Job
Retention Bonus if they meet the eligibility criteria.

 

Support Available:

  • The Government will pay a third of hours not worked up to a cap, with the
    employer also contributing a third. This will ensure employees earn a minimum of
    77% of their normal wages.
  • For every hour not worked by the employee, both the Government and employer
    will pay a third each of the usual hourly wage for that employee.
  • The Government contribution will be capped at £697.92 a month.
  • Grant payments will be made in arrears, reimbursing the employer for the
    Government’s contribution.
  • The grant will not cover Class 1 employer NICs or
    pension contributions, although these contributions will remain payable by the
    employer
  • The scheme will open on 1 November 2020 and run for 6 months, until April 2021.
    Further guidance will be published shortly.

 

Eligibility:

  • All employers with a UK bank account and UK PAYE schemes can claim the grant.
  • Neither the employer nor the employee needs to have previously used the
    Coronavirus Job Retention Scheme.
  • Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs)
  • Employees must be on an employer’s PAYE payroll on or before 23 September
    2020. This means a Real-Time-Information (RTI) submission notifying payment to
    that employee to HMRC must have been made on or before 23 September 2020.
  • In order to support viable jobs, for the first three months of the scheme, the
    employee must work at least 33% of their usual hours. After 3 months, the
    Government will consider whether to increase this minimum hours threshold.
  • Employees will be able to cycle on and off the scheme and do not have to be
    working the same pattern each month, but each short-time working arrangement
    must cover a minimum period of seven days.
  • Employees cannot be made redundant or put on notice of redundancy during the
    period within which their employer is claiming the grant for that employee

 

Extending the existing Self Employment Income Support Scheme (SEISS):

An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus and it will be provided on similar terms to the Jobs Support Scheme.

The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total cap of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April. More details are to be announced in the following weeks.

 

Tax Cuts & Deferrals

  • The government has announced an extension to the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March 2021.
  • Businesses who deferred their VAT payments will now have access to a new VAT payment scheme. Rather than paying a lump sum in full at the end March 2021 they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
  • The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021.Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 and January 2021 will not need to be paid in full until January 2022. 

 

Business Loans:

A new Pay as You Grow flexible repayment system for the Coronavirus Business Interruption Loans has been introduced to provide more flexibility to businesses in regards to repaying what is owed. This plan includes:

  • The government guarantee on these loans will be extended to 10 years as opposed to 6 (this should cut monthly payments by nearly half) and a new successor loan guarantee programme will be announced in January 2021.
  • Those struggling to pay the loans back will now be able to choose to make interest-only repayments and “anyone in real trouble” can suspend repayments altogether for up to six months. Credit ratings will be unaffected
  • The government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
  • All loan schemes application deadlines have been extended and businesses will be able to apply for any of the following loans up until the 31 November 2020; Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.

 

 

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