Government's Winter Economy Plan
Yesterday the Chancellor announced a number of measures to assist employers and businesses during the Covid19 Pandemic, including:
This Article Includes:
Job Support Scheme
To support viable UK employers who face lower demand due to COVID-19, and to keep employees attached to the workforce, the Government will be introducing a new Job Support Scheme from 1 November 2020.
Employees will need to work a minimum of 33% of their usual hours.
For every hour of their usual hours not worked, the employer and the Government will each pay one third of the employee’s usual pay.
Employees using the scheme will receive at least 77% of their pay.
The Government contribution will be capped at £697.92 per month
The employer will be reimbursed in arrears for the Government contribution.
The employee must not be on a redundancy notice.
The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme.
All Small and Medium-Sized Enterprises will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and the Government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.
The new scheme will be open to all employers even if they have not previously used the furlough scheme.
Self Employment Income Support Scheme (SEISS) Grant Extension
The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.
The scheme will last for 6 months, from November 2020 to April 2021.
The extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20%of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total. The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.
VAT deferral ‘New Payment Scheme’
Government will give businesses who deferred VAT the option to choose to make 11 interest free payments over the financial year 2021-22 rather than pay in full by the end of March 2021.
All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
Extending the temporary VAT reduced rate for hospitality and tourism
The Government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021.
This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.
Enhanced Time to Pay for Self-Assessment taxpayers
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 will not need to be paid in full until January 2022.
Extension of access to finance schemes
The Government is extending four temporary loan schemes to 30 November 2020 for new applications:
- Bounce Back Loan Scheme (BBLS)
Loans are between £2,000 and £50,000, capped at 25% of turnover.
A 100% Government guarantee to the lender.
The borrower does not have to make any repayments for the first twelve months, with the Government covering the first twelve months’ interest payments.
Under the new Pay as you Grow options (see below), Bounce Back Loan borrowers will all be offered the choice of more time and greater flexibility for their repayments.
- Coronavirus Business Interruption Loan Scheme (CBILS)
A loan facility to eligible UK-based businesses with turnover under £45 million.
The scheme provides loans of up to £5 million with an 80% Government guarantee to the lender.
The Government does not charge businesses for this guarantee and also covers the first twelve months of interest payments and fees.
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
A loan facility to eligible UK-based businesses with turnover above £45 million.
The scheme provides loans of up to £200 million (to a maximum of 25% of turnover), with an 80% Government guarantee to the lender.
- Future Fund
An investment scheme providing loans ranging from £125,000 to £5 million which are subject to at least equal matching from private investors.
Businesses that have already accessed a Future Fund convertible loan cannot apply for another one.
Pay as you Grow
The Government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years.
This will reduce their average monthly repayments on the loan by almost half.
UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
CBILS loan extension
The Government intends to allow CBILS lenders to extend the term of a loan up to ten years from the current term of 6 years.
More details on the above will be issued by the Government/HMRC and we will of course keep you updated on all developments.