Today in his speech to the House of Commons the Chancellor, Rishi Sunak announced his latest plans to help protect jobs amidst the ongoing coronavirus pandemic. Whilst the primary goal to protect people’s jobs remains unchanged, Mr. Sunak has confirmed that the way to approach this must change.
Mr. Sunak has confirmed that the furlough scheme will not be extended as we must adapt and evolve. He claimed it is “fundamentally wrong” to hold people in jobs that only exist inside of the furlough scheme.
Job Support Scheme
The new Job Support Scheme will replace the existing furlough scheme. The scheme which will begin on 1st November and will last for six months will be available to all small and medium sized enterprises. However will be available to large sized enterprises where they can prove they have been adversely affected by the pandemic.
To be eligible for the scheme employees must work a minimum of 33% of their usual hours. For the remaining hours not worked the government and employer will pay a third of the wages each. The governments contribution being capped at £697.92 per month. This means that employees receive 66% of their usual pay for the hours not worked. For an employee working 33% of their normal hours they would receive 77% of their standard gross pay subject to the government contribution cap not being met.
Self-Employment Income Support Scheme
The Chancellor also confirmed that he is extending the Self-Employment Income Support Scheme (SEISS) on “similar terms” to the new job support scheme. The extension to the SEISS will support “viable traders who are facing reduced demand over the winter months, covering 20 per cent of average monthly trading profits via a government grant.” With the payments being made in two taxable grants covering three month periods, the periods will cover. November 2020-January 2021 & February 2021-April 2021.
Extension of access to finance schemes
The government will also be extending four of its temporary loan schemes, the schemes will now be open to new applications until 30th November 2020. The four schemes which have been extended are;
- Bounce Back Loan Scheme
- Coronavirus Business Interruption Loan Scheme
- Coronavirus Large Business Interruption Loan Scheme
- Future Fund
Pay as You Grow scheme
The Pay as You Grow scheme was also announced, the scheme will allow businesses more time and flexibility to repay bounce back loans.
The loans can now be extended from six to ten years, nearly halving the average monthly repayments. Further to this, there will be the option for interest only payments or to suspend payments for up to 6 months where firms are in difficulty. Mr. Sunak also confirmed that credit ratings will not be affected as a result of taking up any of the Pay as You Grow scheme initiatives.
VAT
Businesses who deferred their VAT payments from March-June 2020 will no longer have to pay these deferred VAT bills, due March 2021, in one lump sum. These businesses will have the option to spread this payment across the 2021-22 tax year, into smaller, interest free payments over the course of 11 months in equal instalments. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
The VAT reduced rated for the hospitality and tourism sectors will extended until 31st March 2021. The reduced rate of VAT which came into force in July was due to expire on 12th January 2021.
Self-Assessment extended time to pay
The government will also 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 twelve month period. This means that those with self-assessment liabilities due from July 2020 will have until January 2022 to make full payment.
The full winter economic plan can be found here.
