Overview of announcements in the ‘Winter Economy Plan’

Category: COVID-19 - Posted On: Sep 24 2020

Today (Thursday 24 September), Chancellor Rishi Sunak addressed the House of Commons on his plans to continue protecting jobs through the winter.

Talk of a ‘nurturing recovery’ was expressed in his plans to support businesses and the self-employed and we’ve covered each of the main announcements below.

Jobs Support Scheme

It was confirmed that the Coronavirus Job Retention Scheme (CJRS) will close on 31 October, however it will be replaced by the Jobs Support Scheme (JSS). Beginning on 1 November, JSS will run for 6 months with the aim of keeping employees in a job on shorter hours, to avoid redundancies with the government and employer topping up one-third of their wages each (up to a cap of £697.92 per month).

Eligible employees must be working at least a third of their normal hours, which employers will pay as normal with the rest being topped up as above. For example, if an employee on £2,000 a month works half their hours, earning £1,000 of normal pay, the employer and government will each top up £333.

All businesses are eligible even if they have not previously registered for CJRS, but this is aimed at small to medium sized business. Larger businesses can only apply when turnover has fallen. Employers retaining staff on shorter hours can claim this and Job Retention Bonus.

Self-Employment Income Support Scheme extended

With expectations that demand will be reduced over the winter months, the SEISS will be extended until 30 April 2021. Set in the form of two taxable grants, the initial lump sum will cover November to January, worth 20% of average monthly trading profits, up to £1,875 via a government grant. Details of the second grant for February to April will be reviewed by the government and released in due course.

Flexible repayments for Bounce Back Loan

For over a million businesses who have borrowed under the Bounce Back Loan Scheme, they will be offered the choice of more time and greater flexibility for their repayments. Loans can be extended from 6-10 years, which offers lower monthly repayment with a separate option to suspend repayments for up to 6 months.

Extended deadlines for Government backed loans

The application deadline for the Future Fund, Bounce Back Loans, Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme will be extended until 30 November 2020, with lenders being able to offer CBILS borrowers more time to make their repayments where needed.

VAT Deferral 

Businesses who deferred their VAT until March 2021 can spread their payments over 11 monthly payments, instead of paying a lump sum, and self-assessed income taxpayers who need extra help, can also extend their outstanding tax bill over 12 months from January.

VAT cut for Tourism and Hospitality sectors extended 

The reduced rate of 5% VAT for the tourism and hospitality sectors will continue until March 2021.

We expect further detail to be released in the coming weeks and will keep you updated as and when information is available. You can read the Winter Economy Plan in full here.

To discuss how these announcements will affect your business, get in touch with one of our team by calling one of our offices.