Mr Sunak confirmed on 24th September that approximately £190 billion of financial aid has been provided to employers, employees and the self-employed since the onset of the coronavirus restrictions in the UK.
The Winter Economy Plan is designed to manage the nation’s fragile economic recovery, while limiting the spread of coronavirus.
Self-Employed Income Support Scheme extended
Self-employed individuals have also been given additional reassurances of Government aid between now and 30th April 2021. The Self-Employed Income Support Scheme (SEISS) will now provide 20% of an individual’s average monthly trading profits in the form of a cash grant.
The initial grant will cover November through to January, spanning three months of average monthly trading profits in one instalment – up to a maximum of £1,875 in total.
The Government has advised an additional second grant will also be available for self-employed individuals to cover the period from February 2021 to 30th April 2021. The amount of support has not yet been clarified and the Government have advised the grant may be adjusted if economic circumstances change.
Launch of Job Support Scheme
Within the Chancellor’s statement to the House of Commons, he suggested that the winding up of the Coronavirus Job Retention Scheme was necessary to focus the efforts on supporting “viable” businesses and jobs.
The launch of the new Job Support Scheme was announced as a replacement, with a three-pronged approach:
1. Support viable jobs
Employees must work at least a third of their contracted working hours. Employers must pay for this percentage of their employees’ wages. For every remaining contracted hour not worked, the Government and the employer will pay a third of the shortfall in the employee’s usual pay. The Government’s contribution is capped at £697.92 per month. This means those working only 33% of their usual hours will still receive 77% of their salary.
2. Open to all small and medium businesses (and some larger firms)
The new Job Support Scheme is open to all small and medium-sized businesses, as well as larger firms whose turnover has dramatically fallen in recent months. Even small firms that did not need to use the original furlough scheme can potentially utilise the Job Support Scheme.
3. Employers also able to claim Job Retention Bonus simultaneously
The Job Support Scheme is designed to work in tandem with the Jobs Retention Bonus, which could be worth £1,000 for every employee who has been included in a previous furlough claim and retained until 31st January 2021.
Bounce Back Loans (BBL)
The Government has also extended its access to the temporary loan schemes, which have provided financial aid to more than a million firms thus far.
The Bounce Back Loans scheme, which provides between £2,000 and £50,000 in funding to businesses, capped at 25% of turnover, has introduced a new ‘Pay As You Grow’ repayments system. All firms will now be able to repay their loan over ten years instead of six. On average, this will reduce a business’ monthly Bounce Back Loan repayments by around 50%.
Businesses struggling to keep up with their monthly repayments may opt 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).
Coronavirus Business Interruption Loan Scheme (CBILS)
More than £15.5 billion has been made eligible to UK firms via the CBILS. The Government has confirmed their intention to give lenders the ability to extend the term of these loans from a maximum of six years to 10 years alongside their guarantee for these loans.
The deadline for new applications for the above two schemes has been extended until 30th November 2020.
More than 500,000 businesses opted to defer their VAT bills earlier in the year. To make those VAT bills easier for firms to manage, the Chancellor confirmed that these repayments could be spread over 11 smaller monthly instalments, with no interest to pay.
The Chancellor also spoke up in support of the tourism and hospitality sectors, with the end of its reduced rate of VAT in sight on 13th January 2021. Mr Sunak confirmed that the 5% VAT rate for tourism and hospitality firms would remain in place until 31st March 2021.
Self-assessment taxpayers are to be given more time to pay their taxes due in January 2021. This builds on the Self-Assessment deferral which was provided in July 2020. Taxpayers with no more than £30,000 in self-assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to set up a payment plan. This will spread their July 2020 payments on account and January 2021 liabilities over an additional 12 months.
Last updated: 7th October 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.