In the Chancellor’s Winter Economy Plan that, rather than paying in full at the end of March 2021, businesses will be now able to choose to make 11 equal instalments over 2021-22.
Yesterday Chancellor Rishi Sunak announced a new ‘Jobs Support Scheme’ to subsidise the wages of people in work. This new scheme will replace the furlough scheme when it ends in October.
Jobs Support Scheme
This new scheme gives businesses the option of keeping employees in a job on shorter hours, rather than making them redundant.
Workers will continue to work rather than be furloughed, and must work a third of their usual hours. For this work time they will be paid by their employer as normal. For the time they are not working, the government will now pay a third of their usual pay. The Treasury says that this new scheme will ensure that employees will get 77% of their usual pay. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The new ‘Jobs Support Scheme’ is targeted at small to medium-sized businesses, however for larger businesses, if their turnover has fallen by a third, they will be able to take advantage of the scheme as well.
The grant for self-employed workers will be extended in a similar way. The Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). A 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. 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 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 – ensuring the support continues right through to next year.
Self-assessment tax payments deferred from July, as well as those due in January, will not need to be paid until January 2022.
The full release can be found on the Government website.
The Chancellor announced a new ‘pay as you grow’ to help companies repay any state-backed business loans.
Loans can be extended from six to ten years which effectively almost halves prepayments. Interest -only payments can also be made and he stated that firms in ‘real trouble’ can suspend their payments. All the government state-backed loan schemes will be extended until the end of 2020.
Up to half a million businesses which deferred VAT bills will be allowed to make interest-free payments over 11 months rather than handing over a lump sum in March.
The Hospitality Sector
VAT currently stands at 5% for hospitality and leisure firms and was due to increase back to 20% on 13 January 2021. The Chancellor announced he was cancelling this planned increase to 31 March 2021.
If you feel you need a little support unwinding this latest round of updates so you understand how best to leverage them for your business, please get in touch for an informal chat or take a look at our flexible business support packages.
Download The Winter Economy Plan