Winter Economy Plan

You will no doubt have seen or heard that late last week Rishi Sunak announced his ‘Winter Economy Plan’, a package of new support measures in preparation for the longer term effects of the Covid-19 pandemic.  These include a new job support scheme, continuing reduced VAT rates, and additional time to pay deferred taxes.

  • A new ‘Job Support Scheme’ to replace the furlough scheme which ends on 31 October.
  • An extension of the Self-Employment Income Support Scheme.
  • Bounce-back loans: ‘pay-as-you-grow’: loan repayments may be extended from six to ten years. Existing business loan schemes will remain open until 30 November 2020 with a new scheme for January 2021.
  • Payment instalment options for businesses who have deferred their VAT until 31 March 2021.
  • Payment instalment options for taxpayers who deferred income tax payments on account to 31 January 2021 (from 31 July 2020).
  • An extension to the VAT rate reduction for businesses in the hospitality and tourism industries until March 2021.

Job Support Scheme

The new scheme is to apply for six months from 1 November 2020.

  • Anyone employed as of 23 September 2020 will be eligible but employees must not be on a redundancy notice.
  • Employees must work at least 33% of their usual hours.
  • Employees should be paid as normal. For every hour not worked the employer and the government will each cover one-third of the employees’ usual pay.  The government contribution will be capped at £697.92 per month.
  • The employer will be reimbursed in arrears as with the CJRS.
  • There is no requirement for the employer to have previously furloughed workers under the CJRS.
  • The scheme can be used alongside the Job Retention Bonus scheme, alongside which employers can claim a bonus of £1,000 for each employee retained until at least January 2021, following a return from furlough.

Self-Employed Grant extension

There is to be similar support for the self-employed by way of extending the Self-Employment Income Support Scheme to April 2021.

  • A further two taxable grants each covering a three month period:

o    The first to cover November 2020 to January 2021 will be based on 20% of average monthly trading profits, capped at £1,875.

o    The details of the second grant, covering February to April 2021 are to be announced in due course.

Business funding and cashflow

  • Under the new ‘pay-as-you-grow’ terms of the Bounce-Back Loan scheme loan repayments may be extended from six to ten years.
  • Businesses who have taken bounce-back loans have the option of moving temporarily to interest-only payments for periods of up to six months or to pause their repayments entirely for up to six months without it affecting their credit rating.
  • To reflect this extension the terms of the CBILS loans will be changed so that the government’s guarantee is extended to ten years.
  • All business loan schemes are to remain open for new applications until 30 November 2020.
  • A new loan scheme is being devised for January 2021, with no details provided yet.

Deferred tax bills

  • Businesses who deferred VAT payments which were due between 20 March 2020 and 30 June 2020 to 31 March 2021 will now be able to pay these in eleven interest-free instalments between April 2021 and March 2022.
  • Taxpayers who deferred their July 2020 Income Tax payments on account to 31 January 2021 will now be able to pay these over a twelve-month period up to 31 January 2022. This applies to taxpayers with liabilities under self-assessment of up to £30,000.  This will be under a Time to Pay arrangement so there may be interest on this deferral but there has not yet been any detail on this.

VAT and the hospitality and tourism sectors

  • The temporary VAT cut, to 5%, for the hospitality and tourism sectors, was due to end on 12 January 2021 but has been extended to 31 March 2021.

We hope the above helps and it keeps you up to date. Please let us know if you have any questions.

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If you’re just starting out with your business venture and want the best advice on creating rock-solid foundations. Or you’re an established business that’s looking to grow and need help to build and fund your growth plan.

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During the meeting, we will learn more about your business, understand your motivation and your market and give you the business advice you need.