Earlier today the Chancellor, Rishi Sunak, delivered his Winter Economy Plan – it was targeted and comprehensive, supporting cashflow, as well as jobs.
The message seemed clear. We are now in a position where business needs to adapt to live with the implications of the virus, rather than putting in place temporary measures and waiting for things to get back to normal. Most of the measures outlined below cover six months, to match with the six month expected timescale laid out by Boris Johnson earlier this week.
- The Job Retention/Furlough Scheme will end as previous mentioned at 31 October.
- This will be replaced by The Job Support Scheme from 1 November. If any employee works a minimum of 33% of their usual hours (definitions to be confirmed) then for any hours not worked, the government and employer pay 1/3 each of their remaining wages. This gives an overall split take home for someone doing 33% of their hours, 77% of their pay. Meaning an overall split of: 55% employer, 22% government. It will still be possible for an employee to qualify for the Job Support Scheme and the Job Retention Bonus of £1,000 if still employed, following furlough, at 31 January 2021.
- This measure will be targeted to include all SMEs. Larger businesses (Broadly 250+ employees and turnover £50m+) will have to prove that they have seen turnover fall as a result of the pandemic.
- Any UK employee will be eligible (they do not have to have been furloughed already) and the scheme will last six months. The self-employed scheme (SEISS) will be rolled forward for self-employed people.
Separate stages announced here:
- Bounce Back Loans – there have been £38bn in bounce back loans. These can now be spread for up to 10 years. It is possible to obtain a payment holiday or switching to interest only for a period of time. This should not affect your credit rating. This is being known as ‘Pay as You Grow’.
- Coronavirus Business Interruption Loans (CBILS) – 60,000 businesses have one of these. The Government Guarantee will be extended for 10 years, making loans easier to afford and obtain. All business loans to be given a new closing date of 31 December this year. There will also be a further new loan scheme in January, with details to be announced.
- VAT Deferral – £30bn of VAT has been deferred to March 2021! There will be the option to clear this deferral over 11 equal instalments, interest free, easing cash flow pressures coming out of the winter.
- Self Assessment liabilities falling due at 31 January 2021 could be split over 12 months also.
- Hospitality and Tourism will see lower VAT rates in place (5%) until 31 March 2021, instead of ending in January.
Overall, these are measures are timely and – hopefully – will offer businesses the reassurance that they need to continue to keep employees on the payroll, and if necessary, to take advantage of the cashflow supports in place.