Government Coronavirus Winter Economy Plan

In his statement today, the Rishi Sunak the Chancellor set out his plans for the Coronavirus Winter to support small businesses, employees and the self employed along with measures designed to help larger businesses.

The Chancellor pointed out that in March he set out a plan for businesses that were closed. This was a temporary plan and rationale for this stage is different as it’s living with the virus rather than lockdown. It’s likely that we’ll be living with the virus for at least six months so the economy now needs a more permanent adjustment.

Today the Chancellor is setting out a plan for businesses that are open but facing decreased demand for their products and services. He also mentioned viable jobs several times – these measures are designed to support businesses that can survive, not those which are doomed to close.

Furlough

There is no extension to the furlough scheme but a new Jobs Support Scheme will apply to everyone that was employed as of yesterday. The scheme will support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer. The government will top up their wages to at least 3/4 of full pay. The scheme will support businesses right through the Coronavirus Winter and into Spring, running from November to April and all small & medium sized businesses are eligible to apply. Larger businesses will only be eligible when their turnover has fallen. Businesses are eligible even if they have not previously used the furlough scheme.

Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus. This should provide significant assistance to you if you still have previously furloughed employees as you can get them back to work without having to put them on full hours and full pay.

Self Employed Workers

If you are self employed, the Chancellor is extending the existing self-employed grant on similar terms and conditions as the new Jobs Support Scheme.

The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the Coronavirus Winter, covering 20% of average monthly trading profits via a government grant.

If you are one of the millions of self-assessed income taxpayers who deferred their tax bill, you will now be able to extend your outstanding tax bill over 12 months from January.

Bounce Back Loans

Bounce Back Loads have given over a million small businesses a £38 billion boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans, a Pay As You Grow plan is being implemented.

• Loans can be extended from six to ten years – nearly halving the average monthly repayment.
• Businesses who are struggling can now choose to make interest-only payments.
• Anyone in trouble can apply to suspend repayments altogether for up to six months.

To give businesses longer to apply for all Coronavirus loan schemes application deadlines have been extended to the end of the year. There is also the promise of a new, successor loan programme, set to begin in January.

VAT

Nearly half a million businesses deferred more than £30 billion of VAT this year. Those payments were all due in one lump sum in March but now businesses will be allowed to spread their VAT bill over 11 repayments with no interest to pay. The chancellor said that this will benefit up to half a million businesses – on average, turning a one off £60k payment in March, into 11 payments of less than £6k.

Hospitality and Tourism

To support more than 150,000 businesses and protect 2.4 million jobs through the winter the planned VAT increase is cancelled for hospitality and tourism. The lower 5% VAT rate will remain until the 31st of March next year.