Winter Economy Plan: Key Information

Scrapping the usual Autumn Budget, Rishi Sunak has instead announced a host of measures aiming to boost the economy and save jobs in the coming months.

Here’s a useful summary of the new and extended initiatives announced on 25 September.

Job Support Scheme

A new Job Support Scheme will replace the current Coronavirus Job Retention Scheme, running for 6 months from 1 November 2020. The new scheme will give small businesses the chance to keep employees in their jobs on shorter hours, in a bid to avoid redundancies. At a glance:

• Employees should be paid as normal, and must work at least 33% of their usual hours
• For every hour not worked, the government and the employer will each pay a third of employees’ usual pay
• Government contribution will be capped at £697.92 per month
• Employees need to have been on PAYE payroll since 23 September 2020 and must not already be on a redundancy notice
• This scheme can be used alongside the Job Retention Bonus
• Large businesses will have to show that their turnover is lower now than it was before Covid-19 through a financial assessment test (but there’s no test for SMEs)

More details and examples are available in the government’s latest Job Support Scheme Factsheet.

Self-Employed Income Support Scheme (SEISS)

The SEISS has been extended from November 2020 to April 2021, through two taxable grants that each cover a three month period. The first grant will cover the start of November to the end of January. The grant will consist of 20% of average monthly trading profits, paid out in a single installment and capped at £1,875. Details of the second grant, covering February to the end of April, will be announced in due course. Find out more with the SEISS Extension Factsheet.

VAT Deferral

Businesses who deferred their VAT payment for March to June 2020 will now have the option to pay in 11 smaller payments – interest free – over the 2021/22 financial year, up to the end of March 2022. You need to opt in to join this scheme. Those who can pay by 31 March 2021 may still do so.

Self Assessment Deferral

Those due to pay their self assessment tax in January 2021 can take advantage of HMRC’s Time To Pay facility and set up a payment plan over an additional 12 month period. To be eligible, you need to owe less than £30,000 in self assessment liabilities. You can check eligibility and set this up at gov.uk.

Bounce Back Loan Scheme

Three announcements in relation to the BBLS:

1. All businesses who have borrowed under the Bounce Back Loan Scheme will now have up to 10 years to pay back their loan.
2. Businesses struggling with loan payments can temporarily move to interest-only payments for periods of up to 6 months (you can do this a maximum of 3 times) or to pause repayments entirely for up to 6 months (you can do this just once, and only after having made 6 payments), without affecting your credit rating.
3. Applications for the Bounce Back Loan Scheme will now stay open until 30 November 2020, with a new guarantee loan programme being worked on for January 2021 onwards.

Hospitality & Tourism

For hospitality and tourism businesses, the temporary VAT reduced rate of 5% has been extended to 31 March 2021.

For more details from the chancellor’s announcements, you can take a look at the full Winter Economy Plan here. If you have any further questions, contact your Warr & Co accountant for tailored advice that’s relevant to you and your business.