The Chancellor Rishi Sunak has set out the Government’s latest measures as part of the Winter Economy Plan designed to support employees and businesses.
This included confirmation that businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months – benefitting up to half a million businesses.
This is a key point that the BSA has been raising as part of our continued engagement with government.
The Chancellor began by confirming that the furlough scheme is to end and be replaced by a new jobs support scheme launching 1 November.
The scheme has the following key features:
- Employees will have to work a third of normal hours. They will be paid as normal for those hours. For the reaming hours not worked, the Government and Employer will a third each.
- This means that an employee working 33% of their hours will receive 77% of their pay with employers paying 55% and the Government paying 22%.
- The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
- This will apply to small and medium sized enterprises. Larger employers will only be covered if their turnover has gone down.
- All employers will be allowed to apply, even if they did not use the furlough scheme and firms can use it alongside the job retention bonus.
- There will be restrictions on larger companies, in terms of capital distributions to shareholders while they are in receipt of money for their workers on this scheme.
- They will not be able to make redundancy notices to those workers who are on this scheme throughout its duration.
He also announced a new Pay as You Grow scheme for businesses which took government guaranteed loans during the crisis. Loans can now be extended from six to ten years and businesses can also move to interest only payments or suspend payments if they are “in real trouble” for up to six months. These will not affect credit ratings.
Coronavirus Business Interruption Loans will also be extended for up to 10 years and there will also be a new loan scheme in January.
The application deadline for all coronavirus loan schemes – including the future fund – has been extended to 30 November.
Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months – benefitting up to half a million businesses. This is a key point that the BSA has been raising at a ministerial and departmental level and was also included in our CSR Submission.
Any self-assessed income taxpayers who need extra help can also now extend their outstanding taxbill over 12 months from January.
The Self-Employment Income Support Scheme has been extended to 30 April 2021 to support viable traders who are facing reduced demand over the winter months, covering 20 per cent of average monthly trading profits via a government grant. 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.
The Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
Full details of the Winter Economy Plan can be read here.