Summary: Winter Economy Plan
The Chancellor Rishi Sunak today outlined additional government support being made available to businesses and workers impacted by coronavirus across the UK.
As we enter the next phase of economic response to coronavirus, an emphasis has been placed on protecting jobs and the economy over winter.
The primary goal remains supporting jobs, but now it is clear the economy is likely to undergo a more permanent adjustment, The Chancellor explained the Government feels it is fundamentally wrong to keep people in jobs that only exist because of the furlough
New announcement include a new Jobs Support Scheme, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
New Jobs Support Scheme
A new Job Support Scheme will be introduced from 1st November, and will run for 6 months to support the wages of people in viable jobs, giving businesses the opportunity to keep people in work on shorter hours.
- Supporting viable jobs – The government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.
- Support targeted at firms that need it most – all small and medium businesses will be eligible, but only large firms that have seen a decline in revenue due to pandemic will be eligible.
- Businesses can claim both jobs retention bonus and support scheme.
There will be a similar scheme for self-employed, operating on similar terms and conditions as the new jobs support scheme.
There will also be restrictions on larger companies in terms of capital distributions to shareholders whilst they are in receipt for payments this scheme, and they will not be able to make redundancy notices to workers whilst they are on this scheme
Cashflow Support for Business
Bounce back loans have given over 1m small businesses a boost. To give them more time and greater flexibility on repayments:
- Introducing ‘pay as you grow’ loans scheme, with payments extended from 6 to 10 years, halving average monthly repayments. Businesses can also choose to make interest only payments if struggling. Can apply to suspend repayments up to 6 months if necessary. Their credit rating will not be affected
Changing terms of other loan schemes:
- Coronavirus Business Interruption Loan – extend guarantee on these loans up to 10 years so lenders can give more people more time to repay
- Extending deadline to end of this year for all loan schemes
- New successor loan scheme to start in January
Tax cuts and deferrals
- Businesses who deferred their VAT bills will be offered the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
- In addition, self-assessment taxpayers can apply for an additional 12-month extension from HMRC
- To support two of the most affected sectors – hospitality and tourism – government also announced it will extend the temporary 15% VAT cut for the sectors to the end of March next year.
For more information please visit the Government website here.
The British Chambers of Commerce responds to Chancellor’s Winter Economic Plan, you can read it here.
You can also read the Scottish Chambers of Commerce response to the Chancellor’s Winter Economic Plan here.