Following the recent rise in Coronavirus cases and new government restrictions being announced, the Chancellor of the Exchequer announced the UK's Winter Economy Plan.
If you are anything like me, you would have been glued to the updates waiting for the next phase of government assistance despite restrictions starting to creep back, so what will happen after the furlough scheme has ended?
Check out my main takeaway points below:
Who is eligible for the new job support scheme?
All small and medium-sized businesses are eligible for the new job support scheme with larger businesses needing to prove their turnover has fallen during the pandemic.
Even if you have not used the furlough scheme - employers can use the new scheme for their employees.
The new Government scheme will last for six months to 30 April 2021.
To be eligible, employees will need to be working a minimum of 33% of their hours.
For the remaining hours not worked, the Government and employer will pay one third of wages each.
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.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month
Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the employer along with the government will each pay one third of their equivalent salary.
What about sole traders? Is there any additional assistance?
The existing self-employed grant (SEISS) will also be extended on the same basis as the job support scheme.
An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
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.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.
Self Assessment Approximately 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Bounce Back Loans - More flexibility announced
More than a million businesses who took out a Bounce Back Loan will get more repayment time through a new Pay as You Grow flexible repayment system.
Loans can be lengthened from six years to ten, which can cut monthly repayments by nearly half.
Interest-only periods of up to six months and payment holidays will also be available to businesses.
The Government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years but only if it will help businesses to repay the loan.
The Chancellor also announced an extension in applications for the government’s coronavirus loan schemes until the end of November.
Further Tax Updates from the Winter Economy Plan Reduction in VAT to 5% for the hospitality and tourism sector will be extended until 31 March 2021. VAT Help Deferral of VAT bills through the new payment scheme. Up to half a million businesses who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments by making 11 smaller interest-free payments during the 2021-22 financial year. Further guidance will be issued in due course. See here for more information: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan
If you have any questions about this or anything else you need to discuss, please book an appointment with me .