Today, the Chancellor Rishi Sunak set out his Winter Economy Plan – a package of support measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus.
Having made a number of representations to the Treasury on behalf of businesses and workers in the Forest of Dean, I am pleased to see the Chancellor taking bold steps to protect viable businesses, preserve jobs and help support people’s wages through the winter.
The key parts of this Plan are as follows:
JOB SUPPORT SCHEME: To protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. Under the scheme, which will run for six months, employees will work at least one third of their normal hours and be paid for that work, as normal, by their employer. The government, together with employers, will increase those people’s wages covering two thirds of the pay they have lost by reducing their working hours. All small and medium sized businesses will be eligible to apply – even if they have not previously used the furlough scheme.
Employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention Bonus.
SELF-EMPLOYED GRANT: To ensure parity between employees and the self-employed, the Treasury will provide a grant extension for those who have used the existing Self-Employment Income Support Scheme. An initial taxable grant will be provided, covering three months’ worth of profits for the period from November to the end of January next year. This will be 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 - ensuring our support continues right through to next year.
‘PAY AS YOU GROW’ SCHEME: To give greater flexibility to the one million small businesses who have benefitted from Government loan schemes - all borrowers will now have the option to extend the length of their Bounce Back Loan from six years to ten, which will cut monthly repayments by nearly half. Rightly, this will have no impact on a business’s credit rating.
The Government will also allow Coronavirus Business Interruption Loan Scheme lenders to extend their loans to ten years as well by extending the government guarantee, providing more flexibility and support for those businesses.
EXTENDING GOVERNMENT BACKED LOANS: The Chancellor also announced he would be extending applications for the Government’s coronavirus loan schemes until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.
VAT CUT EXTENSION: To support more than 150,000 businesses and protect 2.4 million jobs in hospitality and tourism through the winter, the Government is extending the temporary 5 per cent rate of VAT until the end of March 2021.
VAT AND TAX LIABILITIES DEFERRAL: Up to half a million business 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. 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.
On top of this, around 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.