The Chancellor Rishi Sunak announces winter economy plan
On Thursday 24th September, the Chancellor Rishi Sunak announced his Winter economy plan to provide further support to the UK economy in a bid to minimise further unemployment.
The Coronavirus Job Retention Scheme is coming to an end in October, from the 1st November the new Job Support Scheme will kick in. Employees will be able to cut their working hours to a minimum of a third of their normal hours which will be paid for as normal by their employer. The Government, together with employers, will then increase wages to cover two-thirds of their pay, lost by reducing their working hours. Those employees on the new scheme will not be able to be put on notice of redundancy.
The scheme will last for six months in order to support the UK economy and protect jobs throughout the winter season. It will be open to all small and medium-sized businesses whilst larger firms would only be eligible if their turnover has fallen during the Coronavirus crisis. Larger firms will also see restrictions on capital distributions to shareholders whilst they are in receipt of money for the scheme.
The self-employed will also see an extension to the Self-Employed Income Support Scheme with similar terms to the new Job Support Scheme starting on 1st November. Income tax can also be delayed, for those that need to complete a self-assessment tax form every year. Anyone with a debt of up to £30,000, will be able to set up a payment plan over 12 months to January 2022.
For those businesses that deferred their VAT payment, they will no longer need to pay a lump sum at the end of March 2021. The option to split the payment into smaller, interest-free payments over an 11-month period will also be available. The lower VAT rate of 5% will also remain until the 31st March 2021 in order to provide more support to the hospitality and tourism industry.
A new ‘pay as you grow’ scheme was also launched for businesses that accessed the Government guaranteed loans. They can now be extended from six to ten years, this will nearly half the average monthly repayment. There will also be the option to move to interest only payments or payments can be suspended if the business is experiencing ‘real trouble’ (up to six months). Coronavirus Business Interruption Loans will also be extended up to ten years and a new loan scheme will be launched in January 2021.
Sean Daniel, Managing Director said “The second Coronavirus wave has seen the UK economy and more importantly jobs affected. We are glad to see a number of initiatives being announced to provide further support during the next six months”.
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