The Winter Economy Plan – what we know so far

The winter economy plan

The Winter Economy Plan – what we know so far

Chancellor Rishi Sunak has revealed his plans to support businesses and jobs through the winter.

He revealed a new Jobs Support Scheme and the relaxation of some tax and loan repayments for businesses – so let’s explain what this means:

Jobs Support Scheme

The Jobs Support Scheme will require employees to work at least one-third of their usual hours and to be paid as normal.

The Government and employers will jointly cover the remaining two-thirds of their lost pay and the employee will keep their job, although the employer will need to pay more of the employee’s wage than under the current flexible furlough arrangements.

The details will be provided in Government guidance that will be released shortly.

The scheme can be accessed by all SMEs but larger businesses will have to must show their turnover has fallen during the crisis.

Employers can use the new Jobs Support Scheme even if they haven’t previously used the furlough scheme, they can still also claim the furlough bonus in January 2021, please see our blog here for further details about this.

The new scheme will run for 6 months from 1st November 2020 however please note businesses will not be able to issue redundancy notices to employees on the Job Support Scheme.

Self Employed Grant

The Chancellor is also extending the self-employed grant “on similar terms and conditions” to the new jobs support scheme – further details will be revealed on this over the coming days and weeks.

VAT and Tax which has been deferred

Many businesses took advantage of the VAT deferral scheme which meant their VAT is deferred to March 2021.

Any VAT which has been deferred will no longer need to be paid in full by the end of March 2021 – you will have the option to spread out the debt into interest free, smaller, repayments over 11 months.

Extra support has been announced to allow you to delay your income tax (self assessment) bill – but it will still need to be paid.

Those with income tax debt of up to £30,000 will be able to set up a payment plan over 12 months to January 2022 – this will help you if you have immediate financial problems, but you will still need to find the money eventually.

Please note – you will still need to get through to HM Revenue and Customs on the phone to set up the plans – this has been a frustrating experience for many people.

VAT rate for Hospitality and Tourism

The lower 5% VAT rate will now be extended from 13th January 2021 to 31st March 2021.

Bounce Back Loans

A “pay as you grow” scheme has been announced for businesses to allow them to extend their bounce back loans from 6 to 10 years, nearly halving the average monthly repayment when they become payable.

Businesses will also be able to move to interest only payments or suspend repayments for six months if they are “in real trouble” – credit ratings will be not be affected.

Bounce Back Loan repayment periods will be extended from 6 to 10 years, with repayment holidays available.

The Government guarantee for CBILS loans will also be extended to 10 years, giving lenders flexibility.

He also revealed there are plans for a successor loan programme that is set to begin in January – further details will be released on this at a later date.

A link to the official guidance is here.