Rishi Sunak has today announced his ‘Winter Measures’ support package to help businesses, employees and individuals through the ongoing troubles of the global COVID-19 pandemic.
The Chancellor announced a package of measures that includes 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 job support scheme
A new Job Support Scheme will be introduced from 1 November 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 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.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary and capped at £697.92 per month. The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
The Jobs Retention Bonus will sit alongside the new job support scheme and applies to workers who are kept on until the start of February 2021. Businesses can benefit from both schemes.
Self employed support
The Government are extending the Self Employment Income Support Scheme Grant (SEISS). 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 and 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.
There will be extension to the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
The Government will also allow further deferral of VAT bills 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.
Self assessment tax payments
In a similar way to the VAT deferral the Chancellor announced that income tax payers will 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.
CBILS applications and terms extended
The Chancellor announced he would be extending applications for the government’s coronavirus loan schemes until the end of November.
This includes extending the length of the loans available from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
For more information on how the packages will affect you and your business please contact your usual partner or manager who will be happy to assist.