The Chancellor, Rishi Sunak, cancelled this year’s Autumn Budget yesterday and today outlined additional support for businesses to assist recovery from the Covid-19 pandemic in his ‘Winter Economy Plan’.
The Coronavirus Job Retention Scheme is not being extended and will continue to remain flexible until 31 October 2020 as previously planned. As part of the scheme, employers will receive a one-off bonus of £1,000 (paid in February 2021) for each furloughed employee who has been paid on average over £520 per month between the end of Coronavirus Job Retention Scheme and 31 January 2021.
However, from 1 November 2020, a new Job Support Scheme will be introduced for businesses with decreased demand over the winter months due to coronavirus for a period of six months. In order to qualify, employees must work at least a third of their usual hours. The Government will pay a third of any remaining unworked hours (up to a cap of £697.92 per month) with the employer also responsible for paying a further third for unworked hours, such that an employee working the minimum 33% of their usual hours will receive 77% of their usual pay (55% paid by the employer and 22% funded by the Government). Employers are not required to have previously furloughed staff under the Job Retention Scheme.
There is an extension for the Self Employment Income Support Scheme (SEISS) Grant for the period from 1 November 2020 to 31 January 2021. This taxable grant will be paid to those that previously qualified for SEISS and will be calculated based on 20% of average monthly profits, up to a total of £1,875. An additional second grant will be available for self-employed individuals to cover the period from 1 February 2021 to 30 April 2021, however the quantum of this grant will be outlined in the coming months.
VAT registered businesses that availed of the VAT deferral now have the option to repay the deferred liabilities over 11 months’ interest free instead of a lump sum on 31 March 2021. The temporary reduction in VAT for businesses in the Hospitability & Tourism sector from 20% to 5%, which was due to expire on 12 January 2021 will now be extended to 31 March 2021.
Finally, in connection with the various loan schemes that had previously been made available, the Government have increased flexibility for businesses including extending the length of loans from six to ten years, extending applications to 30 November 2020 and providing a ‘Pay as You Grow’ repayment system for Bounce Back loans.