In light of postponing the Autumn Budget, Rishi Sunak delivered a Winter Economy Plan today outlining additional support throughout for the coming six months. The focus being to support businesses which are viable and operating but with future uncertainly and depressed demand as a result of the continuing Covid-19 Pandemic. The headline measures of the announcements are:
Job Support Scheme
The Chancellor confirmed that the Job Retention Scheme will come to an end on 31 October 2020 and a new Job Support Scheme has been announced to provide support within jobs for six months from 1 November 2020.
Employees must work at least one third of hours with the Government and Employers covering two thirds of lost pay. The indication is that employees will receive around 77% of their pay.
All small and medium size businesses will be eligible and larger businesses whose turnover has fallen against pre-Covid levels.
The Job Support Scheme will be available to Employers, even if they did not previously furlough staff and use the Job Retention Scheme.
Employers can use the new Job Support Scheme and claim the Job Retention Scheme Bonus, if the conditions are met.
Further details of the the Job Support Scheme will be published by HMRC.
Self-Employment Income Support Scheme
The existing Self-Employment Income Support Scheme will be extended, for grants to be in line with the financial support in a similar manner to the new Job Support Scheme. We await further details.
VAT Deferment – Additional Time to Pay
For businesses who took advantage of deferring their VAT liability for the periods ended Feb/March/April 2020 to 31 March 2021, these liabilities can now be spread over 11 months, with no interest to pay.
Self-Assessment Income Tax – Time to Pay
Individuals who have tax liabilities falling due, who need extra help, can extend their outstanding tax bill over 12 months from January 2021.
Covid-19 Business Loans – Pay As You Grow
Both business loan schemes, the Bounce Back Loans and the Coronavirus Business Interruption Loan Scheme (CBILS) have been given extensions under the Chancellor’s Pay As You Grow announcement.
The terms of any Bounce Back Loan can be extended from 6 years to 10 years with more flexible repayment options including interest only payments and a payment holiday of six months. With both measures not affecting credit rating.
For CBILS, the Government Guarantee will be extended to 10 years, with additional time to repay.
Both loan schemes have been extended until the end of the year.
VAT for Hospitality and Tourism
The reduction in the VAT rate on hospitality food, accommodation and attractions to 5% has been extended until 31 March 2021, when it will revert to the standard rate.
Whilst the current pandemic has brought out the best in people, it also brings out the worst. Please be vigilant about scams, which mimic HMRC messages, do not give out private information or reply to text messages, emails or click links you are not expecting. HMRC will only request submissions through the Government Gateway and we would always recommend logging in independently through the gov.uk website and not via any links or invitations.
Please note these are headline announcements and further guidance will be provided by the Government on the details and implementation of each measure in due course.
Please do not hesitate to contact a member of the team, should you wish to discuss how these changes may affect you and your business or if we can assist with additional accounting needs at this unprecedented time.
Best wishes from all the Bailhache Linton team.