What the Chancellor's ‘Winter Economy Plan’ actually means for your business

Rishi Sunak has unveiled his latest lockdown measures to help ease the financial burden on UK businesses during the Covid19 pandemic. Learn how the Job Support Scheme (which will sit alongside the Job Retention Bonus) may benefit your business after the Coronavirus Job Retention Scheme ends. Also find out about the latest Self-Employment Income Support Scheme, tax cuts, VAT and self-assessment payment deferrals plus the flexibility to pay back loans (Pay as You Grow).

The Job Support Scheme

Rishi Sunak announced his emergency jobs scheme today, The Jobs Support Scheme will replace the furlough scheme which ends 31 October and will run for 6 months until April 2021. The scheme will be introduced from 1^st November 2020 to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the scheme 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 cannot work.

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, capped at £697.92 per month.

Can employees work more than one third of their contracted hours?

Yes employees can work more than one third of their contracted hours and still be eligible for the scheme, but the amount the government will pay is reduced*

So, for example, if someone earning £2,000 a month was working half their hours, they would get £1,000 normal pay. Taking advantage of the Job Support Scheme means the employer would then get £333 extra from their employer and £333 from the government.

The scheme is open to small and medium-sized businesses (usually defined as firms with 250 employees or less). Large businesses whose revenue has fallen because of coronavirus will also be eligible but will have to meet a financial assessment test.

Are employees eligible for the Job Support Scheme even if they haven’t been furloughed?

Yes! 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.

I am bringing members of my team back from furlough – can we still claim the Job Retention Bonus and include the employee on the Job Support Scheme?

Yes, the Job Support Scheme is designed to sit alongside the Jobs Retention Bonus, businesses can benefit from both schemes to help protect jobs.

Self-Employment Income Support Scheme

In addition, the Government is continuing its support for millions of self-employed individuals by 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. This is 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 2021.

Tax cuts and deferrals

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space 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 of March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

Deferring self-assessment payments

Self-assessment taxpayers will be able to benefit from a separate additional 12-month extension to the due date of Self-Assessment payments, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Flexibility to pay back loans – Pay as You Grow

The burden will be lifted for businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan 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.

Coronavirus Business Interruption Loan Scheme lenders can extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes until the end of November.

As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme, and the Future Fund.

*we are still awaiting further guidance on this and will update asap

HB Accountants are accountants for business. We understand how you can make sharper, better business decisions when you really understand your financial position and we are keen to help you deliver this transparency in the best manner for your business. For guidance on whether a cloud-based accounting system would help your business, please talk to us. We’re still working hard to help you make the right decisions.

Our Covid19 hub is still available to any business that needs accounting support and our team is on hand for bespoke consultations.

Visit our COVID19 Business Hub for more information

For financial and accounting guidance and support, please contact Keith or Karen. We’re still working hard to help you make the right decisions.

Or call 01992 444466 or email directors@hbaccountants.co.uk for help. We look forward to hearing from you.

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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above