Chancellor Sunak’s Winter Economy Plan: the main points

The Chancellor has shelved the idea of an Autumn Budget and today (24 September 2020) gave details of further support to help preserve viable jobs and provide help for businesses and individuals affected by the measures taken by the government to try to fight coronavirus.

David Gillies, tax partner at Friend Partnership explains the main points from the Chancellor’s announcement.

The Covid Job Retention Scheme (CJRS)

The Chancellor confirmed that there will be no further extension of the CJRS (furlough) scheme. Furlough will end on 31 October 2020.

The new Job Support Scheme

From 1 November 2020 a new “Job Support Scheme” will be introduced. This is designed to run for six months and is aimed at supporting only viable jobs.

Employees who are forced to work fewer than normal hours because of coronavirus will be paid two thirds of their normal salary for the hours they do not work. The employer will pay one third and the taxpayer will pay the other third.

The employer will be required to pay the employee their full salary for hours actually worked.

In order to qualify, the employee must be working at least 33% of their usual hours.

The amount of taxpayer grant will be calculated based on the employee’s usual salary but capped at £697.92 per month.

The Self Employment Income Support Scheme Grant (SEISS)

The SEISS is being extended. The government will provide an initial taxable grant to those who currently qualify for SEISS and who continue to actively trade at a reduced level due to coronavirus.

The grant will cover three months’ worth of profits for the period from November 2020 to the end of January 2021.

The grant will be the equivalent of 20% of average monthly profits and is capped at £1,875.

A second grant will be available to those that qualify to cover the period from February 2021 to the end of April 2021. The level of the second grant may be adjusted depending on the circumstances at the time.

VAT cut extended and new payment scheme

The 15% VAT cut available to the tourism and hospitality industries has been extended to the end of March 2021.

A new payment scheme is also introduced for businesses who deferred their VAT bills. Rather than having to pay in full at the end of March 2021, businesses will be able to make payment in 11 instalments during the 2021/2022 financial year. These payments will be interest free.

Self assessment

Additional time to pay will also be available to taxpayers under self-assessment. Those who deferred their July 2020 payment and those who are due to make a payment in January 2021 will not now need to pay these in full until January 2022 under HMRC’s “Time to Pay” facility.

Bounce Back Loans

A new “Pay as You Grow” repayment system has been introduced.

This will allow extension of the period of the loan from six years to 10 years.

In addition, interest-only periods of up to 6 months and repayment holidays will be available.

Other Loan Schemes

The Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the Future Fund and the Bounce Back Loan Scheme will be extended until the end of November.