Currently, you could be forgiven for not being completely up to date with government policies, laws and legislations, as the Coronavirus has meant constant alterations and updates from the government.
Today’s announcement from Chancellor Rishi Sunak is certainly one to pay attention to, however, as it dictates the UK’s plan for dealing with the economics of Coronavirus leading up into the winter months.
The Chancellor has outlined the following three main pillars of the Winter Economy Plan.
- Support viable jobs and making sure that employees are working a third of their normal hours, paid as normal by the employer, in order to receive a top up provided from the Government.
- Six months of targeted support at businesses that are most at risk – smaller and medium sized businesses to be prioritised, while larger firms allowed to apply if turnover is proven to have fallen.
- Extending the existing self-employment grant in its current form.
Job Support Scheme
To be eligible for government support, employees must work a minimum on 33% of their usual hours. For the remaining hours that they have not worked, the Government and the employer will pay a third of those wages each, meaning an employee working 33% of their normal hours will get 77% of their normal wages.
It will be the smaller and medium sized businesses that benefit from this scheme at first, with the larger companies having to prove that they have indeed lost income because of the pandemic.
Employers can use this scheme even if they have not previously used the furlough scheme it replaces. It will run for six months from November.
VAT remains the same within hospitality
VAT is to remain at five percent for hospitality, which is some good news for restaurant owners. This will remain in place until 31.03.21 – originally it was supposed to go back to 20% on 14.01.21.
Concerning the self-employed
An extension to the self-employed grant, known as SEISS, will take place but on the terms of the Job Support Scheme, not the previous furlough scheme. The extension will provide two grants and will last for six months from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period.
The first grant will cover 3 months’ worth of profits from the start of November until the end of January. It will be worth 20% of average monthly profits and will capped at £1,875 in total.
‘Pay as you grow’
A “pay as you grow” scheme was announced for businesses, allowing them to extend their bounce back loans from six to 10 years, reducing their payments. Businesses can also move to interest-only payments or suspend repayments for six months if they are “in real trouble”. Credit ratings will be unaffected.
It is good to see the government being proactive and planning ahead. We think the Job Support Scheme should be able to help a lot of people, and will beneficial for businesses to retain their staff on shorter hours, rather than having to get rid of people.
It is also right for the self-employed to be given an extension on their support scheme, but we predict many will find the support unsatisfactory if their earnings have been dramatically cut during the pandemic.
Overall, it is at least something to work with for the meantime. We will keep you updated as new changes come to light.
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